Pay executor fee
If an executor or administrator will receive payment for helping to settle the estate, they too must be paid from the estate bank account.
The executor or administrator should receive payment after all other payments and distributions have been made.
Most often, the amount paid is identified in the deceased’s will and calculated as a percentage of the estate, as a flat fees, or as an hourly rate.
If the will does not specify how the executor or administrator is to be paid, state law will determine executor of estate fee rates.
If an executor is also inheriting portions of the estate as a beneficiary, then it may not make sense to collect an executor’s fee because it will be taxed as income, whereas inheritance may not be taxed.
In these cases, payment is typically provided in the form of distribution of other assets.
Personal Considerations
Does the will specify the executor must waive commissions?
The executor cannot be compensated for their work as executor.
Normally, wills include a statement that executors must waive commissions when the executor is also an heir of the estate and will be compensated in another manner.
The executor can be compensated for their work as executor.
The will might outline how the executor is supposed to be compensated.
In such a case, the executor will be compensated according to the will.
The executor cannot be compensated for their work as executor.
Normally, wills include a statement that executors must waive commissions when the executor is also an heir of the estate and will be compensated in another manner.
The executor can be compensated for their work as executor.
The will might outline how the executor is supposed to be compensated.
In such a case, the executor will be compensated according to the will.
Does the will specify how the executor is to be compensated?
The executor will be entitled to compensation as identified in the will.
For example, the deceased’s will might say that the executor should be paid an hourly rate or a percentage of the estate.
The will might also specify whether the executor is to be paid from life insurance proceeds, a specific bank account, or if an asset (such as a vehicle) is to be sold in order to pay the executor.
Review the will to determine how the executor is to be paid and how much they are to be paid.
The executor is still entitled to compensation, if they choose to receive compensation for their work, in accordance with the laws of the state where the deceased lived.
State laws vary greatly regarding executor commissions, with some states limiting commissions to “a reasonable amount” of the estate, while others stipulate that commissions cannot exceed a specific percentage of the estate.
Review the law on executor commissions for the state where the deceased lived.
The executor will be entitled to compensation as identified in the will.
For example, the deceased’s will might say that the executor should be paid an hourly rate or a percentage of the estate.
The will might also specify whether the executor is to be paid from life insurance proceeds, a specific bank account, or if an asset (such as a vehicle) is to be sold in order to pay the executor.
Review the will to determine how the executor is to be paid and how much they are to be paid.
The executor is still entitled to compensation, if they choose to receive compensation for their work, in accordance with the laws of the state where the deceased lived.
State laws vary greatly regarding executor commissions, with some states limiting commissions to “a reasonable amount” of the estate, while others stipulate that commissions cannot exceed a specific percentage of the estate.
Review the law on executor commissions for the state where the deceased lived.
Is the executor also an heir?
The executor may decide not to be compensated for their role as executor, because this type of compensation must be reported as taxable income.
Generally, when an executor is also an heir, they are entitled to assets of the estate in the form of an inheritance.
It may be beneficial to accept compensation in the form of inherited assets, instead of executor compensation, because inherited assets may not have to be reported on the executor’s tax return as income.
The executor will likely want to be compensated for their work settling the estate.
Unless they decide not to accept compensation, which is an available option, they should be paid either in accordance with the instructions in the deceased’s will or according to state law.
The executor may decide not to be compensated for their role as executor, because this type of compensation must be reported as taxable income.
Generally, when an executor is also an heir, they are entitled to assets of the estate in the form of an inheritance.
It may be beneficial to accept compensation in the form of inherited assets, instead of executor compensation, because inherited assets may not have to be reported on the executor’s tax return as income.
The executor will likely want to be compensated for their work settling the estate.
Unless they decide not to accept compensation, which is an available option, they should be paid either in accordance with the instructions in the deceased’s will or according to state law.
