What Can an Executor Legally Charge the Estate for in Texas?

By Heather Frances J.D.

When a person dies in Texas, some or all of the estate's assets will go through a court probate process before being passed down to the decedent's beneficiaries. In most cases, the decedent names a trustworthy person in his will to administer the estate. This person, called the executor, acts as a representative of the estate, guiding it through the probate process. This can be a time-consuming and expensive process for the executor, so Texas allows compensation for performing executor duties.

Probate

The probate process begins when an executor named in a decedent's will submits the will to probate court. The court will almost always appoint an executor the decedent nominated unless someone successfully challenges that nomination. Among other duties, the executor is charged with gathering and inventorying the estate assets, paying the decedent’s final debts and distributing the remaining property to beneficiaries as instructed in the will.

Compensation Options

In Texas, a decedent may spell out the specific amount of compensation an executor should receive in the terms of his will. If the will does not specify an amount of compensation, rates set by the Texas Probate Code will apply. Under the law, executors are entitled to receive five percent commission on the amounts they collect and pay out in cash while administering the estate, as long as the court finds the executor's duties were properly carried out. However, an executor's compensation may not exceed five percent of the total fair market value of the estate.

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Compensation Issues

Because Texas' method for determining executor compensation is based completely on cash flow through the estate, it can create some unusual results. The Texas Probate Code identifies several types of assets that are specifically excluded as cash for executor compensation purposes: money the testator had on hand at the time of his death; money held for the decedent in a checking account, savings account, certificate of deposit or money market account; life insurance proceeds; and bequest payments made to beneficiaries. To fairly compensate an executor, Texas probate courts are permitted to reasonably compensate an executor if the statutory compensation method is unreasonably low or the executor manages a business on behalf of the estate.

Independent Executors

The Texas Probate Code does not specifically address whether the five percent compensation rate may be applied to executors acting independently, without probate court supervision. In such cases, executors may determine their fees without using this formula; executors may request reasonable compensation or reach an independent agreement with the beneficiaries.

Expenses

Executors often incur ordinary expenses during estate administration, such as the cost of selling or storing personal property. The executor is entitled to reimbursement from the estate for such expenses as long as they are reasonable and necessary. However, if the executor expends triple the amount normally spent for a certain service or spends money on something that isn't necessary for administering the estate, for example, the beneficiaries may challenge the reimbursement. Attorneys fees incurred by the executor for defending claims against the estate also constitute reimbursable expenses.

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References

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Executor of a Will and Funeral Expenses

People often include burial instructions in their wills or leave separate instructions with their executor regarding their wishes for funeral arrangements. This cuts down on guesswork at an emotionally difficult time, ensuring loved ones and the will’s executor don’t have to wonder what the decedent might have wanted. Despite such preparation, there may still be an issue with how to pay for the funeral.

An Executor's Duties to a Beneficiary

Executors are individuals who are appointed through a will to ensure the wishes of the testator, person who created the will, are carried out. In some states, executors are called personal representatives. Since the testator is deceased, the executor owes certain duties to those who stand to benefit from the deceased's will, known as beneficiaries. While the primary duty of the executor is to follow the instructions of the testator and administer the will as written, the executor has other legal duties, called fiduciary duties, he owes the beneficiaries.

Does an Executor of a Will Receive More?

The job of an executor is to handle the estate of the deceased. In most cases, the deceased names the executor in his will. When there is no will, or when an executor can't complete the task, a probate court will appoint one. Under state probate rules, executors are responsible for filing the petition of probate and the will with the probate court and then seeing the process through to final distribution of the deceased's assets. Acting as an executor can be a complex and time-consuming process, but fortunately state laws also allow for fair compensation to executors from the estate assets.

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