How is an executor paid?
Key takeaway
An executor's pay depends on what the will permits and on state law, and compensation that an executor receives is taxable income to the executor. Some states fix commissions by percentage. South Carolina and Georgia are two examples. Estate settlement costs also vary with the complexity of the estate and the type of executor.
The will and the tax treatment
A speaker with executor experience says compensation depends on the will permitting it, and compensation received is taxable income to the executor.
Federal guidance treats a bequest made to an executor in place of commissions as not deductible. Compensation fixed by the will is deductible up to what local law or practice allows.
Percentage rules in two states
South Carolina caps personal representative compensation at five percent of the appraised personal property of the probate estate plus the proceeds of authorized sales of real property. The cap applies absent court approval for extraordinary services.
Georgia administrator commissions are normally two and one-half percent of money received and of money paid out. The probate judge may also allow up to three percent of the value of property distributed in kind.
Cost varies with the estate and the executor
Practitioners describe estate settlement costs as varying with complexity and with the type of executor. Corporate executors often cost more than individual executors.