How does the executor of a will get paid?
Understanding executor payment is important both for executors and for beneficiaries that may have questions about how the estate’s funds are being managed.
The personal representative of an estate—an executor, if there’s a will, or an administrator, if there’s no will—has a right to be paid for the services they provide to the estate. However, specifics like what state of residence and whether a valid will addresses compensation determine whether they are paid and if so, how much. (An executor can choose to waive compensation, but we’ll talk more about that below.)
Why does an executor get paid?
The executor of an estate has a lot of duties during probate—a process that can take months or even years to complete. And those duties must be completed with care and diligence.
An executor’s primary duties include:
- Opening probate with the court by filing a Petition for Probate
- Locating the deceased’s assets, which could involve a bit of searching
- Providing notice to heirs and interested parties, including creditors
- Managing the administration of the estate, like making mortgage payments, closing credit cards, and notifying the Social Security Administration
- Identifying and paying all the deceased’s debts from the estate’s funds
- Distributing the assets to the beneficiaries
- Close the estate by notifying the court
Executors and administrators invariably deal with a variety of unnamed tasks as well. For many, managing an estate can feel like having a second job. A fee helps compensate personal representatives for the significant time and energy they spend.
Who pays an executor?
The executor receives payment from the estate’s funds.
How much does an executor get paid?
An executor’s payment can vary depending on the terms of the will, the state in which the estate is being administered, and the wishes of the executor and the beneficiaries.
Executor payment if a valid will specifies compensation
Some states allow the testator (the drafter of a will) to say how—or how much—they want the executor to get paid. Some wills request that the executor not receive any compensation for their work or that the executor receive a flat fee. Some testators leave a bequest rather than a fee because a bequest is non-taxable whereas a fee is taxable as income.
Probate courts usually uphold the provisions of a will addressing executor payment. If payment is not mentioned, the court will proceed according to state law.
Executor payment if there is no specified compensation
If an estate has no valid will or if the will does not mention executor compensation, the probate court will follow state law.
States handle executor payment in a variety of different ways. For instance, some states set payment at a percentage of the estate. In those states, the compensation percentage usually diminishes as the value of estate increases—5% compensation for the first $100,000, 4% for the next $200,000, etc.
Some states set payment at a percentage of transactions handled by the estate (income earned, payments made—not distributions). And others set a flat fee or an hourly rate.
States that use the Uniform Probate Code don’t set a specific amount or delineate a method of determining the amount. In these states, the probate judge determines a “reasonable” amount of compensation based on the size and complexity of the estate—i.e., how much work the executor had to do.
Executor payment if the executor performed above and beyond
Sometimes a court will authorize an executor to receive an “extraordinary” fee if the work required to administer the estate was particularly complex—involving, for instance, the sale of property, litigation on behalf of the estate, tax disputes, or running the decedent’s business for a period of time.
Executor payment if there is more than one executor
If a will specifies more than one executor but does not specify payment, state law determines how much they get paid. Some states specify that they will split the executor payment between them, and some allow each executor to receive the full compensation.
Executor payment if the executor is an institution
A will may designate an institution (generally a bank or trust company) as the executor. Or a probate court may assign them to be the executor if there is no valid will. Either way, an institution that commonly acts as the representative for an estate likely has a fee schedule that determines their payment amount if the will is silent on compensation.
Executor payment if the executor is also the attorney for the estate
Some wills designate that the attorney who represented the deceased or represents the estate also acts as the executor of the estate. In those instances, state law determines compensation unless there is a previous agreement between the decedent and attorney. In general, attorneys are usually able to charge their regular rate for executor services.
When does an executor get paid?
In some states, an executor receives their compensation only after the estate’s bills are paid but before the remaining assets of the estate are distributed to the heirs. The executor must show the court that all bills have been paid and that the time has passed for any new bills to come in. In these states, the executor’s compensation is treated like a debt that the estate owes, but lower in priority than existing debts.
In other states, an executor can be paid throughout the probate process, though beneficiaries can request that fees be held until the end of the process to ensure that there are sufficient funds to pay all debts and taxes.
Can an executor get reimbursed for expenses?
An executor can get reimbursed for out-of-pocket expenses, even if the executor has waived a fee or if the will specifies that no compensation should be provided.
What types of things get reimbursed?
- Funeral expenses or debts that had to be paid before the estate was opened
- Travel expenses, mileage, postage, office supplies (Keeping good records is important.)
- Mortgage payments, utilities, and other expenses the executor had to pay when estate funds weren’t available
Expenses can generally be reimbursed during the course of estate administration.
Can an executor reject compensation?
Executors can reject compensation, and sometimes family members that have been made executors or administrators feel compelled to do so. But, before you reject payment or ask a family member to do so, remember that serving as the personal representative for an estate is a big job and will take a significant amount of time and energy.
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