When are Executor Fees Paid in Tennessee?

Executors don’t have it easy: Between communicating with beneficiaries, going through probate, and paying off the estate’s debts and taxes, it’s only natural that an executor is compensated for their work. In Tennessee, this compensation is also known as an executor fee and is paid out from the estate. Here’s how it works:

How do estate executors get paid?

In Tennessee, an executor who wants to receive compensation must file a petition for compensation with the relevant court where the estate is being probated. In other states, there is often a specific amount that an executor is entitled to. In California, for example, an executor is to specific percentages depending on how large the estate is. In Tennessee, the compensation amount is completely up to the court. The law only dictates that the executor is entitled to “reasonable” compensation.

The court decides what they consider to be fair compensation based on the size of the estate, its complexity, and whether the executor is a beneficiary or not. However, some counties within Tennessee do have more specific guidelines.

In Shelby County, for example, the usual rates for executors are 1%-2% of the first $100,000, and then 0.5% to 1% on the next $900,000. In Hamilton County, for example, executors can expect 5% on the first $20,000, 4% on the next $80,000, and 3% on the next $150,000.

Estate executors in Tennessee are also eligible to receive a bonus in cases of extraordinary service. What this means is that the responsible court will take into account any additional difficulties in settling the estate, such as dealing with the sale of real estate, facing litigation against the estate, or tackling particularly complex tax situations.

As you can see, there is a lot of variation when it comes to executor fees in Tennessee. The best course of action is to see what the going rate for fees is in the county where the estate is being probated, and then base that off the size of the estate. If the will has established a specific amount as compensation for the executor, then this will usually be granted by the court as long as it’s within the realm of the reasonable.

When do executors get paid in Tennessee?

Executors can only claim their fee once all of the estate’s outstanding debts and taxes have been paid. This means that an executor will usually get paid toward the end of the settlement process, when all loose ends have been tied up, but right before the beneficiaries receive their inheritance. Because an executor can only collect their fee once all other outstanding business has been taken care of, an executor can expect to be paid about six months to a year after probate has been initiated.

When should executors waive their fee?

There are certain situations where an executor should waive their right to compensation. Since an executor can claim their fee before beneficiaries receive their inheritance, it’s important to ensure transparency over the payment to avoid any conflicts and resentments. If it’s clear that the fee eats into a large part of the beneficiaries’ inheritance, it may be worth waiving the fee or settling for a different amount.

It’s also important to keep in mind that executor fees are considered taxable income. If an executor is also a beneficiary to the estate, they should seriously consider waiving the fee and receiving their inheritance instead, thereby avoiding unnecessarily high taxes.

If you’re currently facing difficulties or confusions in your role as executor, we’re here to help. Our team of seasoned estate professionals can help you tackle any issue, whether it’s about executor fees, probate, or taxes. Get in touch for a free consultation and find out how we can help.