When a Manhattan family gathers after a parent’s death, the child named as executor often views the appointment as a final mark of trust and honor. Fast forward six months. That same sibling is spending their lunch breaks on hold with the IRS, coordinating property appraisals, securing a vacant home, and mediating disputes over how personal property should be divided. The prestige fades quickly. It is no longer an honor. It is a part-time job.
Administering an estate requires hundreds of hours of painstaking work. It also carries intense fiduciary risk. If an executor pays a beneficiary before settling a valid creditor claim, or mismanages estate assets during a market downturn, they can be held personally responsible for the loss. Liability.
Because of the heavy burden placed on these fiduciaries, New York law ensures they receive compensation for their time and effort. Compensation is not based on how hard the executor works, how many hours they log, or what the family deems fair. The state relies on a strict statutory formula. We frequently sit down with executors to explain exactly how this works, what assets count toward their fee, and when it makes financial sense to waive payment entirely.
The Statutory Formula for Executor Compensation
New York does not leave executor compensation to guesswork. Under the Surrogate’s Court Procedure Act (SCPA) § 2307, an executor is entitled to a commission based on a sliding scale applied to the value of the estate they are receiving and paying out.
The standard commission rates are calculated as follows:
- 5 percent on the first $100,000 of the estate
- 4 percent on the next $200,000
- 3 percent on the next $700,000
- 2.5 percent on the next $4,000,000
- 2 percent on any amount above $5,000,000
To put this into perspective, if you are administering a $1,000,000 estate, the commission is not a flat percentage. It is tiered. You receive $5,000 for the first tier, $8,000 for the second tier, and $21,000 for the third tier. The total statutory commission for a one-million-dollar estate is $34,000.
This fee is generally taken at the very end of the estate administration process, right before final distributions are made to the beneficiaries. An executor cannot simply write themselves a check from the estate account on day one. Taking an advance on commissions without prior approval from the Surrogate’s Court or the written consent of all beneficiaries is a breach of fiduciary duty.
What Assets Actually Count?
The most common point of confusion we encounter involves the base value used to calculate the commission. The percentages above do not apply to the deceased person’s total net worth. They only apply to the probate estate—the assets that pass directly through the executor’s hands.
Many valuable assets bypass the probate process entirely. If a parent leaves behind a $2 million life insurance policy with named beneficiaries, a joint checking account, or an IRA with a designated transfer-on-death recipient, those funds pass outside the will. The executor has no legal authority over them, does not manage them, and therefore cannot include their value when calculating the commission under SCPA § 2307.
Real estate carries its own specific rules. If a house is specifically gifted to a beneficiary in the will, and the executor does not need to sell it to pay estate debts, the value of that home is excluded from the commission calculation. The executor only earns a fee on real property if they are required to actively manage, sell, and distribute the proceeds.
The Problem with Multiple Co-Executors
Parents often name all their children as co-executors to avoid hurting anyone’s feelings. From a legal and financial standpoint, this is rarely a prudent decision. It creates logistical hurdles—requiring multiple signatures for every bank transaction and court filing—and it directly impacts how commissions are paid.
New York law limits how much an estate can be charged when multiple executors are named, depending on the size of the probate estate:
- Under $100,000: Only one full commission is allowed. If there are three executors, they must split that single commission evenly (unless they agree otherwise).
- Between $100,000 and $300,000: The estate will pay a maximum of two full commissions, which must be apportioned among the co-executors according to the services they actually rendered.
- Over $300,000: Up to three executors can each receive a full statutory commission. If there are more than three, they must divide the three full commissions among themselves.
Naming three children as co-executors on a $500,000 estate means the estate will pay out three separate $19,000 commissions. That is $57,000 drained from the estate simply because of a desire to treat siblings equally on paper. When we draft wills, we advise clients to name a primary executor and a series of successors instead.
When It Makes Sense to Waive the Fee
Just because an executor is entitled to compensation does not mean they must take it. In many cases, we advise our clients to formally waive their right to a commission. The decision almost always comes down to income taxes.
Under federal and state law, inheritances are generally not subject to income tax. If you inherit $100,000, you do not report that as income on your 1040. Executor commissions, however, are considered compensation for services rendered. They are fully taxable as ordinary income.
If you are the sole beneficiary of your mother’s estate and you also serve as the executor, taking a $30,000 commission means you are pulling money out of your own tax-free inheritance and converting it into taxable income. You end up paying income tax on money that would have otherwise been entirely yours. In scenarios where the executor is inheriting a large portion of the estate, waiving the commission is often the smartest financial move.
Conversely, if you are administering an estate where the assets are being split equally among five siblings, waiving your fee means you are doing all the heavy lifting for free while your siblings reap the benefits of your labor. In those instances, taking the statutory commission is entirely justified.
Next Steps for Executors
Estate administration is a deliberate, highly regulated process. Before you distribute any assets, pay any debts, or attempt to calculate your own fiduciary compensation, you need a clear understanding of your legal boundaries. Miscalculating your fee or taking it prematurely can result in court sanctions and personal financial liability.
To ensure you are fulfilling your duties correctly and protecting yourself from beneficiary disputes, schedule a formal probate consultation with our office to review the will, the estate assets, and your statutory compensation structure.
