E327 Professional and Amateur Executor Cost the Same

E327 Professional and Amateur Executors Cost the Same

How much does a professional executor cost? Most people are surprised to learn that executor fees are the same whether you choose an experienced professional or your unemployed nephew who has lots of spare time. When people realize that they are paying the same cost, they will probably choose a professional executor.

In fact, your estate will probably even save on expenses with a professional vs.an amateur.

Executor fees set by state law

Executor fees set by state law

Executor fees are almost always set by state law, whether it is a percentage of the estate or a reasonable fee. The percentage often works out to 2-3% of the estate’s value, which is less than half of a broker’s commission in most states. Some states use the “reasonable fee” standard, and the court accepts a customary percentage as “reasonable.”

Sometimes the reasonable fee is an hourly rate that the court deems acceptable. If you have an amateur executor, the hourly rate can get pretty expensive. If the executor doesn’t know much about probate, it will take him longer to accomplish tasks than a professional executor. Sometimes amateur family/friend executors attract more drama. The heirs are more likely to contest the fees, and the executor may not get paid at all.

Professional executor save time and expenses

Professional executor save time and expenses

As with anything else, a person who has done something hundreds of times is probably better at it than someone who has never tried. A professional executor is experienced, efficient, and has the right contacts. A professional executor knows the person to speak with at the bank rather than talking to 17 different banks. He knows which court clerk is the surly one and which one will push your paperwork through. He also knows which vendors have the best value for the cost (cleaning crews, painters, contractors, accountants, etc.).

A professional executor also knows which services are not necessary. For example, staging an apartment for sale is expensive, but usually not necessary. We’ve seen staging bills as high as $20,000! As an heir, I’d be upset that my inheritance went to pay for something like that. Some contractors pitch pretty extensive renovations, like a marble countertop. Because it’s not their money or their house, some executors go into HGTV-mode.  There is no need to knock out the walls; we just need to clean the home and make it look like it hasn’t been lived in for 40 years.

There are circumstances where it’s beneficial to stage and renovate a home, but not for estates. The longer a probate property sits around, the more it will cost the estate.

How much do banks charge to be executors?

How much do banks charge to be executors?

Banks are the exception; they will sometimes ask for special language in the will or trust opting out of state law and getting higher fees with higher minimums. A large entity, like a bank, doesn’t want to be bothered with small estates and small fees.

On top of that, most banks won’t agree to be your executor unless you have a decent amount of liquid money invested in their bank. We made a recent call to a bank who refused to act as executor for a $2.5 million estate. Even if you have enough money to qualify, you still need to wait for their risk analysts and committees to accept. It is a long process…IF they even accept. you.

As you can see, it’s more cost-efficient to hire a professional executor than to choose your unemployed nephew. So if you don’t want to burden a relative or friend with the task, please check out my book, “How to Hire a Professional Executor,” available on Amazon.

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