The fee compensates the executor for their time, effort, and diligence in Settling the Estate, including tasks such as identifying and valuing Assets, paying outstanding Debts and taxes, and distributing assets to Heirs and Beneficiaries.
Typically, the amount paid to the executor is listed in the Last Will & Testament, or calculated as a percentage of the Estate, or given as a flat fee or hourly rate. If it isn't listed, or if no will exists, then state law will identify "reasonable compensation."
The executor fee is paid from the estate's assets before they are distributed to heirs and Beneficiaries and payment is sent from the Estate Account.
The executor fee is taxable income and must be reported on the executor's personal income tax return. Additionally, the fee may be subject to Estate Tax or Inheritance Tax depending on the laws of the state where the estate is being Administered.