A personal representative, also referred to as an executor or administrator, is entitled to be paid a fee for the work they complete during the estate administration process. Oftentimes, a testator will include a provision in their will that indicates the amount that the personal representative is to receive. If the testator chose not to include such a provision, if the personal representative chooses to reject the compensation scheme provided by the will, or if there is no will, then the personal representative would be entitled to compensation as provided by the Ohio statutory provisions.
Statutory Compensation for the Personal Representative
The statutory compensation for personal representative is based on the value of the probate assets in the estate. Probate assets include those assets owned by the decedent individually or as a tenant in common and assets without a right of survivorship, designated beneficiary, or payable/transfer on death designation. The compensation would be as follows:
- For the first $100,000 of probate assets: 4%
- For the next $300,000 of probate assets: 3%
- For assets above $400,000: 2%
The fee that a personal representative is entitled to receive is for services rendered. If the probate court learns that the personal representative failed to discharge their duties as required, the court may refuse to approve any payment or may reduce the fee.
Note that a personal representative is not required to accept compensation. There are a variety of reasons that a personal representative would refuse to accept payment. For example, they may feel that managing the estate of a deceased loved one is a privilege or duty for which payment is not appropriate. Because payment received for doing the work of a personal representative would be considered personal income, some people may refuse payment because of the tax implications.
Work of the Personal Representative
The job of the personal representative can be challenging and time-consuming, particularly if the estate has substantial assets, unusual assets, or many beneficiaries and heirs. The duties and responsibilities of the personal representative include the following:
- Inventorying and appraising the assets. Since it is the of the personal representative to manage estate property, it is critical that they have an understanding of what property is in the estate and its value. One of their first duties is to identify estate property, determine its value, and create an inventory. The inventory must include the value of real property, tangible personal property, intangible personal property, and vehicles. It must be filed with the probate court.
- Pay estate debts. Most decedents leave some debt behind such as credit card bills, student loans, or car loans. It is up to the personal representative to pay the decedent’s debts out of estate assets. First, the personal representative must notify creditors, letting them know that the decedent’s estate is being probated, the procedure for filing claims, and the timeframe for submitting claims. The personal representative is required to pay claims that are valid and that are filed within the claims period. Claims are paid out of estate assets. That means that if the estate does not have enough money to pay all claims, some claims will go unpaid. The personal representative is not required to pay estate debt out of their own personal assets. In addition to paying estate debt, the personal representative is also required to pay expenses of administration out of estate assets. Expenses of administration includes not only court fees and fees for professionals such as appraisers, it also includes payment of their own personal representative commission.
- Distribute estate assets. The personal representative is responsible for asset distribution. Before they can distribute assets, they must submit a final accounting and get approval from the court. The decedent’s will dictates how assets are to be distributed. The personal representative must follow those instructions. If there is no will, then the Ohio has a statute called the law of intestate succession. It dictates that the decedent’s next of kin would be legally entitled to their estate.