How Much Are Executor of Estate Fees? What You Should Know

How much are executor of estate fees? These costs are paid to the executor of a will in exchange for performing the necessary responsibilities of the job. As an executor, you'll take care of paying debts and taxes of the estate, then distributing assets to heirs as detailed in the person's will. You have to keep careful records and fulfill other requirements depending on the state. Some people include the amount they'll pay the executor when they name that person in the will. Otherwise, the answer to this question varies by state law.

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How Do Executor of Estate Fees Work?

Executor fees may be calculated as a percentage of the estate's value, an hourly rate or a flat fee. With the percentage approach, the will usually has a tiered structure that charges a certain percentage for each $100,000 of the appraised estate. The person who writes the will decides on the calculation method and amount.

They may offer a bonus for special services beyond normal executor duties, such as litigation. If someone dies without a will, the court determines executor payment.

What Are the State Laws About Executor Fees?

Most states simply specify that the executor should get reasonable compensation. These examples show how states generally handle the question of executor payment.

California

California uses a tiered structure as described above:

4% fee for the first $100,000 of estate value
3% fee for the next $100,000 of estate value
2% for the next $800,000 of estate value
1% for the next $9 million of estate value
5% for the next $15 million of estate value

Once the estate exceeds $25 million, the court decides on executor payment.

New York

The Empire State has a slightly different tiered structure:

5% fee for the first $100,000 of estate value
4% fee for the next $200,000 of estate value
3% for the next $700,000 of estate value
5% for the next $4 million of estate value
2% for the next $5 million or more of estate value

Ohio

Here's the tiered schedule of payment for Ohio executors:

4% fee for the first $100,000 of estate value
3% fee for the next $300,000 of estate value
2% for the remainder of the estate value
1% of the value of unsold real property

What Else Should Executors Know About Executor of Estate Fees?

If you're an executor of a loved one's estate, your fees will be taxed as income by the IRS. That means you have to state the amount you got paid on your tax return for that year. As a result, some executors decline compensation, most often when they'll also inherit untaxed estate assets. Sometimes, executors waive payment to avoid a family dispute, so that one sibling won't end up getting a larger share of parents' assets, for example.