Executor fees are fees charged by the executor of an estate for processing the estate during probate. Family members and close friends acting as executors may choose to waive these fees, working for free as unpaid executors. The amount executors can legally charge for handling an estate is governed by statute and the statutes vary between jurisdictions. An attorney can provide information about a specific jurisdiction to people with questions about executor fees.
Generally, executor fees are based on the value of the probated estate. They can vary between 2 and 4 percent and in some cases, a sliding scale of fees may be charged. For example, a jurisdiction might allow a 4 percent executor fee for the first $100,000 United States Dollars (USD) of an estate and scale back to 3 percent for any amount over that. Executors who violate the statute by charging an unreasonable fee can be subject to legal penalties.
The executor must handle the fees as taxable income, something people should consider when agreeing to act as executors. Depending on the size of the estate the amount earned can vary, but executor fees could potentially push someone into a different tax bracket, resulting in a significant tax bill. People asked to serve as executors should consult an accountant to discuss the financial and tax implications of the decision.
Executors must account for their handling of the estate through the probate process. Any expenses incurred must be documented and justifiable, and when the executor takes the fees earned for handling the estate, this must also be documented. Executors handle assets on behalf of other people and thus have a duty of care during the probate process. In some cases, the executor may be one of the inheritors, as seen when the oldest adult child in the family is tasked with handling a parent's estate. In these situations, it is conventional to scrupulously account for the estate in probate so there can be no accusations of questionable behavior.
It is important to be aware of other probate costs beyond executor fees. Executors can retain the professional services of people like appraisers, lawyers, cleaners, and so forth and may bill these services to the estate. In addition, people may need to meet with lawyers separately to discuss the will and estate, and this will add to the costs associated with probate. Any disputes with the terms of a will can also generate more expenses.
