An executor (known as a “personal representative” in Massachusetts) is named in the Last Will and Testament, and that person is responsible for managing the estate after the testator (person who writes and signs the will) passes away. The personal representative can be a very time-consuming position which includes gathering and securing the deceased’s assets and household belongings, paying debts and taxes, establishing the value of estate assets, filing court paperwork, and making distributions to beneficiaries.
As an executor, in most cases you’re entitled to receive a fee for your executor services. The first task is to check the will, which may have specified a compensation amount or even prohibited an executor fee. If the will doesn’t mention anything about an executor fee or the deceased died without a will, the executor fees are determined by state law.
In some states, executor fees are a certain percentage of the probate estate, but in Massachusetts the executor is entitled to “reasonable compensation.” The fees can also be subject to approval by the probate court.
There really are no real guidelines as to what “reasonable compensation” means. The best approach is to keep detailed records of the tasks you perform, the dates the tasks are done, the amount of time each task takes, and an hourly rate for each task. The hourly rate can vary depending on the task. For example, preparing a tax return is a more difficult effort than writing a check to pay a bill. In the final accounting of the estate, you’ll provide all of this information.
One important fact to remember is that executor fees are considered income and are taxable. If you want to avoid tax consequences, you can decline to be paid for your services.