You Were Named the Executor or Administrator of an Estate – What To Expect
When someone is designated as a personal representative for an estate, their mind is often inundated with questions and concerns about what they are legally obligated to do. In many instances, personal representatives are named an Executor/Executrix or an Administrator/Administratrix.
Similarities and Differences between an Administrator and an Executor
You may be wondering, “What is different from being named an Administrator versus an Executor?” Well, an Administrator is the individual appointed by a court to oversee an estate when someone passes away without a Last Will and Testament. In contrast, an Executor is the individual named by a decedent in their estate plan to oversee the administration of their estate, including the distribution of assets and management of any outstanding liabilities.
Despite these differences, there are a number of similarities between Executors and Administrators. For example, both Executors and Administrators are subject to the jurisdiction of a probate court. Both Executors and Administrators are considered to be fiduciaries, which means they have been bestowed with the highest duty of trust and responsibility that can be imposed by law.
Responsibilities Associated with Being a Personal Representative
When you are designated as a personal representative, there are specific duties you should prepare to carry out in order to properly administer an estate. These duties include:
- Auditing and inventorying the assets of the estate;
- Distributing the assets of the estate;
- Pay off valid debts and liabilities of the decedent;
- File necessary paperwork in the probate action;
- File necessary tax documents;
- Notify beneficiaries;
- Notify other interested parties;
- If litigation is filed, take action to defend the interests of the estate; and
- Maintain specific types of estate assets to ensure they do not diminish in value.
It is worth noting that Executors do not obtain the full authority to complete the above-listed tasks until the decedent’s Will is admitted to a court and recorded. Once the Will is formally admitted to court, the Executor will need to file a bond and take an oath in the court in which the record is made. This means if you are alerted to your designation as an Executor, you cannot start inventorying or distributing assets until you are formally recognized as the Executor of the estate by a probate court.
Refusing Role of Executor
If you are named as an Executor to an estate, but you do not feel capable of properly handling the responsibilities of this position, you have the right to refuse. If you decide to refuse, an alternate Executor will become responsible for the estate. If there is no alternate, the court will appoint an Administrator.
Compensation Structure for Executors and Administrators
If you agree to serve as a personal representative for an estate, it is important to know that you do not have to work for free. For example, if you serve as an executor in Maryland, you are allowed to claim a fee of 9 percent of the estate’s value as compensation for your services. For estates of greater than $20,000, an executor may claim an additional 3.6 percent of the value over $20,000 as compensation.
If you serve as an Executor in Virginia, the amount of compensation varies and subject to the discretion of the court which has jurisdiction over the estate. Nevertheless, as a general guideline, Virginia courts have considered a reasonable fee for executors to be around 5 percent of the estate assets. While there is no specific compensation rate set by statute in Virginia, multiple jurisdictions have proactively established guidelines for assessing an executor’s commission, and the amount is predicated primarily on the following factors:
- Complexity of the estate;
- Responsibilities assumed by the executor, and
- Amount and type of professional services required to administer the estate
If you agree to serve as executor in D.C., the compensation standards are similar to Virginia in that the principle of “reasonable” compensation is the governing standard. This means a court will award a fee based on factors such as:
- Size of the estate
- Complexity of the estate
- Compensation customarily charged for other types of similar estate
Have Questions? Speak to an Experienced Estate Planning Attorney
It is important to understand that serving as a personal representative is not something to be taken lightly. If you are tasked with this important responsibility, consider contacting an experienced and knowledgeable estate planning attorney to help guide you through the process. The InSight Law team is here to help. Contact our office today to schedule a meeting.