Quick answer
Executors are entitled to compensation for their work — typically a percentage of the estate's value (often around 2-5%), an hourly rate, or a court-approved 'reasonable' fee, depending on the state and the will. Many family-member executors waive the fee since, unlike an inheritance, it counts as taxable income.
Serving as executor is real work — often months of paperwork, phone calls, and decisions — and the law generally recognizes that with a right to compensation. But most family members who take on the role never actually collect a fee, and the ones who do are often surprised by how it's calculated and taxed. Here's how it actually works.
This is general information, not legal or tax advice. Executor compensation rules vary significantly by state — check your state's probate code or ask a probate attorney about your specific situation.
Start With the Will
If the will names an amount, sets an hourly rate, or explicitly waives compensation, that generally controls. Some wills state a flat fee; others are silent, in which case state law fills the gap. An executor can typically decline whatever the will provides and instead claim the compensation allowed by state law, but can't simply demand more than the will specifies without the court's involvement.
How States Calculate the Fee
There are two broad approaches:
- Statutory percentage schedules. A handful of states, including California and New York, set compensation by statute using a sliding-scale percentage of the estate's value — a larger percentage on the first portion of the estate, stepping down as the value grows. This produces a predictable, calculable fee.
- "Reasonable compensation." Most states instead direct the court to award whatever is "reasonable," considering the size and complexity of the estate, the time and skill the executor put in, and local custom. In practice, this often lands somewhere in the range of about 2-5% of the estate's value, similar to the statutory states, but it's decided case by case rather than by formula.
Either way, an unusually large or contested estate — one with a business to run, real estate to sell, or litigation — can justify a higher fee than a simple estate with a few bank accounts.
Why Many Family Executors Waive the Fee
A spouse, adult child, or sibling serving as executor often chooses to take nothing. A few reasons come up repeatedly:
- The fee is taxable income. An inheritance generally isn't taxed as income to the person receiving it, but an executor's fee is — it's reported and taxed like wages. A family member who's also a beneficiary may come out ahead, after taxes, by taking a larger share of the estate instead of a separate fee.
- Family dynamics. Charging a fee to your own family can feel uncomfortable, and waiving it can head off resentment from other beneficiaries, especially in a smaller estate.
- It's simpler. Skipping the fee avoids extra recordkeeping, tax reporting, and — in some states — a formal accounting to justify the amount.
None of this is required. If the estate is large or the work is extensive, accepting reasonable compensation for real effort is entirely appropriate — that's exactly what the law provides for.
What's Reimbursed Separately
Compensation is different from reimbursement. Whatever an executor spends out of pocket while handling estate business — postage, copies, court filing fees, travel to the courthouse or the decedent's property, professional appraisal costs — gets paid back from estate funds regardless of whether the executor takes a fee. Keep receipts; reimbursed expenses aren't income, so they aren't taxed the way a fee is.
How to Actually Get Paid
- Confirm you have authority. You generally need Letters of Testamentary before you can act for the estate, including paying yourself.
- Keep a time log and expense records from day one — most states expect this if compensation is ever questioned, and "reasonable" fees are hard to justify without it.
- Pay debts and taxes first. Compensation is typically taken after the estate's debts, taxes, and administration costs are covered, not before, since creditors generally rank ahead of the executor's fee.
- Get court approval if required. In formal probate, especially for "reasonable compensation" states, the court may need to approve the fee as part of the final accounting before the executor duties are considered complete.
- Report it as income. The estate typically issues the executor a tax form for the fee, and it's reported on the executor's personal return the year it's received.
How EstateWrap Helps
EstateWrap helps executors track every task, deadline, and dollar that moves through the estate — including time spent and expenses paid — so if you do claim compensation, you have the records to back it up. Start free — unlock every premium template for a one-time $44 (lifetime access, no subscription).