Providing for Payment in Your Will
If you make provisions in your will to pay your executor, your wishes will prevail over the statutory amount provided for by your state’s laws. Your other option is to leave her a bequest in lieu of compensation. Executor compensation is taxable as income, whereas only a few states have inheritance taxes. Even among those that do, the rates are typically lower than income tax rates and the state may reduce or waive the tax if your executor is closely related to you. If you say in your will that your executor should receive $20,000 as compensation and she’s in a 25-percent tax bracket, she’ll actually receive only $15,000. But if you leave her a $20,000 gift, she often gets to keep the whole amount.
If you don’t make provisions for compensation in your will, your executor must ask the court for payment. In some jurisdictions, the statutes say that executors are entitled to “reasonable” compensation so the court must decide how much she should receive. Other states have a sliding scale for payment depending on the extent of your estate. For example, in Oregon, if the value of your probate estate is more than $50,000, she gets 2 percent.
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