Estate Administration

Do Executors Get Paid in Pennsylvania?

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Yes. Pennsylvania law entitles an executor to reasonable compensation for serving. The work is real, the legal obligations are significant, and the time commitment is often underestimated by the person accepting the appointment. An executor who spends a year managing an estate, filing tax returns, handling creditors, coordinating real estate sales, and accounting to beneficiaries is entitled to be paid for that work. The question is how much, and how that figure is determined.

Most executors who are also beneficiaries quietly waive the fee, often without realizing they were entitled to it. That decision can make sense depending on the circumstances, but it should be an informed choice, not an accidental one. Understanding how executor compensation works in Pennsylvania is useful whether you are drafting a will, accepting an appointment, or currently serving and wondering where you stand.

The Legal Standard: Reasonable Compensation

Pennsylvania does not set a fixed statutory fee for executors. The standard under the Probate, Estates and Fiduciaries Code is reasonable compensation. What is reasonable depends on what the executor actually did, the size and complexity of the estate, the degree of skill and care required, the results achieved, and the time involved.

Pennsylvania courts have long applied the schedule of rates derived from In re Johnston’s Estate as a practical framework for measuring reasonable compensation. The Johnston rates apply a declining percentage to tiers of the gross estate, yielding a base figure that courts treat as presumptively reasonable for a straightforward administration. Where the work is more demanding, additional compensation above that base is appropriate. Where the executor did little, the court may allow less. The schedule is a starting point, not a ceiling and not an entitlement.

An executor who manages significant litigation, addresses contested tax issues, administers a closely held business, or coordinates a multi-property real estate situation may be entitled to considerably more than a simple percentage would suggest. An executor who hands everything to professionals and does little beyond signing documents may be entitled to considerably less.

What the Will Itself May Say

The decedent’s will may address executor compensation directly. Some wills specify a dollar amount. Some set a percentage. Some say the executor shall serve without compensation, typically when the executor is also the primary beneficiary and the testator anticipated that the inheritance would be the compensation. Some say nothing at all and leave the matter to the default legal standard.

Whatever the will says on the subject controls, with two qualifications. First, the executor is not required to accept a fee lower than reasonable compensation if the will’s language would produce an unconscionably low result for substantial work performed. Second, an executor cannot simply write themselves a larger check than the will authorizes without court approval or the written consent of all interested parties.

When we draft estate planning documents, we address executor compensation expressly and in a way that reflects the testator’s actual intent, the likely complexity of the estate, and the relationship between the executor and the beneficiaries. Leaving it vague creates room for disputes that careful drafting prevents.

How Compensation Is Calculated in Practice

Pennsylvania courts applying the reasonableness standard look to the schedule of rates established in In re Johnston’s Estate and its progeny as a practical benchmark. Under that framework, compensation is calculated on a declining percentage basis against the gross estate: a higher rate on the first tier of assets, stepping down as the estate grows larger. Those rates are not a ceiling and not a floor in the strict sense, but they are the reference point courts and practitioners in this Commonwealth have applied for generations, and a fee within that range is presumptively defensible.

Where the work performed goes substantially beyond what an ordinary administration requires, additional compensation above the schedule is appropriate and supportable. A contested accounting, significant litigation, the sale of a difficult asset, or the administration of a closely held business are the kinds of services that warrant something more. The justification must be documented. Courts do not accept assertions of extraordinary effort without a record that supports them.

On the other end, there is a minimum below which it is not reasonable to expect a competent executor to work regardless of estate size. Administration imposes real obligations: filings, appraisals, creditor notice, tax returns, accountings. A small estate is not a simple estate in terms of the legal work required. A nominal fee that does not reflect that reality is not a figure the law requires an executor to accept, and it is not a figure that counsel should recommend.

Executor Compensation, Inheritance, and the IRS

The tax treatment of executor compensation is the point that most often drives the practical decision for a family executor. An inheritance passes to a beneficiary free of federal income tax. Executor fees do not. They are ordinary income, reportable in the year received, and subject to self-employment tax in some circumstances. An executor who is also a residuary beneficiary is therefore not indifferent between taking a fee and taking an equivalent amount as a bequest. The after-tax value of the fee is less.

