Executor Compensation and Fees (AZ)
If the will does not specify how executor compensation should be calculated, AZ estates must follow state compensation rules (see AZ calculator below).
In Arizona, the estate executor is known as a "personal representative", or more generally, a "fiduciary".
In determining executor fees, the state of Arizona uses the commonly accepted principle of "reasonable" compensation, considering factors such as:
- Nature of the work involved (time, effort, difficulty, skills required)
- Compensation customarily charged (in the community for similar services)
- Size of the estate (and the results obtained)
- Experience and capabilities of the person
While it is probably most common for personal representatives to bill by the hour, it is also permissible to set the fee by the size of the estate (see Matter of Estate of Smith 1982, for example). In fact, court guidance holds that undue weight should not be given to any one factor, including time spent. Whatever approach you decide, it is important that you keep detailed records of your efforts in case you need to justify your fee in court, since the court will want to see this in determining the overall context for reasonableness:
- Nature of the task (e.g., Drove to bank to get medallion stamp for IBM stock)
- Amount of time spent (e.g., 2 hours)
- Hourly rate for the task (e.g., $25/hour)
- Results (e.g., sold the car for Blue Book value)
For example, an AZ estate worth $500K that required 750 hours of effort might generate $19K in executor fees (see calculator below).
In Arizona, even if a will specifies the compensation for the executor (and there is no contract with the decedent regarding compensation), the executor may renounce the relevant provision before being assigned executor, and be entitled to reasonable compensation (as determined by the Court).
When there is not enough money in the estate to pay all obligations, paying executor compensation has priority over all other claims.
See §14-3719 in Arizona State Legislature, Revised Statutes, Title 14 (Trusts, Estates and Protective Proceedings), as well as AZ ST Code of Jud. Admin. § 3-303.
AZ Compensation Calculator
EstateExec provides the following executor compensation estimator for AZ estates, but please keep in mind that there are no hard and fast rules for AZ estates, and ultimately you must determine what would be reasonable for your particular circumstances. By using this estimator, you acknowledge that EstateExec provides any results as informational input only, not as legal advice, and cannot be held responsible for any inaccuracies for, or misunderstandings about, any given estate.
EstateExec provides two compensation approaches: you can decide which, if either, is appropriate for you. The first uses a sliding percentage scale based on the total estate gross value (the larger the estate, the smaller the percentage); the second simply compensates the executor for the value of his or her time, and is the more common approach in AZ. See estimation methodology for details.
You can use this calculator now, but if you use EstateExec to help you track the settlement process, it will automatically calculate the inputs for you based on the estate and suggest those values in the fields below (you can create an estate for free).
See also Compensation for general remarks on executor compensation.