What are executor fees and how much they can charge for their services is a common question during the estate planning and administration process. Executor fees can vary significantly depending on the state’s laws and the specifics of the estate. Here’s a detailed look at how executor fees are structured in states like New York, Florida, Texas, Ohio, Connecticut, and New Jersey, and considerations such as waiving fees and differences between professional and family executors.
New York
In New York, executor fees are set by a statutory fee schedule. This schedule is based on the value of the estate: for example, 5% on the first $100,000, 4% on the next $200,000, and so forth. These fees are intended to compensate the executor for standard duties associated with estate administration. In cases where the executor performs extraordinary services, they might be entitled to additional reasonable compensation.
Florida
Florida also follows a statutory fee schedule similar to New York. The base rate is 3% of the first $1 million of the estate’s value. Like in New York, additional compensation can be negotiated or awarded for services that go beyond typical executor duties.
Texas
Texas does not have a statutory fee schedule. Instead, the will itself often specifies the executor’s compensation. If the will does not specify, then executors are entitled to receive a commission of 5% on all sums they actually receive or pay out in cash in the administration of the estate, except for funds used to pay debts.
Ohio
In Ohio, executor fees are generally calculated based on a percentage of the estate’s value, similar to other states. The standard is approximately 4% of the first $100,000 of the estate, with the percentage decreasing as the estate value increases. Ohio law also allows for additional compensation for extraordinary services.
Connecticut
Connecticut’s approach to executor compensation is more flexible, often allowing the probate court to determine a reasonable fee based on the time and effort expended by the executor, the complexity of the estate, and other factors.
New Jersey
New Jersey allows an executor to receive a commission of 5% of the first $200,000 of the estate’s gross value, 3.5% on the next $800,000, and 2% on any excess over $1 million. Additionally, an annual commission of 6% of income earned by the estate can be collected.
Special Considerations
In some states, like New Jersey, unusual items such as litigation or the sale of a business owned by the estate can warrant additional fees due to the complexity and additional time required.
Waiving Fees
Executors have the option to waive their fees, which is common among family members serving as executors to keep more assets within the family or to avoid tax consequences.
Impact of Executor Type
Whether an executor is a professional or a family member can influence the decision to charge a fee. Professional executors, such as attorneys or banks, typically charge a fee as compensation for their services, while family member executors may waive their right to a fee for personal reasons.
Conclusion
Executor fees vary widely by state and the specifics of each estate. Executors must consider state laws, the complexity of the estate, and their personal circumstances when deciding on compensation. Understanding these variables can help executors make informed decisions about their compensation and ensure fair and effective estate management.
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