Quick answer: An executor is generally entitled to reasonable compensation, but how much depends on the will, the state's rule and, if anyone objects, the court. Some states use a fee schedule, others leave it to the court's judgment of what is reasonable. The executor does not have to take a fee, and any fee received is taxable income, which is worth weighing if the executor is also an heir.
On this page:
- Who decides what an executor is paid
- How "reasonable" gets judged
- Several executors, and extra work
- Taking a fee or waiving it
- Taxes on executor pay
- If someone disputes the fee
- Your state's rule
Who decides what an executor is paid
Three things set the number, in this order of practical importance: the will, the state's rule, and the court.
- The will. Wills often say what the executor should be paid, and states differ on how much that binds. In Arizona and Hawaii, which follow the Uniform Probate Code, a representative who has no contract with the deceased can renounce the will's provision before qualifying and claim reasonable compensation instead. California goes the other way: a fee set in the will is the full and only compensation unless the representative petitions the court to be relieved from it.
- The state's rule. Some states set a fee schedule and others use a reasonable compensation standard. Our guide on how much probate costs explains both and works through a schedule with numbers, so this guide does not repeat it.
- The court. If anyone objects, or if the state requires approval, the court decides whether the amount is reasonable. The rest of this guide shows how.
How "reasonable" gets judged
A reasonableness standard sounds vague, but courts do look at specific things. The District of Columbia's statute is unusually explicit. It tells the court to consider factors such as the relationship between the pay and the work performed, any estimate of the compensation given in advance, the hours spent and the usual hourly rate for that kind of work, the complexity of the matters and the results achieved, and whether time limits were met. Arizona's statute, by comparison, says only that the pay must be reasonable and lists no factors.
What that means in practice: a representative who wants to be paid should be able to show what was done and how long it took. Arizona's court help advises that detailed records of the services rendered help if a fee is disputed. Our guide on what an executor does lists the work that typically counts.
Several executors, and extra work
When a will names more than one executor, states split the pay in different ways. California apportions a single compensation among the representatives according to the services each actually rendered, or as they agree. Florida's statute takes another approach: each of two representatives is entitled to a full commission once the estate is above a set value, and with more than two the compensation of two is divided among them. So the same three-sibling arrangement can cost the estate very different amounts depending on the state.
Work outside the ordinary can also be paid separately. Florida's statute lets the court adjust ordinary compensation and award compensation for extraordinary services when the circumstances of the case warrant it.
Taking a fee or waiving it
Taking a fee is optional. Arizona's statute says a representative may renounce the right to all or any part of the compensation, and a written renunciation can be filed with the court. The state's court help describes the same option: a representative who insists on not being paid can put that in a note and file it.
The choice matters for two reasons. First, the fee comes out of the estate, so every dollar paid to the executor is a dollar less for the beneficiaries. Second, the tax treatment is different for the two types of money, as the next section shows. If you are both the executor and an heir, it is worth comparing the two with a tax professional before deciding.
Taxes on executor pay
IRS Publication 559 is direct on this. All personal representatives must include fees paid to them from the estate in their gross income. For someone who is not in the business of being an executor, such as the executor of a friend's or relative's estate, the fees are reported as other income. For someone who is in that business, they are self-employment income.
The same publication states that property received as a gift, bequest or inheritance is not included in your income. That is the gap that makes an executor who is also an heir think twice about taking a fee, because a fee is taxed as income and the same money received as inheritance is not.
If someone disputes the fee
Heirs and beneficiaries are not stuck with whatever the executor decides. Arizona's statute lets the court review the reasonableness of the compensation the representative determines for their own services, and it says that a person who received excessive compensation from the estate may be ordered to refund it. DC's statute provides the same remedy, with a hearing and notice to the interested persons. Where a dispute is likely, keeping records from the first day is the best protection.
Your state's rule
Everything above is the general picture. The Executor Fee Calculator shows how your state sets the fee, whether a schedule applies and what the court considers, and the Probate Cost Calculator puts it next to the other costs. If you are trying to keep the total down, see how to reduce probate fees, and for how long the job runs, how long probate takes.
You can reach every tool from the probate calculators page, and our methodology explains how each rule is checked against the statute.