Dear Mr. Premack: I was the sole beneficiary and executrix of my mother’s Will. I received no compensation, which resulted in negative tax consequences. Still, I spent hours and days cleaning and sorting her accumulated items and managing her estate. When is compensation appropriate for various executor tasks? – LM

There is no doubt that serving as an Executor is a time consuming and often difficult task. It is considered appropriate for the person who is doing all that work to be compensated. However, the existence and amount of compensation is entirely up to the testator (in this case your mother). If the testator says in the Will that compensation will be a certain amount then the Executor is limited to that amount. If the testator was silent about compensation, then state law allows the Executor to draw a percentage fee (but it is complex to calculate the amount of the fee).

You say you received no compensation for the services you rendered, but as the sole heir to the estate you still received all that there was to receive. When you inherit the entire estate as sole heir there is not much reason to care whether it is labeled as compensation or as inheritance.

You cite "negative tax consequences" for wishing you could treat part of the inheritance as compensation. It is true that any fees paid to an Executor are a deduction for the estate on its federal estate tax return, which can help reduce the amount of federal estate tax which is owed. However, that only applies to estates that exceed $2 million in value. Smaller estates do not pay federal estate taxes.

Further, you must declare the compensation paid to you as income on your own 1040 income tax return. Consequently, some of the money saved on estate taxes goes to the government anyway when you pay your income taxes. On the other hand, if you forego compensation then you receive the estate (as sole heir) without including any of it in your taxable income.

If your mother had named many different heirs to split the estate then an Executor fee could increase the amount you receive despite income taxes. But when you are the sole heir, there is usually no pressing reason to be compensated for acting as the Executor.

Dear Mr. Premack: My mother set up a living trust which left me only the interest on her estate after her death. When I die, the trust funds go to several churches and schools. One of the universities was conservative and rural when she attended in the 1920’s but is now a large liberal urban institution. I know that when she died her trust became irrevocable, but I wonder if there is any way to eliminate the amount that university would receive when I pass on. – DM

Though the trust became irrevocable upon her death, the law allows modifications to a trust under certain limited circumstances. If the Trustee or a beneficiary petitions the court for a modification, the court can change the trust if (among other things):

1) The trust’s creator did not know about certain circumstances, and a modification will allow the trust’s purposes to be fulfilled despite those unknown circumstances, (2) changing the trust would be consistent with a material purpose of the trust, and (3) all beneficiaries of the trust have consented to the change.

For instance, the trust might have stated her intent was to support "educational facilities in rural areas." If she could not have anticipated her 1920’s rural school becoming an urban campus, her intent would be unfulfilled unless the court changes the trust. Even with that, all beneficiaries would have to agree to the change and it seems unlikely that university would willingly surrender its share.