If you have been appointed as the Executor or Administrator of a friend or relative’s estate, it is very likely that you have quite a time consuming job ahead of you. You will be tasked with tracking down and collecting all of the decedent’s assets, valuing them, filing any final income tax returns and estate tax returns, selling real estate and other assets, and distributing assets to beneficiaries. This is no small assignment and fortunately New York State law recognizes this by providing you with an entitlement to compensation for your services.
An Executor (when the decedent had a Last Will and Testament) or Administrator (when the decedent had no Last Will and Testament) is entitled to a statutory commission for the work they are doing under New York Surrogate’s Court Procedure Act §2307. The commission is calculated based on the value of the estate. The rule is as follows:
(a) For receiving and paying out all sums of money not exceeding $100,000 at the rate of 5%.
(b) For receiving and paying out any additional sums not exceeding $200,000 at the rate of 4%.
(c) For receiving and paying out any additional sums not exceeding $700,000 at the rate of 3%.
(d) For receiving and paying out any additional sums not exceeding $4,000,000 at the rate of 2.5%.
(e) For receiving and paying out all sums above $5,000,000 at the rate of 2%.
To illustrate the rule, if the value of the part of the estate subject to commissions (which is not always the entire estate) is $1,000,000, the Executor or Administrator’s commission would be $34,000. The Executor would receive $5,000 representing 5% of the first $100,000, $8,000 representing 4% of the next $200,000 and $21,000 representing 3% of the next $700,000 equating to a total fee of $34,000.
While the commission is based on the value of the decedent’s estate, it is not always the entire estate. Assets that pass outside of the Last Will and Testament by operation of law such as joint accounts or jointly held real estate, trusts or transfer on death accounts, as well as the value of any specific bequests or real estate not sold by the Executor or Administrator are excluded from the estate for the purpose of calculating fiduciary commissions.
In addition to the above limitations, the decedent has the ability to limit the commissions to which their Executor is entitled by stating so in the Last Will and Testament. The decedent may choose to specify a dollar amount or specific percentage of their estate to compensate their Executor or they may elect to say that their
Executor is entitled to no commission at all. Another possibility is that the named Executor chooses to waive their right to commissions out of a feeling of personal duty to the decedent or the beneficiaries. It is common for an Executor to also be a named beneficiary in a Last Will and Testament or heir at law, in the case of no Last Will and Testament, and therefore choose not to take a commission above and beyond their share of the estate. It is important to note that commissions are considered taxable income for the executor or administrator and there will generally be income tax due when collecting commissions.
Whether or not you have been provided with a fiduciary commission, if you are the named or proposed Executor or Fiduciary of an estate you should always reach out to an experienced and compassionate estate attorney for assistance with the probate and estate administration process. Even the most sophisticated among us will benefit from the guidance of an experienced hand.
Roman Aminov is an award winning probate & estate planning lawyer located in Flushing, NY - the heart of Queens. Roman has been recognized for his excellence by Super Lawyers, AVVO, Justia and many top legal forums in the United States. Official contact information: Law Offices Of Roman Aminov 147-17 Union Turnpike, Flushing, NY 11367 (347) 766-2685.