An executor can take money from the estate, but only for specific, legally justified reasons: paying the deceased person’s debts and taxes, covering the administrative costs of probate, and collecting a reasonable fee for their own work. Anything beyond that — using estate funds for personal expenses, favoring themselves over other beneficiaries, or mixing estate money with their own — crosses the line from fiduciary duty into misconduct, and probate courts enforce that line strictly.
What Estate Money Can Legitimately Be Spent On
An executor isn’t just permitted to spend estate funds on certain obligations. They’re required to. Probate exists to settle the deceased person’s affairs, and that means writing checks from the estate account for legitimate claims against it.
Funeral and burial costs usually come first. After that, the executor turns to the deceased person’s outstanding debts: credit card balances, medical bills, mortgage payments, personal loans, and similar obligations. Tax obligations follow. The executor files the deceased person’s final federal income tax return and pays any balance due.1Internal Revenue Service. File the Final Income Tax Returns of a Deceased Person If the estate earns income during administration from investments, rentals, or asset sales, an estate income tax return is filed as well. Some states impose their own estate or inheritance taxes at various thresholds.
Administrative costs round out the legitimate spending. Federal regulations recognize court filing fees, attorney and accountant fees, appraisal costs, and expenses for maintaining estate property such as utilities, insurance, and necessary repairs as deductible expenses of administering the estate.2eCFR. 26 CFR 20.2053-3 – Deduction for Expenses of Administering Estate Every one of these payments needs a receipt and a place in the estate’s accounting.
The Executor’s Own Fee
Executors are entitled to be paid for their work, separate from any inheritance they might receive as a beneficiary. Administering an estate takes real effort: inventorying assets, dealing with creditors, filing tax returns, managing property. The law recognizes that with a right to compensation.
How the fee is calculated depends first on whether the will addresses it. Some wills specify a flat amount, a percentage, or a formula. When the will is silent, state law controls. Roughly half of states set compensation as a percentage of the estate’s value, often on a sliding scale where the percentage drops as the estate gets larger. These statutory rates generally range from about 1.5% to 5% depending on the state and the estate’s size. Other states allow “reasonable compensation,” which probate courts evaluate based on the time the executor spent, the complexity of the estate, and the results achieved.3Internal Revenue Service. Frequently Asked Questions on Estate Administration Expenses
When to Take It
Most executors collect their fee near the end of estate administration, after debts are paid and before final distribution to beneficiaries. Taking the fee earlier isn’t necessarily illegal if the estate has enough assets, but it’s risky. If a court later decides the amount was excessive, the executor may have to return the difference. Waiting for either court approval or the expiration of any objection period is the safer path.
Putting It on the Record
The executor’s fee must appear in the estate’s formal accounting, a detailed financial report showing every dollar that came in, went out, and where it went. Beneficiaries have the right to review this accounting. If anyone objects to the fee, a probate judge decides whether it’s reasonable. Executors handling complex estates involving business interests, litigation, or unusual tax situations can often justify fees above the standard statutory rate, but they need to show their work.
What an Executor Cannot Do With Estate Money
The fiduciary duty an executor owes translates into specific prohibitions. Courts take these seriously because the executor holds all the power during probate, and beneficiaries are largely at their mercy.
Self-Dealing
Self-dealing is the most common form of executor misconduct. It happens whenever the executor arranges a transaction that benefits them personally at the estate’s expense: buying estate property below market value, hiring their own business to perform services for the estate, or steering decisions in a way that favors them. Even transactions at fair market value can be problematic if the executor didn’t get court approval and informed consent from all beneficiaries first.
Commingling Funds
An executor must open a dedicated bank account for the estate and keep every estate dollar separate from their personal money. Depositing an estate check into a personal account, even temporarily, is commingling. It destroys the clean paper trail that probate courts and beneficiaries rely on. Even without any theft, commingling alone can be grounds for removal.
