Learn how executor compensation works to ensure that the fees requested do not exceed the limits permitted under California law.
A frequent concern for estate executors and beneficiaries revolves around whether executors are entitled to compensation for the time and energy spent managing an estate.
In California, executors are indeed permitted to receive payment, but the amounts are strictly regulated rather than based on personal preferences or hourly charges. Compensation typically follows a statutory fee structure tied directly to the gross value of the probate estate. Executors may also qualify for additional fees if they perform extraordinary tasks, provided these services are adequately justified to the court.
The likelihood of disputes arising over executor pay is relatively slim, since fees are firmly rooted in statutory guidelines. However, there are scenarios where California law may allow the court to reduce the compensation of a personal representative or their attorney, particularly in cases where there were preventable administrative delays that were not in the best interests of the estate or its beneficiaries.
Gaining a clear understanding of how executor fees work helps both executors and beneficiaries set realistic expectations regarding allowable pay and timing. To resolve any uncertainty, a California probate attorney can guide both sides through the fee structure and answer any specific questions they may have.
How Much Does an Executor Get Paid?
In California, how much an executor gets paid is determined by law and based on the gross value of the probate estate. Rather than calculated hourly, executor fees follow a statutory formula set forth in California Probate Code section 10800. The executor’s attorney is generally entitled to compensation based on the same statutory fee structure.
To determine the gross value of the probate estate, the decedent’s assets are typically appraised based on their worth as of the date of death. Certain assets, such as real property and other non-cash assets, are valued by a court-appointed probate referee or licensed appraiser.
Importantly, this calculation does not deduct debts or other liabilities, meaning the gross value of the estate may be higher than the amount ultimately available for distribution to beneficiaries.
Once the gross value has been determined, the executor’s statutory compensation can be calculated using the applicable percentage-based fee schedule.
What Percentage of an Estate Does the Executor Get?
The percentage of an estate that the executor is entitled to is calculated based on the gross value of the estate.
Fee Schedule for Ordinary Executor Compensation | |
Estate Value | Percentage Compensation |
First $100,000 | 4% |
Next $100,000 | 3% |
Next $800,000 | 2% |
Next $9 million | 1% |
Next $15 million | 0.5% |
All amounts above $25 million | A reasonable amount to be determined by the court |
*Fees for personal representatives and their attorneys are cumulative. | |
Example: Executor fees for an estate with a gross value of $5 million would generally be calculated as follows:
- 4% of $100,000 = $4,000
- 3% of the next $100,000 = $3,000
- 2% of the next $800,000 = $16,000
- 1% of the remaining $4 million = $40,000
- Total statutory compensation = $63,000
Keep in mind that the executor and their attorney are each entitled to $63,000 under California law.
Can the Executor Receive Additional Compensation?
An executor may be eligible for additional fees (known as extraordinary compensation) when the work performed goes beyond standard estate administration. These tasks are typically complex and time-consuming, or they require a higher level of effort or expertise than routine duties, which is why additional payment may be justified.
Examples of services that may qualify for extraordinary compensation include:
- Managing or selling real property
- Resolving complicated tax issues
- Liquidating or dissolving a business
- Handling probate litigation
- Locating assets or beneficiaries that are difficult to identify or track down
Unlike standard executor fees, extraordinary compensation is not calculated under the statutory fee structure. Instead, it generally must be requested from the court, and the executor is typically required to provide supporting documentation showing the nature, scope, and value of the additional work performed.
Extraordinary compensation is generally calculated using an hourly rate based on the executor’s experience and expertise. In California, rates often range from approximately $30 per hour for an inexperienced executor to $150 to $250 per hour for a private professional fiduciary. In particularly complex estates, the court may approve even higher rates if the executor’s specialized knowledge or skills provide substantial value to the administration.
That said, extraordinary compensation is not guaranteed. The court may reduce or deny a request based on the circumstances of the estate. For example, if an estate is close to insolvency, the court may determine that awarding extraordinary compensation would not be in the best interests of the estate or its beneficiaries.
