How much they receive and when they’ll be paid can depend on several factors. Still others might leave their personal representative a specific bequest instead of authorizing them to collect a fee. This actually provides an income tax benefit for the personal representative, because a bequest is nontaxable while fees are taxed as ordinary income. Some states provide specific rules for fees. They’re typically calculated by multiplying the gross value of the probate estate by a specific percent. As the gross value increases, the percent decreases. For example, the fee might be equal to 4 percent of the first $100,000 then decrease incrementally until it’s just 1 percent of values over $9 million. The fee is sometimes a percentage of transactions made by the estate—transactions that the executor handled—rather than overall estate value. Transactions would typically include any income earned by the estate and all expenses paid, although it would not normally include distributions to beneficiaries. In still other states, the entire fee is left to the discretion of the probate court. A judge will decide what is a “reasonable.” Probate courts often issue local guidelines for reasonable fees in these cases, however. Extraordinary services can include overseeing the sale of the decedent’s real estate and personal property, conducting litigation on behalf of the estate, defending litigation against the estate, being involved in tax disputes and proceedings, or running the decedent’s business for a period of time. These fee schedules are similar to state laws that calculate the fee as a percentage of the value of the gross estate. State law will dictate the institution’s fee in this case as well if the will is silent on the issue. When a professional acts as personal representative, it’s acceptable for her to bill the same hourly rate she charges her other clients for similar work. Ongoing expenses such as utilities, property taxes, insurance, and storage fees are normally paid from estate funds, but executors might sometimes find themselves in positions where they must pay these out of pocket as well. In all cases, he’s entitled to reimbursement in addition to payment for his services. Out-of-pocket expenses are typically reimbursed during the course of estate administration. In other states, the executor’s fee can only be paid after a court hearing and with a judge’s approval. The requirement for a hearing might be waived, however, if all the beneficiaries are informed of the fees to be paid and they sign consents to authorize payment without a judge’s order.