Personal Use of Estate Assets
Using estate funds to pay personal bills, taking the deceased person’s car for personal errands, living in estate property rent-free without authorization, and borrowing from the estate are all prohibited. When an executor intentionally takes estate property for their own use, that’s embezzlement, a criminal offense that can result in fines and imprisonment on top of civil liability to the beneficiaries.
When the Executor Is Also a Beneficiary
It’s common for an executor to also be named as a beneficiary, such as a spouse or an adult child. This dual role is legal and doesn’t disqualify anyone from serving. It does create obvious tension, since the executor controls the same pot of money they stand to inherit from.
An executor who is also a beneficiary can absolutely receive their inheritance. The requirement is that they treat themselves exactly the same as every other beneficiary. They can’t give themselves a larger share, cherry-pick the most valuable assets, or distribute their own portion before other obligations are paid. Any favoritism toward themselves is self-dealing, and other beneficiaries can challenge it in court.
Disputes most commonly erupt here. The executor-beneficiary may delay distributions to other heirs, undervalue property they want to keep, or charge excessive fees that shrink everyone else’s share. Beneficiaries who notice any of these patterns should request the formal accounting right away rather than waiting for the estate to close.
What Happens When the Estate Can’t Pay Everything
When an estate doesn’t have enough money to pay every obligation in full, the executor can’t just pick which bills to cover. State law sets a priority order, and paying a lower-ranked creditor before a higher-ranked one can make the executor personally liable for the difference. This is one of the areas where executors most often get into trouble, especially when they rush to distribute inheritances before all debts are resolved.
The exact order varies by state, but the general hierarchy runs like this:
- Administrative expenses, including court costs, attorney fees, and the executor’s compensation, because the estate can’t be settled without them.
- Funeral and burial costs, at reasonable amounts.
- Tax debts. Federal and state income taxes, property taxes, and estate taxes. Government claims often carry a super-priority that overrides other creditors.
- Secured debts such as mortgages and car loans. The lender can repossess the collateral regardless of other claims.
- Unsecured debts, including credit cards, medical bills, and personal loans, which share whatever is left proportionally.
If debts exceed assets, unsecured creditors may receive partial payment or nothing at all, and beneficiaries receive no inheritance. An executor who distributes assets to heirs before satisfying higher-priority debts risks being ordered to repay the shortfall out of their own pocket.
If You Think an Executor Is Taking Too Much
Catching problems early makes a real difference. The longer mismanagement continues, the less is left to recover.
Request the Accounting
The first step is demanding a formal accounting. Beneficiaries have a legal right to it. The accounting should detail every asset in the estate, all income earned, every expense paid, and the current balance. If the numbers don’t add up or categories are vague, that’s grounds for further action.
Put Objections in Writing
If the accounting reveals questionable transactions, or the executor won’t provide one, send a written objection. A formal letter creates a paper trail and puts the executor on notice. Sometimes it prompts a correction on its own, especially when the executor made an honest mistake. It also serves as evidence if the matter goes to court.
Petition the Probate Court
When informal efforts fail, beneficiaries can file a petition with the probate court. The petition can ask for a court-ordered accounting, demand return of improperly taken funds, or request the executor’s removal. The court can freeze estate accounts, order the executor to explain specific transactions, and impose a surcharge that makes the executor personally liable from their own assets for any losses their misconduct caused.
Ask for Removal
In serious cases, the court can remove the executor and appoint a replacement. Common grounds include embezzlement, failure to provide required accountings, ignoring court orders, and gross mismanagement. Once removed, the former executor must turn over all estate property to their successor. Courts sometimes appoint a neutral third-party professional whose fees are paid by the estate.
Time limits apply. Statutes of limitations for breach of fiduciary duty vary by state and commonly fall in the range of three to five years, sometimes running from the date of the breach and sometimes from when the beneficiary discovered it. A probate attorney can pin down exactly when the clock starts in your state, which is often the hardest part of these cases.