Who Pays the Cost for the Attorney Fees & the Executor of Probate?

By Tom Streissguth

By creating a will and naming an executor, you set forth instructions for the transfer of assets from your estate to your heirs after your death. A will must go through probate, meaning a civil court approves the document and holds authority over the actions of the executor. By state laws, executors and attorneys involved in the probate process are entitled to reasonable compensation for their work. The fees are paid out of the estate's assets.

By creating a will and naming an executor, you set forth instructions for the transfer of assets from your estate to your heirs after your death. A will must go through probate, meaning a civil court approves the document and holds authority over the actions of the executor. By state laws, executors and attorneys involved in the probate process are entitled to reasonable compensation for their work. The fees are paid out of the estate's assets.

Names and Titles

To be legal, a will must be signed and witnessed. If the will appoints an executor, that individual is responsible for carrying out the will's instructions. That means paying any valid claims against the estate and transferring assets to the heirs named in the document. If the will does not name an executor, then the probate court or a registrar of wills must appoint an administrator to carry out the task. Both executors and administrators are informally known as "personal representatives." Their role is different from that of an attorney, who represents the interests of the estate in probate court and in any litigation that may arise.

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Statutory Fees and Executor Fees

State law sets out guidelines for the fees an executor or attorney may collect from an estate. In some states, including New York, there is a sliding-scale limit on executor fees, figured as a percentage of estate assets: 5 percent of sums received and paid out, up to $100,000; 4 percent for the next $100,000; 3 percent for the next $500,000; 2.5 percent on the next $4 million; and 2 percent for any sums over $5 million. Kentucky sets a flat rate of 5 percent of value and 5 percent of income generated by the estate. Attorneys will charge for probate and estate work with an hourly fee, a flat rate or a percentage of assets, depending on what state law permits and how the executor negotiates the matter. .

Reasonable Standards and Attorney Fees

Not all states adhere to a strict percentage rate for executors; Connecticut law, for example, only requires that compensation be "reasonable," leaving it up to the probate court to make that determination. If the will fixes the executor fee, then other parties such as heirs may challenge that fee on grounds that it is unreasonable. In many cases, the fee is subject to an agreement between the executor and the heirs. The same "reasonable" standard applies to attorney fees, which are subject to a written fee agreement with the estate (which pays the fee) and the executor. .

Fees and Taxes

The executor may be an individual (and heir) named in the will. If that is the case, any compensation paid by the estate as an executor's fee is subject to personal income tax, both state and federal. If the estate is large enough to be subject to federal estate tax, as well as state inheritance tax, then declining the fee may be to the executor's financial advantage -- even if the executor's fee is a deductible expense. Unless they are named as heirs, attorneys don't have a choice in the matter; any fees they collect are declared as business income and subject to income tax.

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Can Executors of Estates Get Paid?

References

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Tennessee State Law on Payment to Estate Executors

Estate executors perform essential tasks in administering a decedent's estate. The administration process includes identifying heirs, completing an inventory of the estate, distributing the estate and preparing annual accounting statements to the court. This process can become complex if disputes arise among heirs, creditors or debtors of the estate. Tennessee state law compensates estate executors based on a reasonable fee as decided by the court.

Can an Executor Charge a Beneficiary for Duties?

The executor of an estate is normally named in a valid will, appointed by the overseeing probate court, and is generally a family member or friend of the deceased. A lawyer or other professional can also be named as an executor. An executor is responsible for paying the deceased’s debts and distributing the estate assets in the manner described in the will. He may also need to hire others, such as appraisers, to help him value or sell assets in the estate. These services are also paid for by the estate. An executor can be paid for his services, but he is not compensated directly by the beneficiaries. The estate pays for the executor’s services, which diminishes the amount of assets the beneficiaries get.

What Can an Executor Legally Charge the Estate for in Texas?

When a person dies in Texas, some or all of the estate's assets will go through a court probate process before being passed down to the decedent's beneficiaries. In most cases, the decedent names a trustworthy person in his will to administer the estate. This person, called the executor, acts as a representative of the estate, guiding it through the probate process. This can be a time-consuming and expensive process for the executor, so Texas allows compensation for performing executor duties.

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