How much does it cost to hire an executor?

How much does it cost to hire an executor?

When folks reach out about hiring me as their executor, price is top of mind for many (if not all). So let’s go over what it costs to hire a professional executor, including fees and other expenses.

We’ll start with the basics.

What does it cost to name a professional executor in my will or trust?

What does it cost to name a professional executor in my will or trust?

$0.

That’s right, there is no upfront cost when you name a professional executor in your will.

At this point, all you’ve done is nominate that person, and they don’t get paid just for being nominated. You haven’t died yet, so your executor hasn’t done any work yet.

Your executor only gets paid after they’ve finished their job and your final affairs are in order. That’s true whether you’ve hired a professional or appointed your best friend or a family member.

Does that mean I’ll have zero contact with you as my executor while I’m alive?

Not at all. Once you’ve named me in your will to serve as your executor, I’ll start reaching out to you for a once-a-year, FREE check-in call. The purpose of these calls is to make sure that: A) you’re still alive, and B) I’m up to date on your wishes.

Our check-ins will always be brief because I’m not charging you any fees (remember, I don’t see a dime until after I’ve fulfilled my duties). But even though the calls are short, they’re still critical.

I need to know what’s going on in your world so I can do my job when the time comes. This is especially important if you’re a solo ager, as you’ll probably lean more heavily on your professional executor since you don’t have a spouse or children.

How much does a professional executor cost after death?

There are a few key things to know here.

First, executor fees are almost always set by state law, whether it’s a percentage of the estate or a reasonable fee.

Second, when it comes to setting fees, states don’t distinguish between professional and non-professional executors. The cost will be the same whether you appoint me, a professional, or your nephew, who has never even heard the term “executor.”

Finally, it also makes no difference whether you appoint me yourself while you’re alive, or your amateur nephew decides after you die that he doesn’t want to go it alone and hires me.

People often think executor fees will vary based on factors like professional vs. non-professional, or who appointed the executor, or when they were appointed. But that’s really not the case.

The most important factor in determining how much your executor will cost is the state you live in, because most fees are set by states.

How are professional executor fees calculated?

In many states, the fees work out to be 2-3% of the estate’s value. In New York, where I’m based, it typically works out to about 3%. (When you think about it, that’s actually less than a real estate broker’s commission, which is usually somewhere around 5.5%.)

Some states don’t set a percentage and instead use the “reasonable fee” standard. This is when the court accepts a customary percentage as “reasonable,” based on the local cost of living.

For the estate percentage, here’s a simple example of how the calculation would work:

EXAMPLE 1: Solo ager Jane leaves her heirs a house worth $700,000 and no other assets. If the executor fees in her state are 3% of the total estate value, then Jane’s executor will get paid $21,000 for his services.

            Calculating Estate Percentage Executor Fees

[Estate value] x [percentage] = [executor fees]

Calculating Jane’s Executor Fees

$700,000 x 0.03 = $21,000

IMPORTANT: Executor fees only apply to probate assets. So in some cases, the fees won’t be based on the entire value of the estate, but a smaller amount. Here’s what I mean:

EXAMPLE 2: Benny dies leaving $800,000 in total assets, divided between two bank accounts: one worth $500,000 and one worth $300,000. But the $300,000 account has a named beneficiary and is not considered a probate asset. So the gross value of Benny’s estate is actually just $500,000, and the executor fees will only apply to that amount. This is because the executor does not have access or control over the non-probate assets. Assuming the executor fees are 3% of the total estate value, Benny’s executor will end up receiving $15,000.

Calculating the Gross Value of Benny’s Estate

[Total assets] – [non-probate assets] = [gross estate value]

$800,000 – $300,000 = $500,000

Calculating Benny’s Executor Fees

            [Gross estate value] x [percentage] = [executor fees]

$500,000 x 0.03 = $15,000

What are the other costs (besides fees) when hiring a professional executor?

Settling an estate DOES involve additional costs outside of executor fees. For example, there are court filing fees, accountant fees, real estate broker commissions, appraisal fees, move-out fees…basically, all the things that come up when you’re selling a deceased person’s property and managing their final affairs.

Whether you hire a professional executor or use an amateur, the types of fees will be the same. But hiring a pro can save you money in the long run, as I’ll explain in the next section.

What’s more expensive: professional executor or non-professional?

Professional or non-professional executor?

The stuff you’re paying for will probably be the same, but your overall expenses are almost guaranteed to be lower with a pro. That’s because your executor is a seasoned vet who’s handled probate before and knows how to get the job done quickly and efficiently.

A professional comes with pre-built systems and relationships with the other pros you need on your team (think: accountants, appraisers, movers, etc.). That helps make sure you get the best pricing and avoid costly mistakes. In addition, you’ll save on lawyer fees because your professional executor already knows most of the answers, which means fewer calls and fewer billable hours racked up.

Also, remember how some states base executor fees on a reasonable hourly rate? If you have an amateur executor, that hourly rate can get pretty expensive.

The one exception to the rule is out-of-state professional executors. If you use someone out of state, you’ll likely have to cover some travel expenses since your executor will need to show up in person for certain things (like property closings). But so long as you’re ok with that extra expense, the total costs should still be comparable if not better.

How big does my estate need to be to hire a professional executor?

It depends on the professional. Our firm is generally open to estates as small as $250,000, but we’ve worked with even smaller ones on a case-by-case basis. We intentionally keep our minimum estate size low so we can serve people who are typically ignored by banks and trust companies.

Banks tend to set their estate minimums in the $2-5 million-plus range. They also often require you to maintain a certain level of liquid assets invested with them. Some folks might consider that a cost (I know I do).

The benefits of hiring a professional executor

Here are some of the most common reasons why pro is the way to go:

  • Executor fees are the same, whether you hire a professional or an amateur friend/relative.
  • Amateurs can end up costing you more (think: mistakes) since it takes them much longer to get the job done.
  • Going pro lifts the burden from your friends and loved ones. Executorship can be a stressful job for amateurs, especially if they’re grieving. And non-professionals sometimes don’t even get paid at all, because of guilt or pressure from other heirs.
  • If you’re a solo ager, a pro can give you the buffer you need to settle your affairs privately and confidentially.
  • Going pro also helps solo agers avoid imperfect probate avoidance solutions, like beneficiary designations.
  • A pro has the know-how to handle unusual assets such as small businesses, collectibles, and bitcoin.

As an experienced probate attorney, I’ve managed probate cases for clients all over the world. I’ll make sure your estate is handled as swiftly, efficiently and effectively as possible—saving you (and your heirs) unnecessary costs, stress and headaches.

If you’d like to chat, please use the form below to get in touch.

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