For that reason, many family executors who stand to inherit a meaningful share of the estate are better served, from a pure tax standpoint, by waiving the fee entirely and receiving their interest as a beneficiary. The estate may also deduct executor fees as an administration expense, which reduces the inheritance tax base, but that benefit accrues to the estate and all its beneficiaries rather than to the executor personally. The offset is real but rarely complete, and it does not change the executor’s individual income tax exposure on the fee received.

The decision is not always obvious. When the executor’s share of the estate is modest relative to the work performed, or when the executor is not a primary beneficiary, the fee may be the appropriate and fair form of compensation. When the estate is large and the executor stands to receive a substantial inheritance in any event, waiving the fee and avoiding the income tax is often the better result. There is no universal answer, and the decision should be made deliberately rather than by default or oversight.

Fairness to the Other Heirs

A point that often goes unaddressed: executor compensation paid from the estate reduces what every beneficiary receives. When the executor is also a beneficiary, taking a full fee is effectively shifting value from the other heirs to oneself, in addition to whatever inheritance share the executor receives. That is not improper when the fee is reasonable and the work warranted it. It can become a source of real grievance among co-beneficiaries when the fee appears disproportionate to the effort observed.

Transparency early in the administration, and ideally agreement among the beneficiaries before a fee is taken, prevents the majority of those disputes. An executor who communicates openly about compensation, who presents the calculation to the beneficiaries as part of the accounting, and who invites consent rather than simply acting, is in a far stronger position than one who presents a completed fact at the end of administration. Where a co-beneficiary objects and the matter reaches the Orphans’ Court, the court’s review of the fee is de novo. A fee that looked defensible in isolation may look different when the beneficiaries’ perspective is before the court.

When Multiple Executors Serve Together

Pennsylvania estates sometimes name co-executors, often siblings or a family member alongside a professional. When multiple executors serve, the total compensation is not multiplied by the number of executors. Rather, reasonable compensation is allocated among those who actually performed the work, in proportion to their contribution.

Co-executors who divide the work reasonably, who document their respective contributions, and who communicate with beneficiaries throughout administration typically avoid disputes over fee allocation. Co-executors who do not coordinate well, or where one carries the load while another is largely absent, often find themselves in exactly the kind of internal disagreement that the testator hoped to avoid by naming multiple people in the first place.

Professional Executors and Institutional Trustees

When a bank, trust company, or attorney serves as executor, the compensation is governed by the institution’s published fee schedule or by a written fee agreement, subject to the reasonableness standard. Professional executors bring administrative infrastructure and legal accountability, but their fees tend to be higher and less negotiable than what a family member might charge or waive.

The decision to name a professional executor versus a family member involves tradeoffs that are worth discussing at the estate planning stage rather than after the testator is gone. Complexity, family dynamics, geography, the liquidity of the estate’s assets, and the trust level among beneficiaries all bear on which choice makes more sense for a particular family.

Disputes Over Executor Compensation

The most common disputes arise when the executor takes a fee without disclosing it clearly to beneficiaries, or when the fee taken seems disproportionate to what the beneficiaries observed the executor actually doing. Transparency in accounting, and ideally written consent from beneficiaries to the compensation amount before it is paid, prevents the largest share of these problems.

When disputes reach the Orphans’ Court, the court has broad authority to reduce or disallow compensation that it finds excessive or unsupported. An executor who cannot document the work performed, or who took a fee before completing the accounting, is in a difficult position. Executors who proceed with legal guidance throughout administration are rarely in that position.

Practical Guidance for Executors Currently Serving

Keep contemporaneous records of time spent, decisions made, and actions taken. Do not wait until the accounting stage to reconstruct what you did over the course of a year or more. Discuss compensation with the beneficiaries early and document any agreement reached. If you intend to waive the fee, do so in writing so there is no ambiguity. If you intend to take it, make sure it appears in the accounting and is supported by the work record.

And if the estate is at all complex, involving real estate, a business, multiple beneficiaries, or inheritance tax issues of any scale, get legal counsel before problems develop rather than after they have.

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This article is for general informational purposes and does not constitute legal advice. Tax treatment of executor fees depends on individual circumstances. Contact our office to discuss your specific situation.

Related:
Wills, Estates & Trusts  · 
Estate Administration and Probate  · 
How Long Does Probate Take in Pennsylvania?  · 
Pennsylvania Inheritance Tax