I have previously written about the duties of an executor in an estate. The administration of an estate can be quite complicated and time consuming. Generally, it includes locating the names and addresses of decedent’s beneficiaries and next of kin, filing the decedent’s last will and testament, gathering and protecting decedent’s assets, obtaining appraisals, preparing an inventory of all real and personal property, verifying and paying creditor claims, selling assets, distributing estate property to beneficiaries, filing tax returns, and following all directions and orders from the probate court.

Legally appointed executors are authorized by an Ohio statute to take a commission, commonly known as a fiduciary fee, to compensate them for their efforts. Fiduciary fees are calculated upon the amount of the decedent’s personal property, funds in financial accounts, and the value of decedent’s real property.

As full compensation for all ordinary services, the Ohio statute provides that an executor may receive a fiduciary fee upon the amount of all the personal property, including any income generated, and upon the proceeds of real property that is sold, as follows:

(1) For the first $100,000, at the rate of four per cent (4%);

(2) All above $100,000 and not exceeding $400,000, at the rate of three per cent (3%); and,

(3) All above $400,000, at the rate of two per cent (2%).

The fiduciary fee is calculated using the gross sale proceeds for real property and the fair market value of all other property (date of death value) as set forth in the inventory. In the event the decedent’s real property is not sold, but rather transferred to the beneficiaries directly, the executor may receive a fee of one per cent (1%) of the inventory value of real property.  

Executors are also allowed to charge a fee of one per cent (1%) on the value of certain non-probate assets that are not subject to the probate court estate administration. These assets include joint and survivorship property and assets that have transfer on death designations. Aside from this compensation, the executor may be reimbursed for reasonable and necessary expenditures.

The statute further provides that a probate court may reduce an executor’s fiduciary fee, or deny the fee altogether, if it finds that the executor has not faithfully discharged his or her duties. The probate court may also allow a fiduciary fee that is greater than the statutory amount if an executor performs extraordinary services. In that case, the court may adjust the commission so that the total fees fairly reflect the reasonable value of both ordinary and extraordinary services.

Fiduciary fees are given priority for payment in insolvent estates as an expense of administration.

Even if there are not enough estate assets to pay all of the decedent’s debts, the executor will receive a fee for his or her services before funeral expenses, creditor claims, and other debts. 

Sometimes executors will waive compensation as the fiduciary fee ultimately reduces the amount received by the beneficiaries. However, if they decide to take a fiduciary fee, they must report the full amount received on their individual income tax return and pay taxes on it.

When administering a probate estate, it is important to seek the assistance of a probate lawyer. That way, an executor will successfully navigate the challenging requirements and receive the appropriate fee for his or her services. Laribee Law, LLP is here to assist you. 

Michael Laribee is a partner in the Medina law firm of Laribee Law, LLP. This article is intended to provide general information about the law. It is not intended to give legal advice. Readers are urged to seek advice from an attorney regarding their specific issues and rights.