When someone passes away in California, the person responsible for administering their estate often takes on a significant amount of work. From identifying assets and paying creditors to managing property and distributing inheritances, serving as an executor can be a time-consuming responsibility.
One common question we hear in estate planning is: Does an executor have to be paid a percentage of the estate, or can the person making the will choose a different arrangement?
The good news is that California law provides several options for executor compensation. Understanding these options can help individuals create an estate plan that reflects their wishes while treating the person administering their estate fairly.
1. California’s Statutory Executor Compensation
California Probate Code § 10800 establishes a statutory fee schedule for executors and other personal representatives administering probate estates.
The standard compensation is calculated as follows:
| Gross Probate Estate Value | Executor Compensation |
|---|---|
| First $100,000 | 4% |
| Next $100,000 | 3% |
| Next $800,000 | 2% |
| Next $9 million | 1% |
| Next $15 million | 0.5% |
| Amount exceeding $25 million | Reasonable amount determined by the court |
These percentages are applied progressively, much like income tax brackets.
Example: A $1 Million California Estate
If an estate has a probate value of $1 million, the executor’s statutory compensation would be:
- First $100,000 at 4% = $4,000
- Next $100,000 at 3% = $3,000
- Remaining $800,000 at 2% = $16,000
Total statutory executor compensation: $23,000.
For a $2 million probate estate, the statutory compensation would be $33,000.
Importantly, California generally calculates these fees using the value of the probate estate without deducting mortgages or other liens on estate property.
For example, if a home is valued at $900,000 but has a $600,000 mortgage, the home’s value for calculating statutory compensation is generally $900,000—not the $300,000 in equity.
However, not every asset a person owns is necessarily part of the probate estate. Assets held in a living trust, certain jointly owned assets, and accounts with valid beneficiary designations may pass outside probate and generally are not included in this calculation.
2. Can You Pay an Executor a Flat Fee Instead?
Yes. California allows a will to specify compensation for the executor, including a fixed lump-sum payment.
Under California Probate Code § 10802, when a will provides for executor compensation, that provision generally governs instead of the statutory percentage schedule.
For example, someone preparing a will might decide that their executor should receive:
- A flat fee of $5,000.
- A lump-sum payment of $10,000.
- A specified amount based on anticipated responsibilities.
- A different compensation arrangement described in the will.
This flexibility can be particularly helpful when the executor is a trusted family member who is willing to serve without collecting the full statutory percentage.
Example: Choosing a Flat Fee
Suppose an individual has a California probate estate valued at $1.5 million.
Under the statutory schedule, the executor would ordinarily receive $28,000 for ordinary services.
However, the individual may prefer to provide a $10,000 lump-sum fee in the will.
This approach can establish a clear expectation and may reduce administration expenses, particularly when the estate is relatively straightforward.
There is one important limitation: Under Probate Code § 10802, the compensation provided in the will is generally the executor’s full and only compensation, but the executor may petition the probate court to be relieved of that provision. If the court finds it is to the advantage of the estate and in the best interest of the persons interested in the estate, it may authorize greater compensation than the will provides. A flat-fee provision therefore does not necessarily create an absolute cap.
The will should be carefully drafted, and the person preparing it should discuss compensation expectations with the proposed executor.
3. Can an Executor Serve Without Compensation?
Absolutely.
An executor is not required to accept compensation for administering an estate.
This is common when the executor is a spouse, adult child, sibling, or another close family member who is also a beneficiary.
For example, a parent might appoint an adult child as executor. The child may prefer to waive compensation so that more money remains available for distribution among the beneficiaries.
There can also be tax considerations.
Executor fees are generally taxable income to the person receiving them. In contrast, an inheritance is generally not subject to federal income tax simply because it is received.
An executor who is also a beneficiary may therefore want to discuss the financial consequences of accepting or waiving compensation with a qualified tax professional.
Even if an executor waives compensation, they may still be entitled to reimbursement for reasonable and necessary expenses incurred in administering the estate.
4. Can an Executor Receive Additional Compensation?
Yes. California distinguishes between ordinary executor services and extraordinary services.
Under California Probate Code § 10801, a probate court may approve additional reasonable compensation for extraordinary services.
Examples may include:
- Managing or operating a business owned by the estate.
- Handling unusually complicated real estate transactions.
- Addressing substantial tax issues or audits.
- Managing complex litigation involving estate assets.
- Performing other services beyond routine probate administration.
Extraordinary compensation is not automatic. The executor generally must request it, and the probate court determines whether additional compensation is appropriate.
If a will establishes a lump-sum payment, the language should address whether the amount is intended to cover ordinary services only or whether the testator also wishes to limit requests for additional compensation, subject to applicable law and court approval.
5. Can an Executor Be Paid Hourly?
California’s default probate compensation system is percentage-based, not hourly.
However, a will may provide an alternative compensation arrangement, such as payment at a specified hourly rate, rather than relying on the statutory schedule.
For example, a will might provide that the executor receive $75 per hour for documented services, subject to a stated maximum.
An hourly arrangement may be appropriate when the amount of work is difficult to predict.
It can also create administrative challenges, including the need to maintain detailed time records and potential disagreements about whether particular tasks were necessary or reasonable.
As with a fixed fee, the executor’s right under Probate Code § 10802 to petition the court for greater compensation than the will provides should be considered.
