What Is Form 2031: Waiver of Fiduciary Fees?

An executor or administrator of an estate is entitled to compensation for their services, but they may choose to decline it. This decision is formalized through a legal document known as a Waiver of Fiduciary’s Right to Statutory Fees. The Internal Revenue Service (IRS) does not have a specific, numbered form designated as “Form 2031” for this purpose. Instead, the waiver is a written statement prepared to declare the fiduciary’s intent to refuse payment, providing clear evidence to all parties that they will not be paid for managing the estate.

Purpose of Waiving Fiduciary Fees

The primary motivation for a fiduciary to waive fees is tax planning. Any compensation paid to an executor is considered taxable income by the IRS and must be reported on their personal income tax return, Form 1040. These fees are subject to ordinary income tax rates, meaning a portion of the payment will be lost to federal and state income taxes.

In contrast, an inheritance received from an estate is not considered taxable income under federal law. Beneficiaries do not pay income tax on the value of the assets they inherit. This distinction is meaningful when the fiduciary is also a major beneficiary of the same estate.

By accepting a fee, an individual who is also a beneficiary converts a non-taxable inheritance into taxable income. For example, if a fiduciary who is the sole beneficiary accepts a $20,000 fee, that amount becomes subject to personal income tax. By waiving the fee, that same $20,000 remains in the estate and is distributed as part of their tax-free inheritance, maximizing the net amount they receive.

According to Revenue Ruling 66-167, the decision to waive fees must be made in a timely manner. An effective waiver is demonstrated by a formal written document or can be implied if the fiduciary’s actions show a clear intent to provide services for free. If a fee is not formally waived in a timely fashion, the IRS could construe the unpaid amount as a taxable gift from the fiduciary to the estate’s beneficiaries.

Information Required for the Waiver

Since there is no official IRS form for this action, the waiver is a legal document that the fiduciary must create. A clear and unambiguous written statement is necessary to properly document the decision, ensuring it is recognized by probate courts and the IRS.

The waiver document must contain specific information to be valid. It should identify the estate by stating the decedent’s full legal name, date of death, and Social Security Number. The document must also include the full name and address of the fiduciary. Finally, it needs an unequivocal statement that the fiduciary is voluntarily and irrevocably waiving all rights to receive statutory fees or commissions for their services.

The fiduciary must sign and date the waiver for it to be legally effective. Having the signature notarized adds a layer of authenticity, though it is not a federal requirement. A properly executed waiver creates a clear record of the fiduciary’s intent for beneficiaries and tax authorities.

How to Submit the Waiver

Once prepared and signed, the waiver must be filed to become part of the official estate record. The primary method is to file the original waiver with the probate court that has jurisdiction over the decedent’s estate. This action formally notifies the court and interested parties that the fiduciary will not take a fee and ensures the document is included in the official court file.

It is also standard practice to attach a copy of the waiver to the federal estate tax return, Form 706, if the estate is large enough to require one. For 2025, an estate tax return is required for estates with gross assets exceeding $13.99 million. Including the waiver provides the IRS with direct evidence that fiduciary fees were not paid.

By not claiming a deduction for fiduciary fees on the tax return and providing the waiver as an exhibit, the executor creates a consistent record. This documentation can help prevent potential questions from the IRS regarding the estate’s expenses and distributions.