As you start your estate planning, one of the most important decisions you’ll make is who will be the executor. Sometimes referred to as the personal representative, this is the person who will be in charge of carrying out everything you’ve detailed in your estate plan as well as paying your final bills and income taxes and other duties that need to be handled when someone dies.
It’s a big job – even if you have a solid estate plan and have taken steps to avoid probate. That’s why California, like other states, requires that executors be compensated for their work.
Executor compensation requirements
Under California law, the minimum payment is based on the value of the estate as follows:
- 4% of the first $100,000
- 3% of the next $100,000
- 2% of the next $800,000
- 1% of the next $9 million
- .5% of the next $15 million
For estates valued at over $25 million, the court determines a “reasonable” fee.
Executors may receive more than the minimum – or choose to waive their fee
As you create your estate plan, you have the right to designate that your chosen executor will receive more than the minimum for their services. However, you can’t designate less than the legal minimum. This doesn’t include out-of-pocket expenses the executor incurs for things like the funeral (if you haven’t left funds for it) and other things they might have to pay for before the estate is settled. These expenses are repaid from the estate.
Sometimes when the executor is a family member, like a spouse or adult child, they’ll waive their fee so that there’s more left for everyone. However, they’re legally entitled to receive payment for their time and work. This payment shouldn’t be considered part of their inheritance. That’s completely separate.
Some people choose a professional executor. Many financial institutions, for example, have departments that handle estate administration. Professional executors typically have set fees for their services that exceed the legal minimum.
The law also allows executors to seek additional payment for “extraordinary” services beyond what an executor would be expected to do. Those are paid from the estate, at the discretion of the court.
If you have a solid, well-crafted estate plan and have chosen a qualified person to be your executor, they shouldn’t have to perform “extraordinary” services that would take more of the assets you leave for your heirs and other beneficiaries.