Legal services must be separated from personal representative duties

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The Wisconsin Court of Appeals on Thursday issued an opinion concerning a variety of issues regarding attorney fees in probate proceedings.

Although the opinion was not recommended for publication, it is authored and valuable persuasive authority, in light of the paucity of case law on probate issues.

Margaret Elegreet died in 2002, having named her three adult children as equal beneficiaries. After disputes arose between the beneficiaries, the probate court ordered formal administration and appointed attorney John Stoltz as personal representative.

Stoltz died in 2006 and Karl Green, his law partner, was appointed successor personal representative.

At the final accounting, all of Green’s fees were calculated at his hourly rate, rather than pursuant to the personal representative rate under sec. 857.05(2). Less than $1,500 remained in the estate, and this amount was distributed to the three beneficiaries.

When one of the beneficiaries appealed, Green declined reappointment as personal representative, stating that he did not handle appeals. The probate court then ordered each of the beneficiaries to deposit $5,000 with the court to finance the appeal, because no attorney could be found to accept appointment without a guarantee of available money for his fees.

The Court of Appeals affirmed in part, and reversed in part, in an opinion by Judge Gary Sherman.

The court reversed the calculation of Green’s fees for all services using his customary hourly rate as an attorney. The court said it was unable to tell from Green’s billing statements which services were legal services and which were for his services as personal representative.

The court then affirmed the probate court’s refusal to order that the appealing beneficiary’s attorney fees be paid by Green. Although a prevailing party may recover fees from the estate, no statute authorizes an award of fees against the personal representative.

The court also affirmed the probate court’s dismissal of Green as personal representative and refusal to reappoint him for the appeal.

Citing the code of professional responsibility, the court concluded, “Green had the right, and in fact the obligation, to decline reappointment if he did not believe that he was competent to represent the estate on appeal.”

Finally, the court vacated the probate court’s order that each beneficiary deposit $5,000 to cover attorney fees the estate would incur on appeal.

The estate conceded that there is no statutory authority to support the order, but argued that the court had inherent equitable power to do so.

However, the court disagreed: “We have not been presented with any legal authority which would allow the circuit court through its equitable power to obligate an appellant, and parties not directly involved in an appeal, to pay an appeallee’s litigation expenses irrespective of the outcome, and we were unable to find any in our independent research. We therefore conclude that the court did not have such authority.”

But the court distinguished between the beneficiaries’ personal funds and funds received from the estate.

The court found that the beneficiaries received disbursements in several ways: from a trust created by Elegreet; from partial disbursements of property from the estate; and the final disbursement when the case was closed by the probate court.

While disbursements from the trust are the beneficiaries’ personal property and thus unreachable, the court held that the value of any property or cash distributed from the estate could be ordered returned in order to pay the estate’s expenses for the appeal, pursuant to sec. 863.01.

Accordingly, the court instructed the probate court on remand to make findings of fact regarding these distributions, and what amount, if any, should be returned to the estate.

Case: DeSalvo v. Estate of Elegreet, No. 2010AP817.

Issues:
– At what rate should an attorney be paid where he acts as attorney and personal representative of an estate?

– Can a probate court order that beneficiaries post bonds to cover the estate’s attorney fees on appeal?

Holdings:
– Fees should be paid based on the nature of the services performed.

– No. Only distributions from the estate, not personal funds, can be ordered to be posted for that purpose.