Executor Compensation and Fees (TN)Show Table of Contents
If the will does not specify how executor compensation should be calculated, TN estates must follow state compensation rules (see TN calculator below).
How Much Should an Executor be Paid in TN?
In Tennessee, the estate executor is known as a "personal representative".
Tennessee law specifies only "reasonable" compensation, and courts have interpreted this to include consideration of a number of factors, including:
- 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)
- The relationship of the personal representative to the decedent
- The amount of work outsourced by the personal representative
- Experience and capabilities of the person
Some counties go further, and provide specific guidance based on the value of the estate. For example, Hamilton County takes the position in Civic Practice Rule 17.12 that if you regularly serve as an executor, by default the following rates would be considered reasonable:
- 5% on the first $20K
- 4% on the next $80K
- 3% on the next $150K
- 2% on the next $500K
- 1% on anything more
So, for example, a Hamilton County estate worth $50K would yield $2,200 in executor fees, and one worth $600K would generate $15,750 in executor fees.
However, if you aren't an experienced executor, then the Hamilton County guidelines say the amounts above should be reduced by 75%. For what it's worth, neither the original scale above, nor the 75% reduction, are legal statutes.
Other counties simply say to check prevailing rates, and usually these are much more generous (see estimation methodology). For example in Davidson County, a representative schedule is:
- 4% on the first $300K
- 3% on the next $900K
- 2% on the next $300K
- 1% on anything more
If the chosen compensation approach is based on the estate value, as above, then assets that pass directly to named beneficiaries, such as life insurance policies or 401Ks, are generally not included in these calculations.
Additionally, under an estate value approach, additional compensation for extraordinary services is allowed. Common interpretations of "extraordinary" include overseeing the sale or lease of real estate, running a business, conducting litigation, preparing tax returns yourself, handling tax audits, and so on.
The bottom line is that in Tennessee, there is considerable variability in approach. You can use the calculators below to get a feel for what might be reasonable, and if your county is not specifically listed, it might make sense to check with the Probate Court in the county of the estate to see if there are any particular guidelines. Keep in mind, though, that the statute says "reasonable", and the guidelines are only intended to be helpful.
Finally, note that when there is not enough money in the estate to pay all obligations, paying executor compensation and other costs of estate administration have priority over all other claims.
TN Compensation Calculator
EstateExec provides the following executor compensation estimator for TN estates, but please keep in mind that there are no hard and fast rules for TN 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.
Below 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. 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.
Executor Compensation Considerations
Timing: Generally, any executor compensation is paid during the final stages of estate distribution, as one of the last things the executor does. Be careful in situations in which there is not enough to pay yourself and all other outstanding debts, as this may expose you to legal issues. However, in most states, executor compensation has precedence over almost all other debts (for example, in NY, only funeral expenses have a higher precedence).
Communication: You may wish to discuss your compensation with the other heirs early during the process, so they don't end up surprised and unhappy when they notice their shares are somewhat less than expected. You may also want to leave the door open to modify your planned compensation as the process unfolds and you determine how much or how little work will actually be required on your part.
Optional: Keep in mind that collecting executor fees is optional. Even if the will specifies compensation, or if state laws support specific fees, the executor can choose to forego that compensation, and many do. That being said, serving as an executor is A LOT of work, and there's a reason that state laws support such compensation.
Tax Optimization: One reason an executor might choose to forego explicit compensation is that executor compensation is taxable, while inheritances are generally not taxable. Consequently, if the entire estate (or a large portion of it) is going to be inherited by the executor, you may end up with more after-tax value if you forego executor compensation.
Trusts: Note that trustee compensation for managing a trust is handled differently than that of executor compensation for settling an estate (see Trustee Compensation).
Expense Reimbursement: An executor is also entitled to reimbursement from estate proceeds for legitimate and reasonable estate administration costs, such as death certificate copies, notarization of documents, the EstateExec licensing fee, and even travel costs strictly associated with managing the estate. Once you have established an estate banking account, you can often pay for these costs directly from that account, so that no reimbursement is necessary, but you should keep good records in case you later have to justify your expenditures to the IRS or to estate heirs. Executor expenses can be reimbursed when desired, although certain probate proceedings may require prior approval. While executor expenses are generally not considered when calculating executor compensation (i.e., executor fees), if the executor incurs substantial costs paying for services that would normally be directly handled by an executor, a probate judge may sometimes require that the default executor fee be reduced accordingly.