How are probate attorney fees handled, and can an executor pay the retainer fee from estate funds rather than out-of-pocket? - Pennsylvania
The Short Answer
In Pennsylvania, probate-related attorney fees are typically treated as an estate administration expense when the legal work is for the benefit of the estate. That often means an executor can pay a reasonable attorney retainer from estate funds (once estate funds are available), but the fee still must be justifiable and properly documented because it may be reviewed by the Orphans’ Court and challenged by beneficiaries.
What Pennsylvania Law Says
Executor and attorney compensation in an estate is generally governed by a “reasonableness” standard. In practice, counsel fees for work performed for the estate are commonly treated as a cost of administration, and administration costs are paid before most other claims if the estate is short on cash.
The Statute
The primary law governing this issue is 20 Pa.C.S. § 3392.
This statute establishes that if an estate does not have enough assets to pay everything, the personal representative must pay claims in a set order of priority, with “costs of administration” paid first—the category that commonly includes necessary probate attorney fees incurred to administer the estate.
Separately, Pennsylvania law also provides that the court allows the personal representative compensation that is “reasonable and just.” See 20 Pa.C.S. § 3537. While that statute addresses executor compensation, the same overall court-supervised “reasonableness” framework is why executors should be cautious about any estate-paid retainer or fee arrangement.
Why You Should Speak with an Attorney
While the statutes provide the general rule, applying it to your specific situation is rarely simple. Legal outcomes often depend on:
- Cash-flow and timing: Even if fees are a proper administration expense, the estate may not have liquid funds early on (or may need to follow a priority of payments if assets are limited). See 20 Pa.C.S. § 3392.
- Reasonableness and documentation: Beneficiaries can object to attorney fees or retainers they believe are excessive or not for the estate’s benefit, and the executor may have to justify the payments in an accounting.
- Scope of representation: Fees for work that primarily benefits one beneficiary (or the executor personally in a dispute) may be treated differently than fees that benefit the estate as a whole—creating potential surcharge risk if the wrong party pays.
Because the executor has fiduciary duties and personal exposure if payments are mishandled, it’s usually worth getting probate counsel involved early to structure the engagement and payment method in a way that is defensible in the Orphans’ Court.
If you want additional context on handling estate funds properly, you may also find this helpful: Can a Pennsylvania executor distribute proceeds directly to a trust or beneficiaries instead of using the estate bank account?
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Disclaimer: This article provides general information under Pennsylvania law and does not create an attorney-client relationship. Laws change frequently. For legal advice specific to your situation, please consult with a licensed attorney.