If you or someone you know has recently been appointed in the role of executor of a loved one’s Kentucky estate pursuant to Ky. Rev. Stat. Ann. § 395.015, you might be doing some research to figure out the exact responsibilities associated with this and whether there are any benefits to handling someone else’s estate administration.
Executor Responsibilities in Kentucky
Your loved one might have appointed you by default because you are a spouse or a child, they assume to be responsible who could handle the final details of wrapping up their estate, such as gathering all of their assets, inventorying them, telling creditors about the existence of the estate and paying out claims in a priority manner and then distributing remaining assets to beneficiaries. Since executors have to do so many different things to close out an estate, and this can take months in the absolute best case scenario, executors are entitled to compensation and Kentucky is no exception to this.
As a Kentucky executor fees lawyer can tell you, an executor in Kentucky might quickly find themselves in over their head as it relates to estate administration. The estate that seemed to be relatively straightforward might actually turn out to be quite difficult for an executor to handle when a will contest occurs or when assets are difficult to find. A Kentucky legislature has outlined the payment for executor compensation and fees. Every state has their own rules about how much an executor can be paid for the role that they take on. Many of these are flat guidelines associated with a percentage of the estate or the payment of an hourly fee. You’ll want to do a walkthrough with the support of a Kentucky executor fee lawyer to understand how this impacts you as the executor and the importance of keeping good record so that you can be paid on time for the work that you do.
Understanding Kentucky Executor Fees
Unless the will has specific instructions that states something different, executor compensation in Kentucky is typically determined as a percentage of the estate value. Ky. Rev. Stat. Ann. § 395.150. This is usually capped at 5%. This means that the bigger the estate and the more assets are inside, the smaller the percentage. Remember that not every asset that someone owned at the time they pass away goes into probate and is included in this calculation. 401(k) and IRA accounts, for example, as well as proceeds associated with a life insurance policy pass outside of probate altogether because they go directly to beneficiaries. This means they are not calculated as part of the probated estate and can reduce the total value of the estate. Furthermore, the executor is eligible to receive 5% of any estate income that is collected by the executor. The amount withheld will still count as income received for this calculation in the event that taxes on this income need to be withheld. The court is also eligible per Kentucky revised statutes 395-150 to allow additional compensation for those cases in which an executor needed to go above and beyond. Cases that become extremely complex or those that involve the executor to things such as oversee real estate sales, manage a business, prepare tax returns on their own, handle audits from the IRS and conduct litigation are examples of what goes above and beyond. Before stepping into the role of executor, you need to educate yourself about what to anticipate and how to minimize the risks associated with serving in this role.
Keeping good records will also make it that much more likely that you would be paid for the time and work you put in. Disgruntled beneficiaries might attempt to argue about the amount that you have claimed as executor compensation and having good records illustrating all of the steps that you took in this process and any other issues that have emerged, can make it very easy to determine what to do next.