Should You Use a Paid or Unpaid Executor?

The Case for a Paid Executor

One approach is to appoint someone with no potential conflict of interest--that is, someone who doesn't stand to gain from the will. For this reason, many testators avoid naming family members or business partners. This helps avoid will contests from disgruntled relatives who might accuse the executor of cheating. If you have several beneficiaries who don't get along, you may want an outside executor who's independent of all factions. The larger the estate, the more the potential for conflicts, and the more you should consider naming an outside executor. You should also consider the possibilities of conflicts of interest if you have several beneficiaries.

There are sometimes reasons for choosing a paid executor instead of your spouse. Your spouse may be incapacitated by grief, illness, or disability. Nonetheless, he or she as executor will be personally liable for unpaid estate taxes and fines for late filings, even if he or she has delegated such tasks to a lawyer.

Furthermore, since the executor must gather all the estate assets, your spouse may be faced with the odious duty of retrieving money or property you loaned to other friends.

If you think your spouse may not be up to the job (considering that he or she may also be saddled with sole responsibility for any minor children), you might choose a lawyer or other professionals, even though it means paying a fee. Remember, this is a job that, primarily because of tax procedures, can take more than three years of involvement, though most estates take far less and in any event the first few months are by far the hardest.

For larger estates, it's often advisable to use a lawyer or a bank. A complicated estate that involves temporarily running a business often demands an institutional fiduciary, such as a bank, that can call on the advice of lawyers, tax experts, accountants, investment counselors, even business administrators; it's impartial and immortal.

You might also consider hiring your lawyer as executor if you anticipate a will contest or know that estate is going to require a lot of legal work.

How Much Does an Executor Charge for His Services?

If the executor is a beneficiary, for example, a family member, he or she may choose to forego the statutory executor's fee, but you can expect any executor who is not a beneficiary, such as a bank or lawyer, to charge a fee. Fees vary by state and are usually set as a percentage of the estate's value. For small and mid-sized estates--estates under $200,000 for example--expect a fee of one to four percent of the total estate. Although these fees usually are regulated by probate courts and state law, nonbeneficiary executors generally charge the maximum fee even if the estate requires less work than the complicated estates the statutory fee structure contemplates.

The Case for an Unpaid Executor

Most of the time, where there is little possibility of a contest, the fees that lawyers and other paid executors charge may make it too expensive to hire such outsiders. So many people choose a friend or family member who will waive (refuse) the executor's fee to which he or she would be entitled--and which comes out of your estate.

For people whose assets amount to less than half a million dollars or so, your spouse or a mature child or children may be your choice. This person will naturally be interested in making sure the probate process goes as quickly and smoothly as possible.

One compromise popular with small business owners is to appoint co-executors, such as one personal friend and one person with business expertise, and specify which executor will be responsible for which duties. Or, to prevent family dissension, your will may provide that all three of your children serve as co-executors. Co-executors can be a good idea if the main beneficiary lives in another state and it would be inconvenient for him or her to make frequent trips to handle clerical details; you could appoint another relative or friend who lives in the same city as the one in which the probate court is located, to handle local details. George Washington appointed seven executors!

Copyright 1999, 2000, 2002 American Bar Association