Does Executor Compensation Require Court Approval?
In California, executor compensation requires court approval before it can be paid. Although executors in California are entitled to compensation based on a clear statutory formula, they lack the legal authority to pay themselves independently.
For situations involving extraordinary compensation, executors must file a separate petition accompanied by documentation that details the additional work performed.
Ultimately, court supervision ensures that executors are not overcompensated and that all fees remain reasonable.
When Does the Executor Get Paid?
An executor is generally entitled to receive payment after the court approves the requested fees. This typically occurs during the review of the executor’s final accounting, which is usually submitted after all the estate’s debts, taxes, and any disputes have been resolved. In some cases, however, interim fee payments may be permitted.
An executor may petition the court for partial compensation relating to statutory and extraordinary services performed before the estate is ready to close when an estate is expected to continue for an extended period, and delaying all compensation until the final accounting would be impractical.
Does an Executor Get Paid Before Creditors?
In California, executor fees generally have priority over most creditor claims because they are considered expenses of administration, which receive the highest priority among estate debts. However, certain claims owed to the federal government or the State of California may receive priority if applicable law requires them to be paid first.
It is important to note that an executor cannot simply take payment from estate assets without court authorization. Compensation for the executor and the executor’s attorney — whether requested as interim or final compensation, and whether for statutory or extraordinary services — must be formally approved through the probate process. Once fees are approved, however, they are treated as an administrative expense of the estate rather than an ordinary creditor claim.
If an estate is nearing insolvency, the court has discretion to reduce any extraordinary compensation requested by the executor. However, statutory compensation generally must be paid in full before extraordinary fees are awarded and before creditor claims that are not entitled to priority under federal or state law are satisfied.
In rare cases, the court may be permitted to reduce compensation for the personal representative or their attorney if the following conditions are met:
- If the administration of the estate has been unnecessarily delayed;
- The delay was within the individual’s control; and
- The delay was not in the best interests of the estate or its beneficiaries.
Does an Executor Get Paid Before Beneficiaries?
An executor is generally paid before distributions are made to beneficiaries. Because executor compensation is considered an administrative expense, it is typically paid before the remaining estate assets are distributed according to the terms of the will.
If estate assets are limited, executor compensation may reduce the amount ultimately available for beneficiaries to inherit. For this reason, some executors, particularly those who are also beneficiaries or close family members, choose to waive their right to compensation.
Can an Executor Waive Their Fee?
Executors may waive all or part of their statutory fee, even though California law generally entitles executors to compensation for administering an estate. Waiving executor fees can help preserve more of the estate for beneficiaries, but it does not relieve the executor of their fiduciary duties or other responsibilities.
To waive compensation, the executor typically notifies the probate court of their decision, often in the final accounting or petition for final distribution.
While professional fiduciaries generally expect to be compensated for their services, family members and executors who are also beneficiaries frequently opt to waive their fees. In some cases, doing so may even be financially advantageous. Because executor compensation is generally taxable income, accepting a fee could increase the executor’s tax liability. By contrast, an inheritance is generally not treated as taxable income.
Waiving executor compensation does not mean the executor can simply receive the same amount as an inheritance. The unpaid fee remains part of the estate and is distributed according to the terms of the will. If there are multiple beneficiaries, all of them, not just the executor, may be entitled to share in the additional estate assets.
Before deciding whether to waive compensation, an executor should consult an experienced probate attorney or tax professional to fully understand the legal and tax implications.
Can Beneficiaries Challenge Executor Fees?
Beneficiaries and other interested parties generally have the right to challenge executor compensation. However, an objection is unlikely to succeed unless it is supported by a legitimate legal basis.
For example, California law allows for an executor’s compensation (or that of their attorney) to be reduced in situations where the administration of the estate has been unnecessarily delayed, the delay was within the individual’s control, and the delay was not in the best interests of the estate or its beneficiaries.
Here are examples of circumstances where beneficiaries may challenge executor fees:
- The statutory fee was calculated incorrectly.
- The requested extraordinary compensation is unreasonable or unjustified.
