When a person dies, the executor steps into one of the most legally exposed jobs in American life. You are now personally responsible for someone else’s assets, taxes, debts, and final wishes, and you can be sued for getting any of it wrong. Yet most executors begin the role with no idea how executor compensation is calculated, where their fiduciary duty actually ends, or how to share decision-making with a co-executor without creating a legal mess.
This guide covers the three things every active executor needs to understand: how state law sets the fee, what fiduciary duty really requires, and how to manage co-executor communication so shared authority does not turn into shared liability.
How executor compensation is calculated
The short answer: yes, executors get paid. The longer answer is that the number depends entirely on which state issued your letters testamentary (the court document that proves you are allowed to act for the estate).
Two general models exist. Percentage-based states set a fee schedule in the probate code. The fee is a percentage of the estate’s value, with the percentage decreasing as the estate grows. California, for example, uses 4% on the first $100,000, 3% on the next $100,000, and so on, until the rate drops to 0.5% above $25 million, at which point the court sets the fee. New York, Florida, New Jersey, and Wyoming use similar tiered structures.
Reasonable compensation states, including Texas, Illinois, Ohio, Pennsylvania, Michigan, and Georgia, give the court discretion. The judge looks at the size and complexity of the estate, the time you spent, whether there was litigation, and what local professionals charge. In practice, fees in these states often land between 1% and 5% of estate value, but no statute guarantees that range.
A handful of states mix the models. Connecticut, for instance, is technically a “reasonable compensation” state, but judges rarely approve more than 3% to 4%.
Three details that catch first-time executors off guard:
- The fee is taxable income. Executor compensation is reported on your personal return. It is not an inheritance.
- You can waive the fee. If you are also a beneficiary, waiving compensation in favor of taking the same amount as an inheritance can sometimes reduce taxes. Talk to a CPA before deciding.
- Co-executors typically split, not double, the fee. Most states divide the total fee between co-executors. A few allow each co-executor to claim a full fee; check your state’s rule.
For the full state-by-state breakdown of statutory formulas and reasonable-compensation standards, see our executor compensation by state guide.
Legal disclaimer: Fee schedules and “reasonable compensation” standards vary by state and change over time. This article is informational and not legal or tax advice. Confirm the rule that applies to your estate with a licensed attorney or CPA in your state.
What fiduciary duty actually means
“Fiduciary duty” is the legal obligation to act in the best interest of the estate and its beneficiaries, even when that conflicts with your own interests. For an executor, that obligation runs from the moment letters testamentary are issued until the estate is fully closed, and in some cases beyond (for example, if a beneficiary later challenges a distribution).
In practice, fiduciary duty means five concrete things:
- Loyalty. You cannot profit from the estate beyond the compensation you are entitled to. Selling estate assets to yourself at below-market value, or steering business to a company you own, is a breach.
- Care. You must act with the care a reasonable person would use in managing someone else’s property. That includes keeping accurate records, securing assets, paying bills on time, and filing required tax returns.
- Impartiality. You cannot favor one beneficiary over another. If the will gives specific items to specific people, those gifts must be delivered as written, even if other beneficiaries want them.
- Disclosure. You must keep beneficiaries reasonably informed about the estate’s status, major decisions, and timelines. Silence is one of the fastest ways to invite a lawsuit.
- Accounting. At the end of the process, you must file a final accounting with the court showing every asset, every payment, every distribution, and your fee.
If you breach any of these duties, beneficiaries can sue you personally. The estate’s insurance does not always cover you. Your home, your savings, and your future income can be on the line.
Fiduciary liability risks worth knowing
Most executor liability cases fall into a small number of patterns. Knowing them in advance is the best defense.
Missing creditor or tax deadlines. Creditors have a fixed window to make claims against the estate. If you distribute assets to beneficiaries before that window closes, you can be held personally liable for unpaid debts. The same applies to filing the estate’s final income tax return and, where applicable, the estate tax return.
Mismanaging estate property. If the estate includes real estate, vehicles, or business interests, you have a duty to preserve their value. Letting a house sit vacant without insurance, or selling assets too quickly at a discount, can be treated as a breach of the duty of care.
