The individual selected as executor of an estate doesn't have an easy job. She must inventory assets, notify the deceased’s creditors, decide if creditor’s claims are legitimate, and deal with beneficiaries who may or may not be pleased with the decisions she’s made. Most states allow executors to accept financial compensation for all this work and North Carolina is no exception. When a testator -- the person who makes the will -- sets payment for his executor in his will, the terms of his will prevail; otherwise, North Carolina’s probate code determines payment.
Under North Carolina law, an executor may receive up to five percent of the value of the estate’s “receipts and disbursements" as compensation. This means the court calculates five percent from the value of the estate that remains after the executor has paid the decedent’s debts and after all outstanding revenue is received, such as from investments that produce interest. However, North Carolina’s code does not guarantee a payment of five percent. A court clerk may allow up to this much, but only if she feels the difficulty of settling the estate warrants it. When someone dies without leaving a will and the court appoints an executor, this same procedure applies.
Even when the terms of a will include the specific remuneration the executor should receive, North Carolina does not permit the executor to pay herself at the time she closes the estate without court approval. She must petition the court for permission first. If the testator did not set a specific payment amount, she can ask for the statutory five percent payment. The clerk will decide if the work involved in settling the estate justifies her request.
How Fees Are Paid
The decedent’s estate is responsible for paying the executor. The decedent’s beneficiaries do not have to pay her directly, although the executor’s compensation will reduce their bequests because the money available to the estate will be less after she receives her percentage. The executor is also entitled to reimbursement for any out-of-pocket expenses she incurs while settling the estate, such as parking fees or postage. Reimbursement for these costs also comes out of the estate’s funds.
Some wills specifically allow their executors to enlist the services of an attorney, an accountant or both if they have questions regarding certain issues. The estate will usually pay these individuals as well, but some exceptions exist in North Carolina. If a testator’s will does not include specific language allowing this, the probate court clerk must approve payment of these fees as well. If the clerk finds the fees are reasonable, the court may give the go-ahead for the executor to pay the professional or professionals from the estate’s funds. If the clerk decides the estate was so complex that settling it required the assistance of a professional, the court will usually approve these fees. In some instances, however, the court will rule that the executor and professional must share the statutory five percent commission. If the court does not approve the expenditure for professional assistance, then North Carolina requires the executor pay the individual from her own money.