As others have said, the statutory executor fee differs by state. If you hear "X percent," then ask "X percent of what?"
In some states, it's X percent of the estate's value. But in Texas, for example, the statutory fee is "five percent commission on all amounts that the executor or administrator actually receives or pays out in cash in the administration of the estate." The statute also provides that the compensation "may not exceed, in the aggregate, more than five percent of the gross fair market value of the estate."
https://statutes.capitol.texas.gov/Docs/ES/htm/ES.352.htm
That means, basically, five percent of the checks the executor writes (disbursements) and five percent of the deposits he makes (receipts), and by statute doesn't include life insurance proceeds, cash distributions to heirs, or cash on hand in a bank.
But get this. I just googled
texas executor commission
https://www.google.com/search?q=texas+executor+compensation
The "featured snippet" at the top of the search results is this:
According to the Estates Code, an executor in Texas is entitled to up to 5% of the estate's total financial transactions. For Example: If an executor has to settle an estate worth $250,000 - if they do their duties correctly, and honestly are entitled up to $12,500 as compensation for administering the estate. [bolding in original]
They got the "total financial transactions" kind of right, but then give a number that is 5% of the total estate. Oh, but it says "up to." Which technically is correct, but because of the structure, very few (maybe even zero?) estates will result in an executor commission of 5% of the total estate.
So I went to the actual website:
https://www.clearestate.com/en-us/blog/executor-fees-texas
It does warn that the compensation "does not include certain estate assets" but doesn't ever give any number other than the 5% of the total estate. And this is google's top result and the snippet is probably the only thing most people will read.
Okay, so let's go to the second result. (I'm skipping google's Q&A because I just can't with the Q&A.) The second result is a Houston law firm's website:
https://houston-probate-law.com/how-much-can-an-executor-in-texas-be-paid/
They do a decent job of explaining it, and actually include a calculation:
A Texas executor can charge up to 5% of the estate’s total financial transactions (all amounts the executor actually receives or pays out in cash in the administration of the estate), according to Texas Estates Code. For example, if the value of all estate assets was $200,000, and the executor actually paid out or received $18,000 in cash (all within 120 days of appointment), the maximum fee that could be charged would be $900 ($18K x 5%).
Correct. HOWEVER, if you continue scrolling down the page, there are "Related Questions." These are the first two:
How much can an executor pay themselves in Texas?
In Texas, an executor is allowed to pay themselves at a rate of 5% of the value of the estate.
What is a reasonable executor fee in Texas?
A reasonable executor fee in Texas is typically 5% of the probate estate’s value.[bolding in original]
The hell? And it gets worse. This is at the end:
Executor Hourly Rate / Compensation Calculator
The Texas State Law Library has compiled an executor hourly rate calculator. In order to use the calculator, you must identify which county the will is being probated in and enter the terms of the will. You can use this executor hourly rate calculator to determine how much an executor can make in Texas.
I didn't see it on the State Law Library's website, so I called and a guy who's been there for 10 years says he's never heard of such a thing. I don't doubt him, because under the statute, executors don't have an hourly rate, the county where the will is probated has nothing to do with the executor's compensation, nor do the terms of the will.
Okay, let's go to the third google result:
https://www.estateexec.com/Docs/Compensation?state_abbrev=TX
It starts out nice and clear:
In Texas, an executor is entitled to 5% of all amounts the executor actually receives or pays out in cash in the administration of the estate, not to exceed 5% of the estate gross value. [bolding in original]
And goes on to give an example:
So for example, a Texas estate with a gross value of $600K at death, with $100K in cash, that incurs $25K in estate expenses, would generate $26,250 in executor commissions (see calculator below).
No it wouldn't. It doesn't matter what the gross value of the estate is, or how much cash it has (except to operate as
a ceiling on the compensation). I assume the "$25K in estate expenses" is the cash paid out by the executor in the course of administering the estate, and 5% of that is $1,312.50. Not $26,250.
So I tried to use the calculator and the types of numbers it calls for aren't the same as the types of numbers in the example. But I was able to make some inferences to make it work. The gross estate is $600,000; clear enough. The calculator asks for "qualified assets." Hmm. Maybe gross estate ($600,000) minus the $100,000 in cash (since executors don't get 5% of cash on hand), means $500,000 in qualified assets.
And then $0 in "estate income." Put the $25,000 of "expenses" in the "payments" field on the calculator, and $0 in "Business Mgmt." If I do that, I get $26,250 in executor fee; they're using 5% of the "qualified assets" plus 5% of the "expenses." That's wrong.
Obviously...beware of what you read on the internet.
