In general, executors are entitled to reasonable payments for their services. Alabama is no exception to this. At the state level, statutes will determine how much this person can be paid. An personal representative, commonly referred to as either an executor or an administrator, is the person appointed by the Probate Court to settle the estate of a decedent. If the person was named in the decedent’s will, they are common referred to as an executor. If they were not, they are commonly referred to as an administrator. The general term for the role is a personal representative. Under Alabama law, compensation is based on the several factors, including the value of the estate. Ala. Code § 43-8-848
Duties of a Personal Representative
The duties of a personal representative commonly include:
- File the will with the probate court and notify beneficiaries
- Locate estate assets (bank accounts, personal property, real estate, vehicles, etc.)
- Appraise asset and prepare inventory
- Secure and manage estate assets
- Notify creditors
- Manage creditor claims
- Pay estate debt and expenses of administration (credit card bills, personal loans, funeral expenses, hospital bills, court fees, attorneys fees, etc.)
- File outstanding tax returns and pay any taxes that are due
- File accounting
- Distribute assets to decedent’s beneficiaries and heirs
Alabama law enables the executor of any estate to file with the court a request for an executor fee that is no higher than 5% of the value of the estate being probated. Methods like this are often used to compensate executors because when there are more assets in the estate, it is typically more complicated for the executor to carry out all of their necessary duties.
Alabama executors are entitled to reasonable compensation of up to 2.5% of assets received and 2.5% of disbursements. Ala. Code § 43-8-848(a). Assets that pass outside of the probate process, however, are not included in these calculations. Excluded assets include life insurance policies and 401(k)s or other accounts that pass directly to named beneficiaries based on the forms filed by the account owner for those beneficiaries. Some of the different factors to consider as it relates to executor fees compensation in Alabama include the size of the estate and the overall results obtained, the capabilities and experience of the person assigned to the role of executor, compensation that is customarily charged in similar cases, and the difficulty or uniqueness of the administrative process.
In addition, if the decedent left a will, they can state in the will the amount of compensation to which the executor would be entitled. The executor does not have to accept the amount of compensation that they will provides. Instead, they can choose to reject it and accept the amount the court would approve based on the statutory framework. If the executor choose to renounce what the will requires for compensation, they most do so in writing and file the writing with the court.
Further Compensation for Executors in Alabama
The court can also allow for additional compensation beyond what has been stated here as a guideline. For example, the court will award additional compensation if the personal representative performed extraordinary services beyond what a personal representative is commonly required to perform. Examples of extraordinary services may include:
- Managing the decedent’s small business
- Locating missing heirs
- Dealing with a tax audit or complex tax or accounting issues
- Dealing with estate litigation, including claims against the estate
- Selling estate real estate
The amount of additional compensation that court may award for extraordinary services is typically based on the amount of additional time spent on those tasks.
Compensation for a personal representative is designed to pay them for services rendered. If the personal representative fails to do what they are by law required to do, the court can choose to reduce their compensation below the statutory minimum or choose to not pay them anything at all.