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Executor fee – to take or not to take?

SodiumFreeSodiumFree Posts: 538Registered User Member
edited December 2011 in Parent Cafe
Background: I am the co-executor on my mother’s estate. (My father pre-deceased my mother many years ago.) The other executor is an attorney. I will be inheriting 1/4 of the estate; the other 3/4's will go to my sister, my brother, and two nephews, the adult sons of a deceased brother (my nephews will each get 1/8).

I just found out from the accountant who is doing the estate taxes that my share of the executor fee will be about $20,000, under New Jersey law. I know my co-executor, the attorney, intends to take his share. What I need to decide is whether I will take my fee.

Unfortunately, I never thought to discuss this issue with my mother, so I don’t know what her wishes would have been. But I know that I feel very uncomfortable taking such a large fee, because it would mean I would be getting $20K more than my siblings and nephews. Although being an executor has involved some work and worry (I’m a worrier, so that’s inevitable!), I don’t feel I’ve done anywhere near enough work to warrant such a large fee. It just does not seem fair that I should get that much more money than my siblings and nephews.

More detail: my sister has not helped with the estate, but she lives quite far away, and there really is not anything she could have done from a distance to help. I know she feels guilty about this, but she really should not. My brother has helped, though, mostly in joining me in going through all my mother’s belongings, which was a long, hard job.

My husband’s position is that I should take the fee, although he will defer to my decision.

I know this is my personal decision to make, but – any thoughts would be very much appreciated!
Post edited by SodiumFree on
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Replies to: Executor fee – to take or not to take?

  • kelsmomkelsmom Posts: 12,628Super Moderator Senior Member
    It depends on your family. When my brother died, another brother acted as executor. He did not take a fee, but he had an itemized list of all costs associated with the death. He repaid himself from the estate, and the costs were all more than legitimate. My niece got extremely upset with him and has broken off contact with us. Frankly, I think she is a selfish brat (even considering the fact that it was her father and it was tragic - yes, she has been THAT bad), and I feel that it is her problem. However, if that sort of reaction might bother you, it may not be worth it. Our problem arose over a couple thousand dollars in reimbursements.
  • SkyhookSkyhook Posts: 1,095Registered User Member
    This is just one opinion, and it is how I would feel in your shoes, so fwiw.

    If you split the $20,000 four ways, you would get $5000. So, the difference between what you'll have if you keep it and if you split it is $15,000. To me, $15,000 is not worth having bad feelings with my siblings. So, I would split it four ways.

    [Even if the money was greater, I would figure out some logic why I would not want to keep it all for myself. It just doesn't seem right to me.]
  • zoosermomzoosermom Posts: 24,236Registered User Senior Member
    If you are in good standing with your siblings and you don't have a dire need for the money, why not split it with them? If there is any possibility of hard feelings, I would consider what the loss of your relationships with your siblings would mean to you. Which is, of course, the worst case scenario. In my family, we had a wealthy relative die and leave large sums of money to two of my mother's kids, which ended up tearing the family apart. Not because of the "get nots" but because of the "gets." I don't think there is any money worth that.

    You are entitled to the money and if you particularly need it or have the kind of siblings who would think it completely appropriate and fine for you to comply with the law by taking the money, you should actally take it.
  • Youdon'tsayYoudon'tsay Posts: 16,591Registered User Senior Member
    Personally, I'd take the money as I'm sure you're downplaying the work and worry of having been executor. But if the stress of taking the money is too much, then split it four ways like the rest of the estate.
  • somemomsomemom Posts: 9,357Registered User Senior Member
    Having spent quite a bit of time over the past several years dealing with elder care and estate issues, I can see many valid reasons to accept the fee, especially if you lost other significant work or family time, BUT you are saying you feel you have not done enough work to merit that amount. Did the attorney do that much more than you? Is it $20k to you and $20k to the attorney? How much is the total estate? Is that $20k to you a small or large portion of what is left. If you get $1,020,000 and your siblings each get $1MM, take it. If you get $40k and each sibling gets $20k, hmm, I can see your point. But then why does the attorney get so much?

    If the fee is 10% and the estate is $400k, you get $110k & your sibs get $90k, that is less clear cut. Did you or your helpful brother lose work time to perform the duties? Should you give him a share for the time involved in helping?

    There are absolutely valid reasons why one could justify going either way, more details please.

    Oh, and how do your siblings feel about it? In theory and if they actually know the real amount? They may be fine with $2k, but aghast at $20k
  • colorado_momcolorado_mom Posts: 6,557Registered User Senior Member
    If the executor fee is 2X$20K, I am assuming that means $400K estate. So sibling are getting some big checks already. Personally I think it would be fair to keep the fee (especially if it would help with college cost burdens), but you can better judge if that risks causing family strife.

