Executor Compensation and Fee Calculator (NC)

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If the will does not specify how executor compensation should be calculated, NC estates must follow state compensation rules.

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How Much Should an Executor be Paid in NC?

In North Carolina, the estate executor is known as a "personal representative". In the absence of specified compensation in the will, North Carolina statute sets personal representative commissions to at most 5% of:

  • Estate receipts (gross value of assets, excluding real estate, plus any estate income)
  • Estate expenditures (costs of running the estate, such as rent, notary fees, etc.)
  • Any real estate sold (only the amount used to pay debts or fulfill bequests)

Real property (i.e., land and buildings) should only be included in the calculations if the property is sold, and then only the amounts generated from the sale that go to paying off estate debts, or to satisfying will bequests. If you are using EstateExec to settle the estate, it will automatically calculate these amounts for you.

In practice, the percentage commission often depends on overall estate size and relative complexity. For example:

  • 5.0% on the first $250K
  • 4.0% on the next $750K
  • 3.0% on the next $1M
  • 2.0% on the next $2M
  • 1.5% on the anything more

So, for example, a North Carolina estate of standard complexity with receipts and expenditures of $300K might yield $14.5K in executor commissions, one with $800K would generate $34.5K, and a $1.5M estate would generate $57.5K.

A few points:

  • Assets with named beneficiaries (such as an IRA) are not included in the above calculations
  • If taxes on income must be withheld, the amount withheld still counts as estate receipts
  • Executor compensation takes precedence over any creditors or anyone with an interest in the estate
  • The court may reduce the executor fee to somewhat reflect executor expenses for additional professional help (such as realtor fees when selling real estate)

All of the above aside, if the estate is worth <$2K, and there is no compensation specified in the will, the court can set compensation to anything it deems reasonable and just.

Finally, if the will specifies that the executor should receive "reasonable" (or something like that) compensation, without going into further detail, then none of the above necessarily applies, and the executor and heirs can set the terms together in a written agreement.

You must receive permission from the court before paying yourself the compensation.

See North Carolina General Statutes § 28A-23-3 for more.

NC Compensation Calculator

EstateExec provides the following executor compensation estimator for NC estates, but please keep in mind that circumstances may vary, and that there may be special situations addressed by local custom or law. By using this estimator, you acknowledge that EstateExec provides any results as informational input only, not as legal advice, and cannot be held responsible for any inaccuracies for, or misunderstandings about, any given estate.

Below EstateExec enables you to calculate compensation for an estate using representative tiers (from above), modified by an estate complexity factor. See estimation methodology for details, especially for important information concerning qualified proceeds of real property sales.

You can use this calculator now, but if you use EstateExec to help you track the settlement process, it will automatically perform the calculations to provide inputs for the fields below (you can create an estate for free).

Compensation:  $ -

See also Compensation for general remarks on executor compensation.

Executor Compensation Considerations

Timing: Generally, any executor compensation is paid during the final stages of estate distribution, as one of the last things the executor does. Be careful in situations in which there is not enough to pay yourself and all other outstanding debts, as this may expose you to legal issues. However, in most states, executor compensation has precedence over almost all other debts (for example, in NY, only funeral expenses have a higher precedence).

Communication: You may wish to discuss your compensation with the other heirs early during the process, so they don't end up surprised and unhappy when they notice their shares are somewhat less than expected. You may also want to leave the door open to modify your planned compensation as the process unfolds and you determine how much or how little work will actually be required on your part.

Optional: Keep in mind that collecting executor fees is optional. Even if the will specifies compensation, or if state laws support specific fees, the executor can choose to forego that compensation, and many do. That being said, serving as an executor is A LOT of work, and there's a reason that state laws support such compensation.

Tax Optimization: One reason an executor might choose to forego explicit compensation is that executor compensation is taxable, while inheritances are generally not taxable. Consequently, if the entire estate (or a large portion of it) is going to be inherited by the executor, you may end up with more after-tax value if you forego executor compensation.

Trusts: Note that trustee compensation for managing a trust is handled differently than that of executor compensation for settling an estate (see Trustee Compensation).

Expense Reimbursement: In addition to compensation for his or her services, an executor is also entitled to reimbursement from estate proceeds for legitimate and reasonable estate administration costs, such as death certificate copies, notarization of documents, the EstateExec licensing fee, and even travel costs strictly associated with managing the estate. Once you have established an estate banking account, you can often pay for these costs directly from that account, so that no reimbursement is necessary, but you should keep good records in case you later have to justify your expenditures to the IRS or to estate heirs. Executor expenses can be reimbursed when desired, although certain probate proceedings may require prior approval. While executor expenses are generally not considered when calculating executor compensation (i.e., executor fees), if the executor incurs substantial costs paying for services that would normally be directly handled by an executor, a probate judge may sometimes require that the default executor fee be reduced accordingly.

Additional Information

See also the EstateExec Complete Executor Guide.

In case you're interested, authoritative details about executor compensation in other states can be found here:

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