In North Carolina, personal representative is a fiduciary appointed by the Superior Court to perform the activities required to settle the decedent’s estate. G.S. § 28A-2-4. Other terms for a personal representative are executor and administrator. G.S. § 28A-1-1. Under North Carolina law, personal representatives are entitled to receive compensation for their work. Compensation is based on either what the will provides or what the statute provides. G.S. § 28A-23-3. Oftentimes testators include clear provisions in their wills as to how much the personal representative is to be compensation. G.S. § 28A-23-3(g). Sometimes the will is silent on the matter. If the will is silent or if there is no will, the personal representative is still entitled to be compensated for their work. The amount of compensation would be based on North Carolina law.
Statutory Compensation in North Carolina
Under the statute, a personal representative is entitled to receive up to 5% of the estate’s “receipts and disbursements” as compensation. In other words, compensation is based on the value of the estate after all assets are received into the estate and all debts and expenses are paid out of the estate.
Note that the statute allows compensation of “up to 5%.” This does not mean that the court will approve 5%. The court may approve less. The court will approve a percentage based on what it determines is warranted based on the work the personal representative performed during the estate administration process. The Clerk of the Superior Court will consider the time, effort, and skill involved in the management of the estate. G.S. § 28A-23-3
Commissions are typically paid out of estate assets at the end of the administration process. The court clerk must first approve the commission. A personal representative will be denied compensation if they are found guilty of misconduct in the performance of their duties.
Duties and Responsibilities of the Personal Representative
The job of the personal representative is to perform the tasks necessary settle the estate of a decedent.
- Manage estate assets. Throughout the administration process, the personal representative must manage the assets in the estate. This starts with identifying the assets and ensuring that they are secure. It is critical that the personal representative preserve the value of the estate by protecting its assets. The personal representative is required to creating an inventory of estate assets that includes a description and the value of each asset.
- Pay debts. Payment of estate debt is the top priority of estate administration. In fact, paying debt takes precedence over asset distribution. The first step in the debt payment process if for the personal representative to notify creditors of the claims process. This gives creditors opportunity the file claims. Only properly filed claims that are filed within the claims period will be considered for payment. G.S. § 28A-14-1. The personal representative pays valid, timely filed claims from estate assets. The personal representative must also pay expenses. Expenses include costs associated with the administration process, including court fees and fees charged by professionals hired to assist in the process, such as appraisers and accountants. The personal representative is not required to pay estate debts or expenses from their personal assets. If there are not enough assets in the estate to pay all debt, then some creditors will not get paid.
- Distribute assets. The manner of asset distribution is defined by the decedent’s will. If the decedent did not leave a valid will, then the personal representative must turn to North Carolina’s laws of intestate succession to determine who is entitled to share in the decedent’s estate.
How Compensation Is Paid in North Carolina
Note that the commission paid to the personal representative is also considered an expense of administration. Like all expenses it is paid out of estate assets and it is typically paid at the end of administration after the personal representative has submitted the final accounting to the court for approval.