Executor / Personal Representative Compensation and Reimbursement
An estate’s executor — the person responsible for administering the estate, also sometimes called the personal representative — is entitled to receive monetary compensation and reimbursement for any out-of-pocket expenses. There are some limitations to this, however, and the executor should not merely bill the estate for services; the probate court must approve any compensation or reimbursement requests.
The amount of compensation may be defined within the will. Testators are free to write specific compensation guidelines for whoever acts as personal representative. The fee paid is usually a percentage of the estate, but may also be a flat monetary sum or even a gift of property. Depending on the rules of your estate, the executor may also be entitled to reimbursement of out-of-pocket expenses on top of what is specifically given in the will.
Testators could also specifically require that the executor receive no compensation, though this may not be permitted in every state. A nominated personal representative may opt not to administer the estate if the will specifies no compensation. Banks and business entities who provide executor services will also likely deny appointment as personal representative if the will withholds compensation.
If the will says nothing about compensation, the probate court will still provide compensation and reimbursement for executors. Each state is different: some use a flat percentage of the estate — usually 2-5 percent — as compensation, while others provide “reasonable” compensation. What is reasonable is up to the court, but it tends to be around 4%. This is in addition to any court-approved out-of-pocket expenses.
Executors may also be heirs, and the services they provide do not affect their gifts nor does the value of the gifts offset compensation.
Administering an estate is difficult and time consuming; personal representatives are required to work with the probate court to locate property, valuate the estate, distribute property, repay debts, and settle the decedent’s financial affairs. Though few executors perform their services for the money, monetary compensation is a way to recognize the individual for hard and honest work.
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