If the Will specifies executor compensation, that amount applies. If not, compensation varies by state and is dependent on the estate size and complexity.
Dealing with the loss of a close family member or friend can be difficult, and this grieving process can sometimes be made harder for those who are executors. Serving as an executor carries many responsibilities and a lot of hard work. This is why states allow for executor compensation.
Whether you've been asked to serve as an executor or you're drafting your own Will and want to plan ahead, it helps to understand how executor compensation works. This article explains how executors are compensated, the factors that can affect the amount, and how state laws play a role.
Serving as an executor, especially for a large or complicated estate, can be a lot of work. This can involve tasks such as:
Most of these tasks carry little cost or risk for the executor. But sometimes, these involve judgment calls that heirs might disagree with. This could lead the executor to defend their decisions if heirs believe they didn't act in the estate's best interests.
The terms of the Will decide what’s reasonable compensation for the executor of an estate. If the Will doesn’t mention anything, then the probate court’s state laws apply.
Many state laws state that executors are entitled to “reasonable compensation”. Factors that affect this standard are:
It is a good idea to consult with a lawyer when you first become an executor, so you can manage expectations and understand your responsibilities. Many times, executors do not receive compensation until the end of a probate, and a court still has to approve executor compensation.
The provisions of the Will serve as the primary source for figuring out how to calculate executor compensation. This is yet another reason why it’s important to have a Will.
The testator (the person who creates the Will) has a lot of freedom to decide the amount and method of paying the executor. The testator can choose to pay:
A lawyer can help with these executor compensation decisions; this is one of the things a LegalShield provider law firm can assist with.
If the Will doesn’t provide a precise amount or formula for deciding how much an executor gets paid, then state law will apply. Some states use a sliding percentage scale that’s based on the size of the estate.
For a hypothetical example, an executor might receive:
So, for example, if the estate is worth $500,000, the executor receives $11,600:
Other states use the “reasonable compensation” method of calculating executor compensation.
The majority of states allow probate courts to decide how much compensation an executor should receive. This is usually an amount that’s “reasonable” based on what’s fair under the circumstances. Other states, such as California and New York, use a fixed sliding scale based on the estate’s value.
States handle executor compensation differently. Keep in mind that each probate case is unique, and there could be factors that raise or lower these amounts. If you’re looking for an exact answer, a LegalShield provider law firm can help.
Here is a list of how each state typically handles executor compensation.
Reasonable compensation:
Flat or varying percentage:
Executor compensation with set limits or guidelines:
Some estates are simple, with just a few pieces of property and basic bills to pay. Others are more complicated, such as expensive property located overseas or property that’s hard to sell. Some of the key factors that change compensation are below.
The more complex an estate, the more work an executor should expect. Imagine the deceased owned a business, and the executor must take over its management. Or there were numerous creditors the executor had to notify and pay. Probate courts may approve higher executor fees to account for this extra work.
In some states, the executor fee is the same, whether there’s one or more executors. The total fee then gets split among the executors. In other states, the executor fees are multiplied by the number of executors. This ensures each executor gets the full compensation amount.
If executors change mid-probate, then executor compensation may be prorated to reflect time in position.
Someone preparing a Will can select a professional, whether a person or a company, like a trust company, to be their executor. These professionals may have fee schedules that differ from what state law allows. If you're considering naming a professional executor, a lawyer can help you understand what fee arrangements are typical. You can also contact the prospective executor and inquire about fees and services before you add them to your Will.
Title: reimbursable-expense-vs-compensation | Alt: An explanation of the difference between a reimbursable expense, an estate expense paid for out of the executor's personal funds, and compensation, paid to an executor for their services.
Reimbursable expenses are costs the executor normally pays out of pocket and later reimburses from the estate. These can include things like pre-probate expenses, like paying for certified copies of a death certificate. Executor compensation, on the other hand, is money paid to the executor for their time and effort in serving as an executor.
Once a probate has been opened, the executor can request reimbursement of pre-probate expenses. It is important that any request for reimbursement be made to the court to maintain transparency and proper recordkeeping. If you are not sure if you can reimburse yourself from estate assets, you should consult with a lawyer.
The IRS treats executor compensation as taxable income. This income must be reported on the executor’s personal tax return, and the executor will need to pay income taxes on it. Additionally, the estate can usually list the executor’s compensation as an expense when it files an estate return.
An executor typically has the right to waive compensation or take a reduced amount. Whether an executor waives compensation or not is in their sole discretion.
Whether you're serving as an executor or working on your own estate plan, there's a lot to think through. Having access to a lawyer when questions come up can make the process a lot less stressful.
Luckily, you can use your LegalShield® membership for an affordable way to get legal guidance. From executor compensation questions to drafting a Will, a provider law firm can help you navigate the process with confidence. Learn more about LegalShield Personal Plans to get started.
Yes, an executor may refuse compensation. A family member serving as an executor may wish to waive compensation, but a professional executor likely will not.
When an executor is compensated depends on the state. In some states, executors get paid only after paying all of the estate’s debts and bills. In other states, executors may be compensated throughout the probate process.
Yes, the executor who’s also a beneficiary can receive compensation. The exception is if the Will specifically states something different. In some Wills, the executor’s inheritance is intended to also be their compensation for handling the estate.
Content Specialist at LegalShield, creating educational resources about legal and consumer protection topics. She focuses on making complex legal and financial concepts accessible to readers and has contributed to various educational articles on consumer rights and protections.
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