Being named the executor of someone’s estate is both an honor and a heavy responsibility. Many people accept this role without realizing how much time, effort, and expertise it requires — often comparable to a second full-time job.
To reflect this responsibility, state laws typically provide for executor compensation, even when a will is silent on the matter. Here’s what you need to know.
What Are Executor Fees?
Executor fees are payments made to the person managing a deceased individual’s estate. As executor, your duties may include:
- Filing the will and initiating probate
- Identifying and securing estate assets
- Notifying heirs, creditors, and beneficiaries
- Managing bills, taxes, investments, or businesses
- Distributing assets
- Closing the estate
Because the job can last months or even years and may require skills in accounting, law, finance, or real estate, executor compensation is not just fair — it’s often necessary.
When Are Executor Fees Paid?
Executor fees can be paid:
- As dictated by the will: If the deceased specified fee terms, those instructions usually stand — assuming they’re reasonable.
- During estate administration: State laws may permit payment during the process, often after court approval.
- After estate settlement: Some states require executor fees to be paid after debts are cleared and assets distributed.
- For expenses: Regardless of timing, executors are typically reimbursed for out-of-pocket expenses as they occur.
Are Executor Fees Taxable?
Executors have a fiduciary duty to keep detailed records of:
- Time spent on estate tasks
- Out-of-pocket expenses
- Income and disbursements related to the estate
Whether you’re paid a flat fee or a percentage, maintaining clear documentation is essential — especially if beneficiaries challenge the fees in probate court.
How Much Are Executor Fees?
Executor compensation varies widely depending on:
- The estate’s size
- State laws
- What’s written in the will
- The complexity of the estate
Most states follow one of three methods:
1. Tiered Percentage of the Estate Value
Some states apply sliding-scale percentages. For example:
- 5% of the first $1 million
- 3% of the next $2 million
- 2% of the next $5 million
- 1% of amounts above $10 million
2. Transaction-Based Fees
In some states, compensation is tied to the value of estate transactions like selling property or managing investments.
3. “Reasonable Compensation” Standard
Many states allow “reasonable” fees, determined by:
- The amount of work involved
- The executor’s expenses
- Court approval or beneficiary agreement
Additional fees may be allowed for “extraordinary” services, such as litigation, real estate sales, or business management.
Executor Fee Guidelines by State
Here’s a snapshot of executor fee structures in select states:
Should You Accept Executor Compensation?
If you’re also a primary beneficiary, consider your options:
- Accept fees: They’re taxable but compensate you for your time.
- Waive fees: You avoid taxes and may preserve more of the estate to inherit tax-free.
- Take partial compensation: Strike a balance between covering your effort and optimizing your tax situation.
Final Thoughts
Executor fees vary across states and situations but are always meant to be fair, not excessive. Whether you’re accepting the role or writing your will, understanding executor compensation ensures transparency and prevents future disputes.
If you’re unsure what’s reasonable or how to document your efforts, a probate attorney can help you navigate your responsibilities while staying compliant.
