When a loved one asked you to act as executor of his or her will, you may have accepted the role without fully understanding the extent of the responsibility that you would hold. Now that your loved one has passed away, you have gained more information on the tasks ahead of you. Understandably, you may feel a bit overwhelmed.
Because seeing an estate through probate and handling the necessary steps associated with settling final affairs is immensely trying, the executor often receives some sort of compensation for his or her services. That compensation, which is also known as an executor’s fee, differs depending on the circumstances and state laws.
Information in the will
If your loved one left a will appointing you as executor, he or she may have indicated the amount of compensation you should receive for your services. It could relay a specific monetary amount, a percentage of the remaining estate or even a specific bequest, such as a piece of property. Your family member may not have addressed the fee in his or her will at all or stated that your compensation should fall in accordance with state law.
Following state law
Each state follows varying parameters when it comes to assessing the executor’s fee. Some states allow the probate court to decide on a “reasonable” amount that the executor should obtain. Other states allow the fee to stem from a percentage of the gross value of the estate. For instance, in California, the executor can obtain 4 percent of the first $100,000.
An extraordinary fee
Though the fee for the executor typically falls into the category of a reasonable amount, some circumstances may warrant an “extraordinary” fee. For example, if you have to handle litigation on behalf of the estate, those actions may give cause for extra compensation. Similarly, if you have to handle tasks like selling your loved one’s real estate or personal property, an extraordinary fee may apply.
Understanding compensation and probate
An executor’s fee is only one part of probate, and you do not even have to accept compensation for your duties if you wish to decline the fee. Still, understanding the potential for compensation and how it could apply to your case is important. You may wish to discuss this aspect and other parts of the probate process with your legal counsel to fully understand what to expect.