Not all states have exact rules for an executor’s compensation. Their laws refer to “reasonable” pay, or they leave it up to the discretion of a judge. Ohio’s state code offers an exact formula, so you’ll have some idea at the onset how much you can expect to be paid. The court can deny or reduce payment if you don’t perform all your necessary duties, however.
Appointment of Executor
If the deceased left a will naming you as executor, your appointment is pretty cut and dried in Ohio. If he didn’t leave a will, didn’t name an executor in the will or the named executor is unwilling to take the job, the court will appoint an administrator of the estate instead. Under Ohio law, the deceased’s spouse has the first right to serve, but if she doesn’t want the job or if he wasn’t married, the court will appoint other next of kin. Administrators must be Ohio residents and they must post bond -- an insurance policy to protect the estate against any wrongdoing. The duties of an administrator and executor are the same, but administrators are subject to more court supervision and rules. Executors and administrators are entitled to the same compensation.
When you agree to act as executor of an Ohio estate, you become the legal custodian of the deceased’s property until the estate is settled. This means gathering up his assets, making sure insurance policies for the assets stay current, collecting money that was due to him at the time of his death and giving the court an inventory of all the property he owned, including their values.
The Deceased’s Debts
When someone dies, his estate becomes liable for paying any debts in his sole name, and the executor must oversee this process as well. Ohio law gives creditors six months from the date of death to submit claims to the estate for payment. In most cases, creditors aren’t paid if they miss this deadline. The executor must decide whether the claims are legitimate and, if so, pay them from estate funds. The executor can’t distribute property to beneficiaries until all legitimate debts and the costs of operating the estate have been paid. She must give the court an accounting of what the estate paid and income it took in within six months of taking office. Ohio has an estate tax, so if the estate owes a tax debt either to the state or the Internal Revenue Service for federal estate taxes, this court deadline extends to 13 months.
An executor isn’t expected to do all this work out of the goodness of her heart. Under Ohio law, her compensation is a percentage of the estate: 4 percent of the first $100,000 of value, 3 percent of the next $300,000 and 2 percent of any value over $400,000. Unlike some other states, she’s also entitled to 1 percent of the value of the deceased’s non-probate assets -- property that went directly to a named beneficiary, such as life insurance proceeds. If the estate turns out to be particularly complicated, an executor can ask the court for more money. But compensation is considered income for tax purposes, so executors can waive the fee if they want to.