How is executor compensation calculated in California?
California Probate Code §10810 sets a statutory fee for personal representatives (executors): 4% on the first $100,000 of gross estate value, 3% on the next $100,000, 2% on the next $800,000, 1% on the next $9 million, and 0.5% on the next $15 million. This is the same schedule as attorney fees. For extraordinary services — litigation, complex tax matters, managing a business — the court can award additional compensation.
Can the will set a different executor compensation?
Yes. A will can specify a fixed dollar amount, a percentage, or state that the executor serves without compensation. If the will sets compensation, the executor generally must accept it or disclaim the appointment. Most attorneys recommend not specifying a fixed dollar amount in a will because the estate's complexity at death is unknown — instead, leaving it to the statutory or reasonable standard gives flexibility.
Is executor compensation subject to estate tax?
Yes. Executor fees are deductible from the gross estate for federal estate tax purposes (if the estate owes estate tax), but are taxable ordinary income to the executor. This creates a planning consideration: if the executor is a sole beneficiary, compensation actually results in more total tax — better to take the inheritance (which may be tax-free). If there are multiple beneficiaries, compensation shifts assets to the executor but creates an income tax liability.