Executor fees generally run between 1% and 5% of the estate’s probate value, and the exact amount comes from one of two places: the will itself or a default rule set by state law. The pay is taxable income to the executor, not a tax-free inheritance, which changes the real value of the fee once the IRS takes its share.
How the Fee Amount Is Set
Courts look at the will first. A testator can spell out a flat dollar amount, a percentage, or an hourly rate. If the named executor thinks the will’s figure is too low, most states let them renounce that provision before formally accepting the role and instead claim whatever the state’s default standard would provide. When the will says nothing about pay, or when there is no will, state law fills the gap.
About a dozen states set fees by statute using a sliding percentage scale tied to estate value. These scales start higher on the first tier of assets and step down as the estate grows. A common pattern awards around 4% to 5% on the first $100,000, then drops to 2% to 3% on amounts above that.
The remaining majority of states use a “reasonable compensation” standard. The probate court sets the fee based on the time spent, the difficulty of the work, the executor’s skill level, and local norms for similar estates. There is no mechanical calculation. An estate with a single bank account and one beneficiary warrants less than one involving rental properties, a small business, and contested creditor claims. Detailed records of your time and tasks are what make or break a reasonable-compensation request.
Which Assets the Percentage Applies To
In percentage states, the fee is calculated on assets that pass through probate. Assets that transfer directly to a named beneficiary outside probate are generally excluded, and that distinction can dramatically shrink the base the percentage applies to.
Assets that typically bypass probate include:
- Life insurance proceeds payable to a named beneficiary
- Retirement accounts like 401(k)s and IRAs with designated beneficiaries
- Joint accounts that pass by right of survivorship
- Payable-on-death accounts at banks or brokerages
- Real property transferred through a transfer-on-death deed where state law allows it
An estate worth $2 million on paper might hold only $600,000 in probate assets once you subtract retirement accounts, life insurance, and jointly held property. The executor’s percentage fee would apply to that $600,000, not the full $2 million. That is one reason executors sometimes feel underpaid relative to the total work: they may still need to coordinate with beneficiaries of nonprobate assets that don’t count toward the fee.
Extra Pay for Extraordinary Work
Standard duties are covered by the statutory percentage or the reasonable-compensation award. Those duties include inventorying assets, paying bills and creditors, filing tax returns, and distributing property. When the job goes beyond routine administration, an executor can petition the court for additional compensation for “extraordinary” services.
Work that commonly qualifies for extra pay:
- Selling real estate or other significant assets
- Operating a family business to preserve its value during probate
- Preparing complex tax returns or handling IRS audits
- Defending the estate in litigation or pursuing claims on its behalf
- Tracking down hard-to-locate assets
- Managing foreclosures, financing, or lease negotiations
Extraordinary fees require a separate petition. Courts want specifics: what was done, how long it took, and why it fell outside normal duties. Vague claims that the estate was “complicated” rarely succeed without a detailed breakdown.
Taxes on Executor Fees
The IRS treats executor compensation as taxable income, not as an inheritance. Every executor who accepts a fee has to report it on their personal return. How to report it depends on whether you do this professionally.
If you served as executor for a friend or relative as a one-time role, report the fee on Schedule 1 (Form 1040), line 8z, as other income. If you are in the trade or business of serving as an executor, such as an attorney or trust officer who regularly handles estates, report it as self-employment income on Schedule C, which also subjects it to self-employment tax.1Internal Revenue Service. Publication 559 – Survivors, Executors, and Administrators
That distinction matters. Self-employment tax adds roughly 15.3% on top of your regular income tax, so a $30,000 fee reported on Schedule C nets considerably less than the same fee on Schedule 1. Either way, the fee is ordinary income taxed at your marginal rate.
The Waiver Option When You’re Also a Beneficiary
An executor who is also named as a beneficiary can choose to waive the fee and receive a larger inheritance instead. Inheritances are generally not subject to income tax, so waiving a $25,000 fee in exchange for $25,000 more in inherited assets can save thousands.
Under IRS Revenue Ruling 66-167, an executor can waive fees without the IRS treating the waived amount as constructive receipt of income, but only if the waiver happens within a reasonable time after beginning to serve and the executor’s conduct throughout the administration is consistent with providing gratuitous service.2Internal Revenue Service. IRS Private Letter Ruling 202410045 An executor who manages the estate for two years, files for compensation, and then waives at the last minute risks the IRS arguing the income was constructively received.3eCFR. 26 CFR 1.451-2 – Constructive Receipt of Income
Whether waiving makes sense depends on your tax bracket and the size of the estate. A tax professional can run the numbers before you commit either way.
Getting Paid Requires Court Approval
An executor cannot simply write themselves a check. Most jurisdictions require a formal petition, often called a Petition for Allowance of Compensation, filed with the probate court. The petition pulls together your time logs, the official estate inventory, and the requested fee amount, showing how the request aligns with the will’s provisions or the state formula.
The foundation is a detailed time log recording each date, the hours spent, and a description of what was done. Entries like “worked on estate — 3 hours” are not helpful. Entries like “met with realtor to list 123 Main St., reviewed comparable sales, signed listing agreement — 2.5 hours” give the court something to evaluate. Accurate reporting of probate value matters too, because an inflated figure produces an inflated request that invites objections.
After filing, the executor must notify all beneficiaries and heirs, giving them a window to object. Common objections include claims that the executor spent little time on the estate, that the assets were simple enough not to justify the fee, that the executor was inefficient or negligent, or that the work was actually done by someone else. A judge weighs any objections at a hearing before approving, reducing, or denying the fee.
The court’s signed order is what authorizes you to transfer the approved amount from the estate’s account. Taking fees without court approval is one of the fastest ways to face removal and personal liability. Some states allow interim compensation payments during a lengthy probate, but you typically need court permission for each draw.
Reimbursed Expenses Are Separate
Fees and expense reimbursements are two different things. Compensation pays for your time. Reimbursement covers money you spent out of pocket on legitimate estate business, and it comes from the estate on top of whatever fee is approved rather than reducing it.
Reimbursable expenses typically include postage, certified mail costs, court filing fees, travel mileage for estate-related trips, long-distance calls, and storage costs for estate property. The standard is whether the expense was necessary and benefited the estate as a whole. Personal expenses, home office overhead, and costs that primarily benefited one beneficiary are generally not reimbursable.
Keep original receipts and a log connecting each expense to a specific task. Courts are far more likely to approve a request supported by dated receipts and clear explanations than one built on round-number estimates from memory. If the estate required a surety bond, those premiums are nearly always paid from estate funds and typically run 0.5% to 1% of the bond amount.
Co-Executors and Professional Executors
When a will names two or more co-executors, the total fee is usually split rather than doubled. How it gets divided depends on the state. Some require an equal split regardless of who did more work. Others let the court apportion based on actual contribution or on each co-executor’s separate receipts and disbursements. If you expect an uneven workload, agree in writing on how the work and pay will be divided before accepting the role.
Banks, trust companies, and attorneys who serve as professional executors charge differently. Corporate executors typically charge a base fee of 1.5% to 3% of assets plus hourly charges for extra time, and most impose a minimum fee, commonly $1,000 or more. That minimum can make them cost-prohibitive for smaller estates but can be worthwhile on large or complicated ones, where their experience helps avoid mistakes that generate legal bills later.