Self-dealing or conflicts of interest. Buying estate assets yourself, hiring a company you have a financial interest in, or using estate funds for personal expenses are all fiduciary breaches. Even the appearance of a conflict can trigger a court challenge.
Failing to communicate with beneficiaries. Beneficiaries who feel ignored are far more likely to hire a lawyer. Document every major decision, send periodic status updates, and respond to reasonable information requests in writing.
Distributing assets too early. Once assets leave the estate, getting them back is hard. Wait until the creditor period has run, all taxes are filed, and the court has approved the final accounting before distributing.
For a deeper look at how exposure starts before you even have authority to act, read You Inherit the Liability Before You Inherit the Power.
Legal disclaimer: Liability rules, creditor notice periods, and tax filing deadlines vary by state and by estate size. This article is informational and not legal advice. Confirm the deadlines and standards that apply to your estate with a licensed attorney or CPA in your state.
Co-executor communication: shared authority, shared risk
When two or more executors are named, the will (or the court) usually requires them to act jointly. That means major decisions (selling property, approving distributions, hiring professionals) typically need all co-executors to agree. The upside is shared workload. The downside is that any co-executor can become a personal liability problem for the others.
A few ground rules reduce the risk:
Default to written communication. Email, shared documents, and a centralized task list create a record. Verbal agreements are easy to forget and impossible to prove if a dispute arises.
Agree on a decision-making process early. Who has authority to write checks under a certain amount? Who can hire a contractor without unanimous approval? Who communicates with beneficiaries? Document the answers in writing.
Document disagreements. If you and a co-executor cannot agree on a decision, put the disagreement in writing. Record the options, the reasons, and the outcome. This protects both of you if a beneficiary later claims a decision was made improperly.
Know that one co-executor can be liable for another’s actions. In most states, a co-executor who signs off on a bad decision shares the liability for that decision, even if they did not personally make it. Reading the documents is not optional.
Have an exit plan. If the working relationship breaks down, either co-executor can petition the court to act alone or to be replaced. Knowing this is an option can keep negotiations from escalating.
For a refresher on how the executor role differs from a court-appointed administrator and what each one is authorized to do, see our executor vs. administrator guide.
When to bring in legal or tax help
Executor work crosses probate law, tax law, real estate, and finance. Trying to do it all without help is how mistakes happen. Strong indicators that you need a professional now, not later:
- The estate includes a business, rental property, or out-of-state assets.
- A beneficiary has hired a lawyer, or has threatened to.
- You cannot locate all the deceased’s assets, or the asset list is incomplete.
- The estate’s value approaches or exceeds the federal estate tax threshold.
- You and a co-executor are not aligned on a major decision.
A 30-minute consultation with a probate attorney upfront usually saves months of confusion later. CPA fees for the estate’s final returns are paid by the estate, not by you personally.
Frequently asked questions
Can an executor take a fee without going to court?
In most states, yes. You include the fee in the final accounting, the court reviews it, and the fee is paid from the estate account once approved. If a beneficiary objects, the court holds a hearing.
What happens if a co-executor refuses to cooperate?
You can petition the court to remove them, or to authorize you to act alone. Keep detailed records of every request and every refusal; the court will want them.
Is executor compensation the same as an inheritance?
No. Compensation is taxable income to you. An inheritance is generally not taxable income to the beneficiary. The two are reported on different forms and have different tax treatment.
Can an executor be personally sued?
Yes. Beneficiaries and creditors can sue you personally for breach of fiduciary duty, mismanagement, or failure to follow the will. The estate does not automatically cover your legal defense.
Do all states allow executor fees?
Every U.S. state allows some form of executor compensation, either by statute or through “reasonable compensation” standards. The amount and method vary widely.
Related reading
- Do Executors Get Paid? Yes. Here’s How Much, by State
- What is the difference between an Administrator and Executor?
- You Inherit the Liability Before You Inherit the Power
Next step
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Legal disclaimer: This article is informational only and is not legal, tax, or financial advice. State laws, court procedures, and tax rules vary. Consult a licensed attorney and CPA in your state before acting on any information here.
