When it comes to the question of what percentage an executor of an estate receives, the answer is not always straightforward. Generally, the executor is entitled to receive compensation for their services, either through specific provisions of the will or applicable state law. The amount of compensation varies depending on the situation, but it is usually calculated as a percentage of the estate's value, a flat rate, or an hourly rate. For example, if in the past year the executor's fees were normally 1.5%, then 1.5% would be considered reasonable and 3% might be unreasonable.
However, the court may take into account other factors, such as the complexity of managing the estate and, from there, may increase or decrease the amount. Even if your state's law doesn't have a table of statutory rates, you may be able to charge a percentage of the value of the estate. For instance, if you sold real estate, you could claim a percentage of the sale price of the property. If the beneficiaries don't object, there will be no problem. In North Carolina, executor's fees should not exceed 5%, so compensation is often used.
If there is no will or no provision governing executor's fees in a valid will, state law governs how the executor will be paid. Typical executor fees are intended to compensate for the time and energy needed to finalize another person's affairs. Some states allow a last will and a will to give instructions on how to indemnify an executor; this can be a flat fee set forth in the document, or the will may specifically leave the determination to state law. State law will also dictate the institution's fees in this case if the will says nothing about the subject. These fee lists are similar to state laws that calculate the fee as a percentage of the value of gross assets. Extraordinary services may include supervising the sale of the decedent's real estate and personal property, conducting litigation on behalf of the estate, defending estate litigation, participating in tax disputes and proceedings, or running the decedent's business for a period of time of time. In large part, that would depend on how much actual work you have to do as an executor, and that varies from one estate to another.
That's why most executors are entitled to receive some form of payment for their services, whether through the terms of the will or state law. For example, Colorado does not have a law governing executor's compensation; however, it can normally be considered that Colorado's executor's fees fall under the reasonable compensation item. The executor has the right to be reimbursed for any administrative expenses they pay out-of-pocket. Many states agree that an executor is entitled to reasonable compensation for their services. In states that require a specific percentage of the estate, there is also a possibility that an executor may charge an “extraordinary fee” if their duties managing the estate have gone beyond usual situations such as being involved in litigation or tax disputes on behalf of the estate. However, if you're weighing this decision, remember that being an executor requires a commitment to work on behalf of beneficiaries for months or even years. They could do this by inventing an hourly rate and having them keep track of how many hours they work.
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