6. Can an Executor Receive a Percentage Different From California’s Statutory Rate?
A will can also establish an alternative percentage-based arrangement.
For example, a person may wish to compensate the executor at 1% of the probate estate rather than using California’s statutory fee schedule.
This may be useful when the estate is substantial but the expected administration is relatively simple.
The provision should clearly define which assets are included in the calculation and how the compensation is determined.
Again, any alternative arrangement should account for California’s rule allowing an executor to petition the court for relief from will-specified compensation.
7. Executor Compensation vs. Trustee Compensation
One of the most important distinctions in California estate planning is the difference between an executor and a successor trustee.
An executor administers an estate through probate and is generally subject to California’s statutory executor compensation framework.
A successor trustee administers assets held in a trust and is subject to different compensation rules.
Under California Probate Code § 15680, a trustee generally receives compensation as provided in the trust instrument. If the trust does not specify compensation, Probate Code § 15681 generally permits reasonable compensation under the circumstances.
For example, a living trust might provide that the successor trustee receives:
- A flat fee of $5,000.
- An hourly rate.
- An annual percentage of trust assets.
- Reasonable compensation for services performed.
- No compensation.
A trust may also provide different compensation arrangements for a family member serving as trustee and a professional fiduciary.
This is one reason a comprehensive estate plan should address both executor and successor trustee compensation rather than assuming the same rules apply to both. For more on the trustee’s role, see What Does a Trustee Do? A Practical Guide to Trust Administration and Corporate Trustee vs. Individual Trustee: Do You Need One and What Does It Cost?.
8. Who Pays the Executor?
Executor compensation is generally paid from the probate estate, not directly by the beneficiaries.
The compensation is an estate administration expense and ordinarily requires probate court approval before payment.
Because these fees reduce the assets available for distribution, the compensation arrangement can affect the amount ultimately inherited by beneficiaries.
Executor compensation is also separate from attorney compensation. In California probate proceedings, attorneys may be entitled to their own statutory compensation under Probate Code § 10810, along with any court-approved extraordinary fees.
As a result, a probate estate may incur both executor fees and attorney fees.
9. Which Executor Compensation Option Is Best?
There is no single arrangement that works for every California estate.
The appropriate choice depends on the estate’s size, complexity, family relationships, and the anticipated responsibilities of the executor.
Statutory compensation may be appropriate when the executor will be responsible for significant administrative work or when the person preparing the will prefers to follow California’s default rules.
A fixed lump-sum fee may be attractive when the estate is straightforward, the executor is a trusted family member, and the person preparing the will wants to establish clear compensation expectations.
Hourly compensation may be appropriate when the work is difficult to estimate, although recordkeeping and disputes over time spent should be considered.
Waiving compensation may make sense when the executor is also a beneficiary and prefers to preserve estate assets for inheritance.
Alternative percentage compensation may be useful for larger estates where the statutory fee would be substantial compared with the anticipated work.
Whichever option is selected, clear drafting is essential.
10. Why Executor Compensation Should Be Addressed in Your Estate Plan
Many people spend considerable time deciding who will inherit their assets but give little thought to the person responsible for administering those assets.
Yet executor compensation can become a source of disagreement among family members, particularly when one beneficiary is performing the work and others are not.
Addressing compensation in advance can help establish expectations, reduce uncertainty, and make estate administration more manageable.
It is also important to remember that naming someone as executor does not guarantee that the person will ultimately serve. The proposed executor may decline the appointment, and an appointed executor may have statutory rights concerning compensation.
A carefully prepared will should account for these possibilities.
Planning Your California Estate? Ginsburg Law Group Can Help.
At Ginsburg Law Group, we help individuals and families make informed decisions about estate planning, including wills, trusts, powers of attorney, and the responsibilities of executors and successor trustees.
Whether you prefer California’s statutory executor compensation schedule, a fixed lump-sum payment, or another arrangement, your estate planning documents should clearly reflect your intentions and comply with applicable law.
Contact Ginsburg Law Group at www.ginsburglawgroup.com to discuss your California estate planning needs.
Disclaimer: This article is for general educational purposes only and does not constitute legal advice. California probate law and the terms of individual estate planning documents can affect compensation rights. Consult a qualified attorney regarding your specific circumstances.
Frequently Asked Questions
Does California require an executor to receive 4% of the estate?
No. The 4% rate applies only to the first $100,000 of the probate estate under the statutory schedule. Lower percentages apply to subsequent value brackets. A will may also specify an alternative compensation arrangement.
Can I leave my executor $5,000 instead of paying statutory fees?
Yes. A California will can specify a $5,000 lump-sum fee, although the executor may petition the probate court for greater compensation, which the court may allow if it finds that doing so is in the best interest of the estate and the persons interested in it.
Can an executor also inherit from the estate?
Yes. An executor can be both a beneficiary and the person responsible for administering the estate.
Are executor fees taxable in California?
Executor fees generally constitute taxable compensation. Inheritances generally receive different federal income tax treatment. Executors should consult a tax professional before deciding whether to accept or waive fees.
Does an executor get paid before beneficiaries receive their inheritance?
Executor compensation is generally treated as an estate administration expense and is paid subject to applicable probate procedures and court approval.
Do California trustees receive the same statutory percentages as executors?
No. Trustee compensation is governed by the trust document and applicable trust law, rather than automatically following California’s probate executor fee schedule.
