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Executor compensation is governed by state law, and the rules vary widely depending on where the estate is located. Some states set fees as a percentage of the estate's value, others rely on what a court considers reasonable compensation, and a few blend both approaches. Understanding what your state allows and whether accepting the fee makes financial sense given your tax situation is a key part of the settlement process.
Key Takeaways
- Executor fees vary by state: some use fixed percentages (California starts at 4%, Florida at 3%), others rely on "reasonable compensation" based on estate size and complexity.
- Fees are taxed as ordinary income, but you can waive them if you're a beneficiary to avoid the tax while preserving your inheritance.
- Most executors don't get paid until the estate closes; the fee is calculated, documented in the final accounting, and approved by the probate court before distribution.
- Elayne organizes estate settlement steps and tracks deadlines to support executors.
Executor Compensation Laws
Executor compensation law varies by state, and knowing what governs your fee is key.
There are two broad frameworks states use to determine what an executor of the estate can be paid:
- Percentage-based statutes set executor fees as a fixed percentage of the estate's value, often on a tiered or declining scale as the estate grows larger. California, Florida, and New York all follow this model, each with its own rate schedule.
- Reasonable compensation states give courts and executors more discretion, relying on factors like the complexity of the estate, time spent, and the executor's skill level. Texas, Illinois, and Wisconsin fall into this category.
Some states blend both approaches. Arkansas and Missouri, for example, set a statutory percentage schedule as a starting point while allowing courts to adjust the fee upward or downward based on the complexity of the estate or the executor's actual time spent.
Also, some states base fees only on the probate estate, excluding assets that pass outside of probate entirely, such as jointly held property, retirement accounts, and life insurance proceeds with named beneficiaries.
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Executor Fee Structures by State
States fall into three broad categories for how they set executor compensation: percentage-based schedules, reasonable compensation standards, and hybrid approaches that combine elements of both.
Percentage-Based States
| State | Fee Structure |
|---|---|
| California | 4% on the first $100,000; 3% on the next $100,000; 2% on the next $800,000; 1% on the next $9 million; 0.5% on the next $15 million |
| Florida | 3% on the first $1 million; 2.5% on the next $4 million; 2% on amounts above $5 million |
| New York | 5% on the first $100,000; 4% on the next $200,000; 3% on the next $700,000; 2.5% on the next $4 million; 2% above $5 million |
| New Jersey | 3.5% on the first $200,000; 2% on amounts above $200,000 |
| Pennsylvania | No fixed schedule; courts look to what is reasonable, though 3% to 5% is common in practice |
| Virginia | Generally up to 5% of the estate's value under fiduciary compensation guidelines |
Reasonable Compensation States
Many states, including Texas, Illinois, Wisconsin, Maryland, and Ohio, do not publish a fixed fee schedule. Instead, the standard is compensation a court would consider reasonable given the size and complexity of the estate. In practice, fees in these states often fall in the range of 2% to 4% of the gross estate, but that figure can shift depending on what the executor actually does. A state-by-state executor fee reference can help clarify the specific rules in your jurisdiction.
What "Reasonable" Actually Means
Courts weighing reasonableness typically look at several factors:
- The size of the estate and the total assets under administration
- How long the process took and the hours the executor put in completing tasks
- Whether the executor handled unusual or contested matters, such as selling real property or resolving creditor disputes
- The executor's skill level and whether professional expertise was needed
- Customary fees charged for similar services in that state or county
How to Calculate Executor Fees
The calculation method depends on which state the estate is in.
Some states set executor fees as a percentage of the estate's total value, some use a tiered or sliding-scale structure, some reference what is "reasonable" without defining a fixed number, and a few allow the will itself to specify compensation.
Before running any calculation, confirm which assets count toward the base. Most percentage-based states apply the fee to the gross probate estate, meaning only the assets that pass through the probate process. Assets that transfer outside probate are typically excluded from the fee base, including retirement accounts with named beneficiaries, jointly held property, and life insurance proceeds paid directly to a beneficiary.
Percentage-Based States
In percentage-based states, the fee is applied directly to the gross estate value. A common starting point is around 2% to 4%, though the exact rate and what counts as the "estate value" varies by state.
- In California, the statutory rate follows a tiered schedule that starts higher on smaller estates and steps down as the estate value grows. The full rate breakdown is shown in the table above.
- In Pennsylvania, there is no fixed statutory rate; courts and practitioners typically reference a customary range of around 3% to 5% of the gross estate.
- In Florida, fees are calculated as a percentage of the inventory value of the probate estate.
Tiered and Sliding-Scale States
New York uses a tiered structure where the percentage decreases as estate value increases. The rate starts at 5% on the first $100,000 and drops incrementally on larger amounts. Georgia follows a similar descending-rate approach.
