When a client is named as the executor of a friend or relative’s will, I am often asked whether it is possible to be compensated for the travel and expense of performing this task. A Houston attorney, Ron Lipman, recently created the following piece that addresses that question nicely:
As executor, you are most likely entitled to reasonable compensation for your services. That is the most typical fee provided for in wills written by lawyers. If your love ones will contain this type of provision, then you would decide how much of a fee is reasonable.
Most trust companies charge 1 percent to 2 percent of an estate’s asset value to serve as executor, so that would be a good starting point. Or you might decide instead that a certain amount per hour is reasonable. If you have been keeping track of the time you have spent working on estate matters, you could multiply the hours you have worked by your hourly rate and arrive at a fee.
Keep in mind that one’s will may provide that you are to receive no compensation for your services. If so, you would still be entitled to reimbursement for your expenses, but you would not be entitled to a fee for your time.
It is possible as well, although unlikely, that his will provides that you are to receive a certain dollar amount. If it does, then that is all you would be entitled to receive.
If the will is silent on the compensation issue, then Texas law entitles you to 5 percent of certain funds that go in and out of the state.
For instance, if you had to sell any real estate your father owned, then you would get 5 percent of the sales price.
If you had to pay a fee to a lawyer or an accountant, or if you have to pay taxes, you would get 5 percent of those amounts too. But simply distributing a bank or brokerage account to the estate’s beneficiaries would not entitle you to the same 5 percent.
The Texas statue also provides that you can apply to the court for more than 5 percent if the situation warrants extra pay. For instance, you may have had to run a business your father owned, thus justifying a higher fee.
Keep in mind that the greater your fee, the less the estate’s other beneficiaries would receive. For instance, your siblings might not be too happy if your compensation is unreasonably high. Also, any compensation you receive for your services would be taxable to you as income.