    If there is a charity that was near and dear to your mother's heart, that could be another option. Hmmmm.... thinking more on that, selfish siblings might gripe about that just as much.
  • BayBay Posts: 10,985Registered User Senior Member
    OP,
    I like your question and will likely have to deal with the same issue eventually. I like this approach:
    He did not take a fee, but he had an itemized list of all costs associated with the death. He repaid himself from the estate,

    From what I have read and already experienced, the family fall-out that ensues after a relative dies is not really about the money, it is about pent-up relationship issues that have festered for lifetimes. Kelsmom's niece was probably upset with her uncle for reasons other than the money issue, and the money just brought it out in the open. Even if there is no money involved, the dividing up of "things" can cause the same problems.
  • NJresNJres Posts: 5,284Registered User Senior Member
    You work for it and are entitled to it. When my MIL died my wife was executor. She and her sister were the only 2 heirs. Wife took 10% off the top and split the balance 50/50. SIL had no complaints. It was a lot of work, but that is really beside the point.
  • bookreaderbookreader Posts: 1,371Registered User Senior Member
    You were not GIVEN this amount of money. You EARNED it. This is an important distinction.
    Did you ever keep track of how many hours you spent doing this? I think you may be surprised at how many hours this job took to complete.
    My 2 cents.
  • GladGradDadGladGradDad Posts: 2,794Registered User Senior Member
    I don’t feel I’ve done anywhere near enough work to warrant such a large fee. It just does not seem fair that I should get that much more money than my siblings and nephews.
    I think you answered it right there.

    If you had a lot of expenses related to the duties or possibly a huge amount of work related to it then that's one thing but given what you say, and that you feel that you in fact did NOT really earn it, I too wouldn't feel comfortable taking it. I'd feel much better sharing it with the others.
  • dadxdadx Posts: 2,140Registered User Senior Member
    A tricky problem.

    It depends on your relationship with your siblings and nephews. My guess is that they will (either silenty or out loud) scream about your getting 20K for nothing. Maybe not all of them, but possible some.

    It is a rare family that wishes everyone well, and is fair in its judgements. If you value calm in the family, then I would not take the fee.

    I have an inlaw who told a story of a death in their family where one of the the familiy members who was a lawyer billed the estate at the maximum allowed rate for some "services" that had been provided. It didn't sit well with the other siblings (who were well educated and relative well off too) and led to a non-speaking period that extended over years.

    If you don't feel the fee is in proportion to your time expended, its likely your relatives might feel the same way. As a contrary position, if the relatives already resent you for various and sundry reasons, go ahead and take the fee.

    EDIT: Just noticed the estate tax comment. If the estate taxes are computed after the fee, then you and your relatives would be better off if you take the fee and then gift 5,000 each to the other three parties, after everything is done. There is absolutely no reason to pay any estate tax more than necessary.
  • Proud MaryProud Mary Posts: 170Registered User Junior Member
    I am an attorney and have dealt with estates for many years. In my experience, most people do not take the Executor fee UNLESS they have put in many hours, have lost time at work, and so on working on the estate. Most executors do not . . . they leave it to the estate's attorney to handle most of the details (other than cleaning out the decendant's home, which can a major time suck.)

    As some people have said, you need to balance your need for the money/time spent working on the estate vs. the possible hard feelings your family members may have. As someone said above, family issues related to estates usually aren't caused by money, but, rather, by long-standing family issues that take the form of arguments over money. I've seen knock-down, drag-out fights over some vase that the parties probably wouldn't ever buy but suddenly has the value of the Hope diamond - mom loved ME best so she'd want ME to have this vase. If you take it, I'll NEVER talk to you again. And that happens.

    You ARE legally entitled to the money but only you can decide if it's worth taking.
  • zoosermomzoosermom Posts: 24,236Registered User Senior Member
    It doesn't sound like Sodiumfree's siblings are complainers. It's equally likely that they are as considerate as she and would think the executor fee is right and proper. With a brother who helped and a sister who felt guilty that she could not, it sounds like a group of reasonable, nice people.
  • bclintonkbclintonk Posts: 6,487Registered User Senior Member
    I'm no tax expert, but I'd watch out for the tax implications here. Seems to me the $20K is taxable income to you; it's money you earned for a service you rendered. So it's going to be taxed at your marginal federal and state tax rates; plus (I'm not sure about this) you may need to pay self-employment tax on it (equivalent to the employee's plus the employer's share of the Social Security & Medicare payroll taxes). Depending on your tax bracket, that could mean 40% of more of it gets taxed away. If you take the $20K and give $5K to each of 3 sibs, you could end up in the red after you're taxed on $20K of additional income---I think those would be gifts to your siblings out of your taxable income, I don't think they can take it as income because they weren't co-executors and didn't earn it.

    If I were you, I'd decline the fee and leave that $20K in the estate to be distributed 4 ways. That's not taxable income to anyone. And if the estate is in the $400K range, I should think there wouldn't be estate taxes due on it. If there are estate taxes, it's more complicated. But check with someone who knows something about taxes, don't take my word for it; as I said, I'm no expert.
  • Youdon'tsayYoudon'tsay Posts: 16,591Registered User Senior Member
    Your mom made you executor for a reason. Trust your instincts.
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