When you’re making your estate plans, choosing who to name as the executor of your estate can be tough. After all, you’re asking someone you love and trust to take on a very big responsibility – and it’s not an easy job.
The executor of your estate will have a large number of administrative tasks they have to handle, such as making certain that all your physical property is secured against theft, your assets and debts are tallied, taxes are paid, your heirs are notified and all the correct legal steps are followed, among other things. They may also have to deal with any complex family dynamics that develop (or intensify). Disputes and disagreements among heirs can be frustrating, and that can lead to a lot of pressure and stress on an executor.
Executors are entitled to compensation for their time and effort
According to state law, the executor of your estate is entitled to receive 5% of the estate’s total financial transactions – not including cash, money in checking or savings accounts, life insurance proceeds or assets that transfer directly to named beneficiaries. That means, for example, if your estate is worth $200,000 (after the aforementioned items are excluded) and your executor performs their duties properly, they would be entitled to $10,000, which would be paid out of your estate.
This is the “default” compensation amount, meaning that’s what your executor will be paid if you make no mention of compensation for them in your will. There are also some provisions that would allow your executor to ask for higher compensation in certain situations, such as when the estate includes a farm or a business or the executor believes that 5% is “unreasonably low.” You can also decide to set a different compensation amount in your will if you and your chosen executor agree on an amount that you both feel is fair. If it seems reasonable, the court will likely uphold your wishes.
Knowing that your faithful executor will be rewarded for their efforts on your behalf may make it easier to ask someone to take on this responsibility. You can find more answers to your estate planning questions by seeking experienced legal guidance.