A client—a son named as executor in his mother’s will—recently sat in my office after months of administering her estate in Brooklyn. He had spent countless hours gathering bank statements, paying lingering medical bills, corresponding with beneficiaries, and preparing the house for sale. He looked tired. He finally asked the question many people in his position have: “After all this work, am I entitled to be paid?”
The answer is yes. In New York, serving as an executor is not an honor—it is a job with significant fiduciary responsibilities. The law recognizes the work involved and provides for compensation, known as commissions. This payment is not a gift or part of an inheritance. It is earned income for the deliberate stewardship of an estate, a matter of fairness and proper administration.
The Executor’s Fiduciary Duty
An executor is the person or institution entrusted with the stewardship of a deceased person’s legacy. Their job is to marshal the decedent’s assets, pay all legitimate debts and taxes, and distribute the remaining property to the beneficiaries as directed by the will. This is a temporary but powerful position, overseen by the Surrogate’s Court.
The duties are extensive. An executor may need to:
- Locate and file the original will with the appropriate Surrogate’s Court.
- Identify, inventory, and secure all estate assets—from bank accounts and investment portfolios to real estate and personal property.
- Obtain valuations for assets that don’t have a clear market price.
- Notify creditors and pay the decedent’s final bills and outstanding debts.
- File the decedent’s final income tax returns and any required estate tax returns.
- Manage estate property, which could include maintaining a home or overseeing a business, until it can be distributed or sold.
- Communicate transparently with beneficiaries and provide a formal accounting of all transactions.
This is not a passive role. It requires organization, integrity, and a great deal of time. The executor’s commission is the law’s acknowledgment of this significant responsibility.
How New York Law Calculates Executor Commissions
In New York, executor commissions are not arbitrary. They are set by statute, specifically under Surrogate’s Court Procedure Act (SCPA) § 2307. This law creates a tiered system based on the value of the estate subject to commissions. The estate’s value for this purpose includes all assets the executor receives and pays out—it does not typically include real estate that passes directly to a beneficiary, unless the executor is required to sell it.
The statutory rates are as follows:
- 5% on the first $100,000
- 4% on the next $200,000
- 3% on the next $700,000
- 2.5% on the next $4,000,000
- 2% on any amount above $5,000,000
For example, on a $1 million estate, the calculation would be:
(5% of $100,000) + (4% of $200,000) + (3% of $700,000) = $5,000 + $8,000 + $21,000 = $34,000.
This formula provides a clear, predictable framework that prevents disputes over fees. For the proper performance of their duties, the executor is entitled to this amount. These commissions are taxable income to the executor and must be reported to the IRS.
Special Circumstances and Considerations
While SCPA § 2307 provides the default rule, certain situations can alter the standard commission structure. A prudent estate plan anticipates these contingencies.
Multiple Executors
If a will names two or more executors and the gross value of the estate is $300,000 or more, each executor is entitled to a full statutory commission. If the estate is worth less than $100,000, they must share a single commission. For estates between $100,000 and $299,999.99, two or more executors must also share one commission. The law generally caps the number of full commissions at two if there are three or more executors, unless the court decides otherwise.
Directions in the Will
A person writing a will—the testator—can override the statutory formula. The will can specify a different amount of compensation, such as a flat fee, or state that the executor is to serve without any commission. This is common when a spouse or a close family member who is also a primary beneficiary is named. If the will is silent on compensation, the statutory rates apply.
An Executor-Beneficiary
An executor who is also a beneficiary is entitled to both their inheritance and the statutory commission. They can, however, choose to waive the commission. This is often a prudent financial decision. An inheritance is received income-tax-free, whereas an executor’s commission is taxable income. Depending on the individual’s tax bracket, it can make more sense to waive the fee.
Extraordinary Services
The law recognizes that some estates require work that goes far beyond standard duties. If an executor has to manage a complex business, defend the estate in a lawsuit, or perform other unusually difficult tasks, they can petition the Surrogate’s Court for additional compensation. The court has the discretion to award such fees, but the burden is on the executor to prove the services were necessary and the requested fee is reasonable.
Appointing an executor is one of the most important decisions in estate planning. It is an act of trust. Ensuring that person is fairly compensated for their stewardship is an essential part of honoring that trust and facilitating a smooth administration of your legacy.
If you are drafting your will and considering whom to appoint as your executor, discuss the role’s duties and compensation with your counsel. We can schedule a meeting to review these factors, ensuring your choice aligns with your intentions for your family and your assets.
