Serving as executor is real work, and Texas law allows the person who does it to be paid. The default formula is often called the “five-and-five” rule, but it comes with important limits and exclusions that surprise many families. Here is how it actually works.
The Standard Commission
An executor or administrator who properly manages the estate is entitled to a 5% commission on all cash they actually receive and a 5% commission on all cash they actually pay out during the administration. The commission is capped so that, in total, it may not exceed 5% of the gross fair market value of the estate being administered.
What Does Not Count
The commission applies only to cash moving through the administration, and several big items are carved out:
- Cash on hand or in the decedent’s bank or brokerage accounts at death (checking, savings, CDs, money market)
- Life insurance proceeds the executor collects
- Cash simply paid out to an heir or beneficiary as their inheritance
Because of these exclusions, an estate made up mostly of a house and bank accounts — with little cash actually collected and re-paid — can produce a surprisingly small statutory commission, even for a lot of work.
A Simple Example
If an executor collects $100,000 in rent and other non-excluded cash and pays out $60,000 in non-excluded expenses, the standard commission is 5% of each — $5,000 plus $3,000, or $8,000 — as long as that stays within 5% of the whole estate’s value.
When the Court Can Adjust It
If the standard formula would be unreasonably low, or the executor has to manage a business, farm, or ranch, the court may award additional reasonable compensation. A will can also set the executor’s pay, which overrides the default. And the court can reduce or deny compensation if the executor mismanaged the estate or was removed. The role comes with real duties — compensation follows from doing them well.
Frequently Asked Questions
How much does an executor get paid in Texas?
By default, a 5% commission on cash the executor actually receives and a 5% commission on cash actually paid out, with the total capped at 5% of the estate’s gross fair market value.
What is left out of the executor’s commission?
Cash already on hand or in the decedent’s bank or brokerage accounts at death, life insurance proceeds, and cash simply paid out to heirs do not count toward the commission.
Can a Texas executor be paid more than the 5% formula?
Yes. If the standard formula is unreasonably low, or the executor manages a business, farm, or ranch, the court may allow additional reasonable compensation. A will can also set the fee.
Talk With a Texas Probate Attorney
Questions about executor pay on an estate you are handling? We can walk you through the math. Call 713-955-6182 or contact The De Leon Law Firm to get started.