Pay estate administrative expenses
To begin paying off the estate’s debt, start by paying the estate’s administrative expenses.
These are expenses incurred during the administration of the estate throughout the legal probate process.
Typically, estate administration expenses include:
- Attorney fees
- Accountant fees
- Tax advisors
- Financial advisors
- Appraisal services
- Executor commission
- Services related to the maintenance of estate property, such as cleaning fees, lawncare, and estate sales
Pay these bills from the Estate account, not a personal bank account.
Also, the executor commission, or the amount the executor is to be paid for serving as executor, will be determined by the deceased’s will or state law.
In some situations, the deceased’s will might state that the executor is to be given a specific asset of the estate, such as a car, for their payment.
As long as the will is legally valid, the executor can follow the instructions contained in the will.
Each state has their own payment priorities, so review the laws of the state where the deceased lived to confirm payment priority.
Helpful Tips
How do you pay administrative expenses?
The executor or administrator should pay administrative expenses out of the estate bank account.
Whether the payments are made via online banking, check, or debit card, the executor or administrator should keep a record of payments made (including to whom, when, for what amount, and what the expense was for).
Copies of the estate bank account statements are usually sufficient to record which payments were made. They should be kept in a file with other important estate administration documents, such as letters of administration, court-related paperwork, and inventories.
The estate's bills and debt are also to be paid in a specific order, as determined by the laws of the state where the deceased lived.
Read More
To learn more about the payment priority order, see the “Review Payment Priority Order” Task of the Guide.
The order of payments is particularly important for an “insolvent” estate, because some bills must be paid before others and lower priority bills might not get paid at all.
Read More
To learn more about “insolvent” estates, review the “determine solvency” Task of the Guide.
Important
Even if the estate has enough money and assets to pay all of its bills and debt, it is beneficial for the executor or administrator to pay bills in the order outlined by state law.
This could prevent or reduce the risk of conflict and disputes arising among beneficiaries, heirs, and creditors of the estate and demonstrates that the executor is performing their duties in accordance with state law.
Executor fee scales
When paying administrative expenses of the estate, the executor or administrator is usually entitled to payment for their role in settling the estate.
This is typically referred to as an executor commission.
For more information on executor commissions, refer to the section, “identify executor.”
If the deceased’s will does not specify how the executor is to be compensated (or if there is no will), state law determines how much an executor can be compensated (usually a percentage of the estate’s total value).
Review the laws of the state where the deceased lived to determine how much the executor can be paid.
Personal Considerations
Does the will specify the executor must waive commissions?
This means the deceased did not want the executor to be compensated for their role.
Typically, this is done when the executor or administrator is also a beneficiary of the estate who will be compensated in another manner (such as receiving assets of the estate).
However, the deceased can opt to waive executor commissions for any reason.
If the deceased’s will waives executor commissions or says the executor is not to be compensated, the probate court will typically follow the deceased’s wishes.
This means the executor or administrator of the estate will likely not receive any payment for their services.
Most states defer to the deceased’s will for instructions, and will uphold the waiver of executor commissions as long as the deceased’s will was legally valid (e.g. the deceased was competent when they created the will and there were witnesses to the signing of the will).
However, an executor may ask the probate court to be compensated even if the will waives commissions.
Then, it will be up to the court whether to approve an executor’s request for commissions or not.
The executor or administrator may be entitled to compensation for their services in accordance with state law.
Typically, state laws allow executor’s to receive compensation equivalent to a percentage of the estate’s value.
However, the executor does not have to request compensation, and they can opt to waive their right to compensation if they so desire.
For instance, an executor may waive their right to compensation if they are also an heir of the estate.
Review the laws of the state where the deceased lived to determine how much of a commission the executor or administrator is entitled to receive.
This means the deceased did not want the executor to be compensated for their role.
Typically, this is done when the executor or administrator is also a beneficiary of the estate who will be compensated in another manner (such as receiving assets of the estate).
However, the deceased can opt to waive executor commissions for any reason.
If the deceased’s will waives executor commissions or says the executor is not to be compensated, the probate court will typically follow the deceased’s wishes.
This means the executor or administrator of the estate will likely not receive any payment for their services.
Most states defer to the deceased’s will for instructions, and will uphold the waiver of executor commissions as long as the deceased’s will was legally valid (e.g. the deceased was competent when they created the will and there were witnesses to the signing of the will).
However, an executor may ask the probate court to be compensated even if the will waives commissions.
Then, it will be up to the court whether to approve an executor’s request for commissions or not.
The executor or administrator may be entitled to compensation for their services in accordance with state law.
Typically, state laws allow executor’s to receive compensation equivalent to a percentage of the estate’s value.
However, the executor does not have to request compensation, and they can opt to waive their right to compensation if they so desire.
For instance, an executor may waive their right to compensation if they are also an heir of the estate.
Review the laws of the state where the deceased lived to determine how much of a commission the executor or administrator is entitled to receive.
Does the will specify how the executor is to be compensated?
The instructions in the will should govern how the executor is to be paid, as long as the deceased’s will is legally valid.
If the deceased’s will was accepted and confirmed by the probate court, its instructions will guide the legal probate process, including any instructions regarding executor payment.
The will usually specifies how much the Executor is to be paid (e.g., $1,000) and how they are to be paid (e.g., using life insurance proceeds or selling a specific asset).
For instance, if the will states that the executor is to receive certain assets of the estate, such as a vehicle, instead of payment, the probate court will follow the instructions in the will.
The executor or administrator will be compensated according to the laws of the state where the deceased lived, unless they waive their right to compensation.
State laws often allow executor’s to receive compensation equivalent to a percentage of the estate’s value.
However, the executor does not have to request compensation, and they can opt to waive their right to compensation if they so desire.
For instance, an executor may waive their right to compensation if they are also an heir of the estate.
An executor may waive compensation to avoid tax consequences, because an executor’s compensation is taxable as income.
Review the laws of the state where the deceased lived to determine how much of a commission the executor or administrator is entitled to receive.
The instructions in the will should govern how the executor is to be paid, as long as the deceased’s will is legally valid.
If the deceased’s will was accepted and confirmed by the probate court, its instructions will guide the legal probate process, including any instructions regarding executor payment.
The will usually specifies how much the Executor is to be paid (e.g., $1,000) and how they are to be paid (e.g., using life insurance proceeds or selling a specific asset).
For instance, if the will states that the executor is to receive certain assets of the estate, such as a vehicle, instead of payment, the probate court will follow the instructions in the will.
The executor or administrator will be compensated according to the laws of the state where the deceased lived, unless they waive their right to compensation.
State laws often allow executor’s to receive compensation equivalent to a percentage of the estate’s value.
However, the executor does not have to request compensation, and they can opt to waive their right to compensation if they so desire.
For instance, an executor may waive their right to compensation if they are also an heir of the estate.
An executor may waive compensation to avoid tax consequences, because an executor’s compensation is taxable as income.
Review the laws of the state where the deceased lived to determine how much of a commission the executor or administrator is entitled to receive.
