What Are Executor Fees? Fees By US State

Updated

Attorney, distinguished law professor

Many people find themselves in the position of being named the executor of a deceased loved one’s estate but may not realize the significant responsibility that this role entails. It includes more than just making funeral arrangements and filing the decedent’s will in court.

Jump ahead to these sections:

Serving as the executor of an estate is an enormous responsibility that requires time and energy. So much so that if the will of the decedent does not provide for an executor fee, state law provides for an executor to be reasonably compensated from the estate for their service.  

What Are Executor of Estate Fees?

Executor of estate fees are awarded to compensate an executor for performing said duties expected of the position. An executor of an estate is responsible for:

  • Initiating probate proceedings by filing the decedent’s will in probate court
  • Identifying all of the decedent’s assets included in the probate estate
  • Notifying heirs, named beneficiaries, creditors, and any other interested parties
  • Administering the estate, including paying taxes, satisfying debts, managing property, and perhaps running an ongoing business
  • Distributing property to beneficiaries and transferring title
  • Properly closing the estate in probate court

Because the probate of a decedent’s will involves all of these tasks, and each task can take a considerable amount of time, an executor may be required to devote months, or even years to complete the administration of the estate. For many, it can be the equivalent of taking on a second full-time job. 

Some of the duties of an executor may require special knowledge or skills in areas like accounting, real estate, investing, taxes, and even family relationships. In fact, the decedent may have chosen you to serve as the executor simply because you have some expertise in one or more of these areas. Just as an accountant, investment banker, or attorney would expect to be paid for their time and service, an executor is entitled to the same. 

However, many executors who are also family members or loved ones of the deceased are reluctant to take money from the estate for their service and can dedicate months or years of their time and effort without being compensated.

Although there may be some tax advantage to this (discussed below), it is usually out of a sense of moral obligation that an executor may not accept fees to which they are otherwise entitled.

ยป MORE: Honor your loved one's memory by taking the right next steps. Here is your free post-loss checklist.

 

When Are Executor Fees Typically Paid?

The terms of an executor’s fees can be dictated by what the testator provides in their will. The will may also list when an executor can be paid along with the amount. Provided the terms are reasonable, executor fees can be paid whenever the will provides for them to be paid. 

If there is no will or the will does not provide for payment terms, some state laws say that the executor can be paid at any time during the administration of the probate estate, which usually begins when the will is filed.

Other states require a hearing and a court order for a judge to approve the executor’s fees before they are paid. However, if all the beneficiaries agree that the executor’s fees are reasonable, a hearing can be waived. 

Some states may provide for the executor to be paid when the administration of the estate is completed. But because there are expenses incurred during the administration of the estate, an executor can usually receive compensation for any out-of-pocket expenses as they are incurred.   

Are Executor Fees Typically Taxable?

Yes, typically executor fees are taxable. This is why it may be advantageous for an executor who is also a significant beneficiary under the will to forgo their executor fees. The executor fees come out of the estate and are taxable.

Gifts inherited from the estate through the will are not taxable so it may benefit the executor to decline their fees, thereby leaving more money in the estate, which they will inherit anyway without being taxed.   

How Do You Keep Track of Executor Fees?

An executor has a fiduciary duty to act in the best interest of the estate. This duty includes keeping an accounting of all income and expenses that are received or paid out of the estate. This includes any executor fees the estate might pay.

Depending on how the executor’s fees are calculated, keeping track of fees could be fairly simple (the executor receives a flat fee designated in the will) or somewhat complicated (the executor receives a varying percentage of increasing proportions of the total value of the estate, as designated by state law). 

Whatever the formula is for calculating executor fees, it is the executor’s responsibility to keep track of what is paid. If the beneficiaries object to the executor’s fees as unreasonable, they can petition the court to reduce them.  

What’s a Typical Executor Fee?

As long as they are reasonable, if executor fees are designated within individual wills, they can vary quite significantly. Even when there is no will and state laws dictate what an executor’s fees will be, they can still vary among the respective states. However, among the state laws, executor fees are generally calculated in one of three ways:

A varying percentage of the gross estate

In states that provide for this form of executor fee, the executor may receive a decreasing percentage of incremental values of the gross estate. For example, an executor might receive:

  • 5 percent of the first $1 million
  • 3.5 percent of the next $2 million
  • 2 percent of the next $5 million
  • 1.5 percent of gross value over $10 million

A percentage of administrative transactions

In states that provide for this calculation, an executor might receive a percentage of the value of any transactions the executor conducts as part of the administration of the estate.

For example, if the executor sells a piece of real estate to raise money to pay estate debts, they might receive a fee for that transaction based on a percentage of the value of the sale.