Example
For a $500,000 New York estate, the fee is calculated by working through each tier:
- 5% on the first $100,000: $5,000
- 4% on the next $200,000: $8,000
- 3% on the remaining $200,000: $6,000
Total executor fee: $19,000
The same $500,000 estate in California produces a lower number because the tiers are structured differently:
- 4% on the first $100,000: $4,000
- 3% on the next $100,000: $3,000
- 2% on the next $300,000: $6,000
Total executor fee: $13,000
Both figures assume the full $500,000 passes through probate. If part of the estate transfers outside of probate, the fee base would be smaller and the total compensation would adjust accordingly.
Reasonable Compensation States
States like Wisconsin, Illinois, Ohio, and Virginia do not set a fixed statutory rate. Fees are judged against a reasonableness standard, which courts assess based on factors like the complexity of the estate, time spent, and the executor's skill.
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Are Executor Fees Taxable?
Executor fees are treated as ordinary income by the IRS, which means they are subject to federal income tax in the year they are received. The IRS provides guidance on executor fee taxation to help determine reporting requirements. Most states follow the same rule and tax executor compensation at the applicable state income tax rate.
Some additional tax considerations to note:
Self-Employment Tax
If serving as executor is part of a professional practice, such as an attorney or accountant who regularly acts in a fiduciary capacity, the IRS may classify the fees as self-employment income. In that case, the executor would owe self-employment tax on top of ordinary income tax. For a family member serving as executor on a one-time basis, the fees are typically reported as ordinary income on Schedule 1 of Form 1040, not as self-employment income. This differs from how you pay taxes on inheritance as a beneficiary.
Waiving the Fee
An executor who waives compensation receives no taxable income from the role. This is a legitimate option and one reason many family members choose to decline the fee, especially when they are also a beneficiary. Inherited assets, by contrast, are generally not subject to income tax, which can make waiving the fee a preferrable choice in some situations.
Estate Deductibility
When an estate pays executor fees, those fees are generally deductible as an administrative expense on the estate's federal tax return, Form 706, or on the estate's income tax return, Form 1041. The estate and the executor cannot both claim the same deduction, so it's best to confirm the approach with a tax professional.
When and How Executor Fees Are Paid
Executor fees are typically paid out of the estate's assets before final distributions go to beneficiaries. The estate's checking account or liquid assets cover the compensation, and whether the executor gets paid is generally documented in the final accounting submitted to the probate court.
Timing varies by state and estate complexity. In most cases, executors do not take payment until the estate is ready to close, though some states allow interim compensation for estates that remain open for an extended period.
How the Payment Process Works
A few steps are common across most states:
- The executor calculates the fee based on the applicable state formula or a reasonable rate, then records it as an expense in the estate accounting.
- The probate court reviews and approves the fee as part of the final accounting, particularly in supervised probates.
- Once approved, the executor pays themselves from estate funds before distributing the remainder to beneficiaries.
Estate Settlement Support With Elayne
Settling an estate involves dozens of steps spread across weeks or months. Elayne organizes the entire settlement process into a step-by-step sequence. Our platform is designed to:
- Track which steps have been completed and what still needs attention
- Highlight deadlines and time-sensitive requirements
- Organize paperwork and documents
- Keep a clear record of decisions made throughout the process
- Help executors manage creditor notifications, asset transfers, and final distributions
FAQs
What percentage is used for executor pay?
It depends on the state. California, Florida, and New York use fixed percentage schedules ranging from 0.5% to 5% depending on estate size, while Texas, Illinois, Wisconsin, and Maryland follow a "reasonable compensation" standard that typically falls between 2% and 4% of the gross estate value based on the work involved and complexity.
How much can an executor pay themselves in Pennsylvania?
Pennsylvania has no statutory percentage, so executor fees are based on what a court considers reasonable. In practice, Pennsylvania executors typically receive between 3% and 5% of the gross estate value.
Are executor fees paid before beneficiaries receive their inheritance?
Yes. Executor fees are classified as administrative expenses of the estate and are typically paid from estate assets before final distributions go to beneficiaries. Most executors wait until the estate is ready to close before taking payment, though some states allow interim compensation for estates that remain open for extended periods.
How to calculate executor fees in New York?
New York uses a tiered percentage structure: 5% on the first $100,000; 4% on the next $200,000; 3% on the next $700,000; 2.5% on the next $4 million; and 2% on amounts above $5 million.
*Disclaimer: This article is for informational purposes only and does not provide legal, medical, financial, or tax advice. Please consult with a licensed professional to address your specific situation.
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