- The executor mismanaged the estate or failed to perform required duties.
- The executor engaged in misconduct or breached their fiduciary duties.
- The executor created unnecessary delays or exceeded the time allowed to administer the estate.
Although beneficiaries are sometimes disappointed to learn that executor fees reduce the amount available for distribution, dissatisfaction with an inheritance alone is not a valid basis for objecting to compensation. Executors are generally entitled to reasonable compensation under California law for administering an estate.
Ultimately, the probate court determines whether the requested compensation is appropriate. If the court concludes that the fees are excessive, improperly calculated, or unsupported by the evidence, it may reduce or deny the executor’s request.
California Executor Fees FAQs
Still confused how executor fees work in California? Explore the frequently asked questions below for additional guidance.
Who pays the executor?
The executor's compensation is generally paid from estate assets after it has been approved by the probate court. Because the executor is responsible for managing the estate during probate, they typically issue the payment to themselves on the estate's behalf.
That said, executors must not pay themselves any compensation that has not been expressly authorized by the court. Doing so could expose them to objections from beneficiaries or personal liability.
Does an executor get paid if they are also a beneficiary?
Yes. An executor is entitled to compensation even if they are also a beneficiary of the estate. This is because executor compensation is separate from an inheritance and is paid in exchange for the services performed as part of estate administration.
That said, many executors who are also beneficiaries choose to waive their statutory fee to preserve more of the estate for distribution.
Keep in mind, however, that waiving compensation does not entitle the executor to receive an equivalent amount as an inheritance. Instead, the unpaid fee remains part of the estate and is distributed according to the terms of the will, meaning all beneficiaries share in the additional estate assets based on their respective interests.
Are executor fees considered taxable income?
Executor fees are treated as taxable income by the IRS, as they are considered compensation for services rendered rather than an income-tax-free inheritance.
Does the administrator of an estate get paid?
Yes. Administrators are generally compensated under the same statutory framework as executors and may also be eligible for extraordinary compensation if they perform services beyond standard estate administration.
The primary difference is how they are appointed. An executor is nominated in a will and appointed by the court, whereas an administrator is appointed by the court when a person dies without a will or when no named executor is able or willing to serve.
How much does an executor of a trust get paid?
While there is no such thing as an “executor of a trust” in California, trusts are managed by trustees, who can independently take compensation based on the terms of the trust document. If the trust does not specify compensation, the trustee is generally entitled to “reasonable” fees based on the tasks performed and circumstances of the trust.
Unlike executors, trustees usually do not need court approval before paying themselves. However, trustee compensation must still be reasonable and properly documented.
If a beneficiary challenges the fees, the court may review the trustee’s compensation and determine whether it is appropriate under the law and terms of the trust.
Is compensation available for the executor's legal counsel?
Yes. The executor’s attorney is entitled to the same compensation as the executor and subject to the same statutory fee structure for ordinary and extraordinary fees.
Are estate appraisers entitled to compensation?
Yes. Under California law, probate referees and certain professional appraisers are generally compensated at a rate of 0.1% of the value of the assets they appraise. Their fees are subject to a statutory minimum of $75 per appraisal.
In most cases, compensation for appraisers is also capped at $10,000 unless the court approves a higher amount.
How much does probate cost in California?
There are no fixed probate fees in California, as costs typically depend on the size and complexity of the estate, as well as whether disputes arise.
Common probate expenses include court filing fees, executor compensation, attorney’s fees, appraisal costs, and other administrative expenses.
Because executor and attorney fees are often calculated as a percentage of the estate’s gross value, probate can become more expensive as estate value increases. Contested or complex cases may further drive up overall costs.
Need help determining executor fees?
Executor compensation can be straightforward to calculate in some cases, but when extraordinary services, disputes, or complex estates are involved, experienced legal guidance is often needed to navigate the process effectively.
The probate attorneys at Keystone Law can help you understand executor compensation, assess whether fees are reasonable, and challenge them when appropriate. Contact our firm today to speak with our legal team.
