An estate’s executor, also known as the personal representative, has a big job; they must inventory the decedent’s assets; notify and pay their creditors; pay the decedent's taxes; and distribute the estate to the beneficiaries, who may not agree with the decedent’s decisions regarding the estate.
North Carolina is one of many states that allows the executor to get financial compensation for their duties. Often the testator, the person making the will, sets payment for the executor in the will. If they don't, or if there is no will, the state’s probate code determines the amount the executor will receive.
Duties of an Executor in North Carolina
An estate executor's responsibilities include managing the estate’s assets by identifying them and ensuring their security to preserve the estate’s value. The executor creates an inventory or list of the estate's assets, including a description of each asset and its value.
Before distributing the estate’s assets to the beneficiaries, the executor notifies creditors of the testator’s death to give them an opportunity to file claims against the estate, which must be filed within the specified claim period.
The personal representative also pays expenses associated with an estate’s administration, including court fees and fees for professionals that assist in the process of managing the estate. After everything is paid, the executor distributes the decedent’s assets according to the will.
Administration of an Intestate Estate
If the decedent did not leave a will, the personal representative must follow North Carolina’s laws of intestate succession to distribute the estate's assets. A personal representative for an estate without a will is known as an "administrator." An administrator's payment is calculated in North Carolina probate court in the same way as the fees for an executor.
How Executors Are Paid in North Carolina
Payment to a personal representative takes precedence over any individual with an interest in the estate, including creditors. If the executor needs additional professional help when working with the estate, such as realtor’s fees when selling a property, the court may reduce the executor's payment.
Assets that have named beneficiaries, such as life insurance policies and bank accounts, are not included in the assets the court looks at to calculate the executor’s fee. A decedent may list the executor's compensation in their will, but if they don’t, North Carolina sets commissions of up to 5 percent of:
- Estate receipts: Gross value of assets, including estate income but excluding real estate.
- Estate expenditures: Costs of running the decedent’s estate.
- Real property that has been sold: Amount used to fulfill bequests or pay debts.
Where the Executor Fees Are Not Specified
If the decedent’s estate is worth less than $2,000, and they did not set compensation for the executor in their will, the court can set any amount it deems just and reasonable.
If the will states that the executor should get "reasonable compensation", with no further explanation, the executor and the estate’s heirs can set the payment terms in a written agreement. Executors must get the court’s permission before paying themselves.
Requirements for Serving as Executor in North Carolina
To serve as an executor in North Carolina and oversee the probate process, a person must be at least 18 years of age and of sound mind, which means not deemed incapacitated by a court.
A decedent cannot name an individual as executor if that person has been convicted of a felony under federal or state law, and if their "citizenship has not been restored,” which means they must complete their sentence, parole or post-release supervision, or have an unconditional pardon.
Appointment of an Executor by the Court
A potential executor of an estate who is illiterate or "otherwise unsuitable" will also be rejected by the court, which may hold a hearing on an executor's qualifications with everyone who has an interest in the estate. At that time, a judge will determine who is best qualified for the role of executor and will terminate an improper appointment. The court will not appoint:
- A person convicted of the decedent’s murder.
- A separated or divorced spouse of the decedent or one who is knowingly in a bigamous marriage.
- An individual who declines the executor position in writing or by not qualifying within 30 days after the estate goes into probate.
Laws of Intestate Succession in North Carolina
When a person does not leave a will in North Carolina, an administrator distributes their assets under the state's intestate succession laws. For example, if the decedent left:
- Children but had no spouse, their children inherit the estate.
- Spouse but no children, their spouse inherits the estate.
- Parents but no spouse or children, their parents inherit the estate.
- Siblings but no spouse, children or parents, their siblings inherit the estate.
When a decent leaves a spouse and children, or a spouse and parents, things get a bit more complicated:
- If the decedent left a spouse, one child or descendants of that child, their spouse gets the first $60,000 of the personal property and one-half of the real estate. If the decedent left more than $60,00 in personal property, the spouse inherits $60,000, plus one-half of the remaining personal property. Descendants inherit one-half of the decedent’s real estate and the remaining personal property after the spouse’s share.
- If the decedent left a spouse, two or more children or their descendants, the spouse gets the first $60,000 of personal property and one-third of the real estate. If the decedent left more than $60,00 in personal property, the spouse inherits $60,000, plus one-third of the remaining personal property. Descendants inherit two-thirds of the decedent’s real estate and the remaining personal property after the spouse gets their share.
- If the decedent left a spouse and parents, the spouse gets one-half of the real estate and $100,000 of the personal property. If the decedent left more than $100,000 of personal property, the spouse inherits $100, 000 personal property plus one-half of the remainder.
- Probate Pro: Executor Commission
- NC Legislature: Section 28A-23-3. Commissions Allowed Personal Representatives; Representatives Guilty of Misconduct or Default
- NC Legislature: Section 28A-4-2. Persons Disqualified to Serve as Personal Representative
- NC Legislature: Chapter 29. Intestate Succession.
Michelle Nati is an associate editor and writer who has reported on legal, criminal and government news for PasadenaNow.com and Complex Media. She holds a B.A. in Communications and English from Niagara University.