Reasonable fees based on the court’s discretion

Some states provide for an executor to receive “reasonable fees,” which may be approved (if designated in the will) or determined (if no will) by the court.

In many states, regardless of the formula for calculating fees, an executor might also receive additional fees for rendering “extraordinary” services while administering the estate. This might include tasks that require very specialized skills or significant time and attention, such as:

  • Defending the estate in litigation
  • Handling the sale of real estate
  • Responding to tax inquiries or participating in tax or bankruptcy proceedings
  • Managing the decedent’s business operations 

Executor Fees by US State

Here is a table of each state’s provision for executor fees.

STATE

EXECUTOR FEE FORMULA

Alabama

Reasonable compensation

Alaska

Reasonable compensation

Arizona

Reasonable compensation

Arkansas

Reasonable compensation but cannot exceed:

10% of the first $1,000
5% of the next $4,000
3% of the rest

California

4% on the first $100,000
3% on the next $100,000
2% on the next $800,000
1% on the next $9,000,000
0.5% on the next $15,000,000
For all amounts above $25,000,000, remaining executor fees in California are to be a reasonable amount as determined by the court

Colorado

Reasonable compensation

Connecticut

Reasonable compensation

Delaware

Reasonable compensation

Florida

Reasonable compensation

Georgia

2.50%

Hawaii

Reasonable compensation

Idaho

Reasonable compensation

Illinois

Reasonable compensation

Indiana

Reasonable compensation

Iowa

Reasonable compensation but cannot exceed:

6% for the first $1,000
4% for the next $1,000-$5,000
2% for remaining amounts greater than $5,000

Kansas

Reasonable compensation

Kentucky

Reasonable compensation but should not exceed 5%

Louisiana 

2.50%

Maine

Reasonable compensation

Maryland

Reasonable compensation but cannot exceed:

9% if less than $20,000
$1,800 plus 3.6% of the excess over $20,000

Massachusetts

Reasonable compensation

Michigan

Reasonable compensation

Minnesota

Reasonable compensation

Mississippi

Reasonable compensation




Missouri

First $5,000 is 5%
Next $20,000 is 4%
Next $75, 000 is 3%
Next $300, 000 is 3.75%
Next $600,000 is 2.5%
Greater than $1,000,000 is 2%


Montana

First $40,000 is 3%
Greater than $40,000 is 2%

Nebraska

Reasonable compensation


Nevada

First $15,000 is 4%
Next $85,000 is 3%
Greater than $100,000 is2%

New Hampshire

Reasonable compensation


New Jersey

First $200,000 is 5%
$200,001-$1,000,000 is 3.5%
Greater than $1,000,000 is 2%

New Mexico

Reasonable compensation



New York

First $100,000 is 5%
Next $200,000 is 4%
Next $700,000 is 3%
Next $4,000,000 is 2.5%
Remaining amounts greater than $5,000,000 is 2%

North Carolina

Reasonable compensation but should not exceed 5%

North Dakota

Reasonable compensation


Ohio

First $100,000 is 4%
$100,001-$400,000 is 3%
Greater than $400,000 is 2%



Oklahoma

First $1,000 is 5%
Next $5,000 is 4%
Remaining amounts greater than $6,000 is 2.5%



Oregon

First $1,000 is 7%
$1,001-$10,000 is 4%
$10,001-$50,000 is 3%
Greater than $50,000 is 2%

Pennsylvania

Reasonable compensation

Rhode Island

Reasonable compensation

South Carolina

Reasonable compensation

South Dakota

Reasonable compensation

Tennessee

Reasonable compensation

Texas

5.0%

Utah

Reasonable compensation

Vermont

Reasonable compensation

Virginia

Reasonable compensation

Washington

Reasonable compensation



West Virginia

First $100,000 is 5%
$100,001-$400,000 is 4%
$400,001-$800,000 is 3%
Remaining amounts greater than $800,000 is 2%

Wisconsin

2.0%

Wyoming

First $1,000 = 10%
$1,001-$5,000 = 5%
$5,001-$20,000 = 3%
Remaining amounts greater than $20,000 = 2%

Executor Fees Can Vary

Executor fees are determined by either the drafter of a will, state law, or the courts. Just as executor fees vary between individual testators, they also vary among all the states and different courts. But all executor fees have one thing in common--they are all reasonable, if they are to be valid. The basis for deciding what is reasonable, generally, is the size of the estate. 

The size of the estate also dictates how much work is involved for the executor. If you are deciding whether to serve as an executor, having a formula to calculate potential fees can help you decide whether to take on that responsibility.

Icons sourced from FlatIcon.