An executor for her father’s estate in Brooklyn just received two invoices. One is from our firm for the initial legal work. The other is for Surrogate’s Court filing fees. Her first question is a practical one: “Do I pay these from my own bank account and hope to be reimbursed?”
The answer is no. The estate itself pays all legitimate costs of its own administration. The decedent’s assets form their estate, and those assets must first be used to settle final affairs before anything is distributed to beneficiaries. This isn’t a matter of convenience—it’s a matter of legal and fiduciary order.
What Are “Probate Fees”?
The term “probate fees” isn’t a single bill. It is a collection of distinct costs. As executor, your fiduciary duty is to manage and pay these expenses prudently from the estate’s assets. These costs typically fall into several categories:
- Court Filing Fees: The Surrogate’s Court charges fees to file the probate petition and other documents. The amount depends on the value of the estate.
- Executor’s Commission: The person serving as executor is entitled to payment for their work. This is not a bonus; it is a commission set by New York law.
- Attorney’s Fees: An executor is entitled to hire an attorney for guidance through the probate process. These legal fees are a standard administrative expense.
- Appraisal and Valuation Fees: If the estate includes hard-to-value assets like real estate, art, or a business, professional appraisers must be hired. The estate pays their fees.
- Accounting Fees: A complex estate may require an accountant to file the decedent’s final income taxes and any necessary estate tax returns.
- Miscellaneous Costs: This can include securing property, insuring valuable assets, or paying for bond premiums if the court requires it.
The executor’s role is to act as a temporary custodian of the assets—gathering them, paying these legitimate expenses, and then distributing what remains. It is a job of stewardship.
The Order of Payment: Administration First, Heirs Second
An estate’s assets satisfy obligations in a specific order. Think of it as a waterfall—at the top are the highest-priority debts, and only what flows to the bottom reaches the beneficiaries. The costs of administration, including legal fees and the executor’s commission, are high on that list.
The estate must first pay for funeral expenses and all costs of the probate process. After that, it settles the decedent’s valid debts, such as credit card bills, mortgages, and taxes. Only after all these obligations are met can the executor legally distribute the remaining property to the heirs named in the will. If an executor distributes assets prematurely, they can be held personally liable for the shortfall.
This is why we advise executors to establish a separate bank account for the estate as one of their first actions. All liquid assets are deposited into this account, and all expenses are paid directly from it. This creates a clean, transparent record for the court and the beneficiaries.
How the Executor’s Commission Is Calculated
An executor’s commission is not arbitrary. It is calculated using a statutory formula in the New York Surrogate’s Court Procedure Act. Specifically, SCPA § 2307 outlines the commission rates for fiduciaries like executors.
The commission is based on the value of the assets the executor receives and pays out. The percentages are tiered:
- 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
On a $500,000 estate, for example, the commission would be (5% of $100k) + (4% of $200k) + (3% of the remaining $200k). This formula provides a predictable, court-approved method for compensation. It ensures the executor is paid for their significant responsibility without unfairly draining estate assets.
When an Estate Lacks Cash
What happens if an estate’s primary asset is a Manhattan co-op with little cash in the bank? The expenses must still be paid. In these situations, the executor has the authority—and the duty—to liquidate assets to cover the costs of administration. This might mean selling the property, stocks, or other valuables.
Here, careful planning and communication are critical. The decision to sell a family home is often emotional for beneficiaries. A prudent executor will communicate their plan clearly to the heirs and, if necessary, seek the court’s guidance to ensure their actions are transparent and legally sound. The goal is always to fulfill the will’s terms while preserving as much value as possible for the beneficiaries.
If you have been named an executor, your primary responsibility is to marshal the decedent’s assets and administer them according to New York law. Understanding how and when expenses are paid is a critical part of that process. If you are preparing to take on this role, the most prudent first step is to schedule a meeting to map the estate’s assets, liabilities, and a clear budget for its administration.
