Also known as: reasonable compensation standards · reasonable compensation · reasonable compensation doctrine
Written by attorneys · grounded in primary & secondary sources — see below
A standard governing awards of fees or remuneration that requires the amount to reflect the fair value of services performed or losses sustained.
Riley Rivera sues a third party after Metro Hospital's conversion of equipment forces her to defend her interests in a separate action. The court awards her reasonable compensation for attorney fees and lost time incurred in that earlier proceeding because the hospital's tort required the protective litigation.
Regina Robinson and Roger Ramirez operate a partnership that dissolves. Robinson continues working full time to close accounts and liquidate assets. The court awards her reasonable compensation for those winding-up services even though partners ordinarily receive no pay for ordinary partnership work.
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Rajesh Rao is named personal representative under a will that sets a flat $5,000 fee. Before qualifying, Rao files a written renunciation and petitions for reasonable compensation because the estate involves complex commercial assets. The court grants the request under the reasonable compensation standard.
Ralph Richardson creates a trust for family members and trades stocks in the account. The court examines whether income generated by the trustee's services qualifies as reasonable compensation that may be allocated separately from trust principal for tax purposes.
Yes. Under the governing statute a personal representative may renounce a will's fee provision before qualifying when no separate contract with the decedent exists and then claim reasonable compensation instead. The renunciation must be filed in writing with the court.
No. An unexecuted draft has no legal effect and cannot override the statutory right to reasonable compensation. The personal representative remains entitled to a court-determined reasonable fee for services actually rendered.
A partner may receive reasonable compensation only for services rendered during the winding-up phase. Ordinary services performed while the partnership is operating do not qualify for separate pay beyond profit sharing.
…venture, and to distribute the profits, if any, in equal shares to his wife, mother, and two minor children after deducting a reasonable compensation for his services. During 1928 taxpayer carried on the trading operations contemplated and at the end of the year determined his compensation at slightly less than $10,000, which he reported…