Basic Compensation Rules for Executors
There are many reasons people become executors. Some do it out of a sense of duty, some do it because they feel honoured to have been asked to be an executor, and others do it for the compensation. Any professional executor will be working for compensation. Even if you are not a professional, herein you will find information to help understand the rules that govern compensation for executors.
While there are many provisions and processes which allow an executor to be granted compensation after the execution of the will, it is also possible to set the compensation amount beforehand. The compensation amount can technically be included within the will; however, this is rarely done. Wills are sometimes contested and putting in a compensation agreement within them is not always a good idea. A much better way to go about it is to instead create another agreement for compensation which is referenced in the will. This is better because then, even if there are issues in the will, the compensation agreement stands.
Compensation for lay executors
If you are not a professional executor but are only responsible for executing a particular will, then you’re a lay executor. The lay executor is usually someone trusted or loved by the person who created the will. Therefore, when it comes to lay executors, there usually isn’t a clause within the will about their compensation. That doesn’t mean that lay executors aren’t entitled to any compensation though. One important thing to keep in mind: If the executor is also left something in the will, the other beneficiaries can argue that whatever is left in the will is in lieu of compensation.
How to get compensation if you’re a lay executor
There are two ways you can get compensation. One is through an agreement with all the beneficiaries of the will; but this is only possible if all the beneficiaries legally enter into an agreement. If they are minors or are not considered mentally sound enough to make their own decisions, such agreements are no longer possible. If all the beneficiaries fulfill the criteria, then it is best for the lay person to communicate everything to them. Tell them why the compensation was set at the rate it was, what work will be done, and be prepared to ask any questions. The other way to get executor compensation is a court review.
How Courts Determine Compensation
When you submit the case of compensation to a court, you leave it up to them to decide how much you should be paid. Most courts start at the usual percentages of 5% and then determine whether the actual compensation should be lower or higher. The amount of compensation depends on the volume of work needed to be done, the size of the estate, how good the executor was at their job, and other such factors. So don’t expect to get paid 5 million if the estate is worth a 100 million just because 5% is the usual rate. At the same time, a smaller estate may result in a bigger percentage going to the executor. If the court thinks the executor did not fulfill their duties properly or if there were any problems, then the compensation level might be lower as well.
The Reason behind Compensation Rules
There is a very simple reason why paying the executor is not as simple as giving them money directly. It is against the rules for an executor to be paid for the job while the person who made the will is still living and the will is not being executed. The reason is that, in the eyes of the law, the primary duty of the executor is to the beneficiaries. Thus the compensation is often left to the beneficiaries and the courts, binding the executor to ensure every decision they take is in the benefit of the people who will be getting the money. For example, if you are executing the will of a married man or woman, you should be putting their spouse and children above any personal needs or wants.