A client recently sat in my office, overwhelmed. Her mother had passed away in Brooklyn, and she was named the executor of the will. Amid the grief, she was now facing a mountain of work—locating assets, notifying beneficiaries, paying debts, and preparing to file with the Surrogate’s Court. “This feels like a full-time job,” she told me. “Am I supposed to do all this for free?”
A question I hear often. The short answer is no. Serving as an executor is a demanding role with significant legal and financial responsibility—a true act of stewardship. New York law recognizes this work and provides for compensation, which we call an executor’s commission.
The Statutory Commission Formula
Executor compensation isn’t an arbitrary figure or an hourly rate. It’s a fee explicitly defined by statute. The controlling law is Surrogate’s Court Procedure Act (SCPA) § 2307, which sets a tiered commission based on the value of the estate assets that the executor receives and pays out.
The calculation is based on a sliding scale:
- 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 $1 million estate, the total commission would be $34,000. This fee is paid from the estate’s assets before the final distribution to beneficiaries. It compensates the executor for their time, effort, and fiduciary duty in marshalling assets, settling the estate’s final affairs, and carrying out the decedent’s wishes.
What Counts Toward the Commissionable Estate?
The phrase “received and paid out” in the statute is critical. The commission is calculated only on assets that actually pass through the executor’s hands as part of the probate estate. This distinction often surprises people.
Generally, the commissionable base includes:
- Bank and brokerage accounts held in the decedent’s name alone.
- Real estate that the executor is required to sell.
- Personal property like art, jewelry, and vehicles.
- Business interests owned by the decedent.
However, many assets pass outside of probate and are not subject to executor commissions. These include life insurance policies with a named beneficiary, retirement accounts like a 401(k) or IRA that pass to a designated beneficiary, and property held in a trust. Real estate that passes directly to an heir, unsold by the executor, is also excluded from the calculation. This distinction is key to projecting the true costs of estate administration.
Special Considerations and Waivers
Several factors can alter the standard commission. If a will names two or more executors, they must share a single commission. But if the estate’s gross value is $100,000 or more, each executor is entitled to a full commission. The law allows for a maximum of three full commissions, which the fiduciaries then share.
A person drafting a will can also override the statutory formula. The will can specify a lower fee, a flat amount, or state that the executor must serve without compensation. This is a deliberate choice—one we discuss with clients when they are considering who to appoint as the custodian of their legacy.
Finally, an executor can choose to waive the commission. A family member—often a spouse or child who is also the primary beneficiary—might do this. The reason is simple: an executor’s commission is taxable income. An inheritance, by contrast, is generally received income-tax-free. By waiving the fee, the executor can increase the total amount passed to beneficiaries and simplify tax reporting. The decision is personal and depends on the family’s financial circumstances.
The role of an executor is one of the most significant responsibilities one can undertake for a family member or friend. The commission acknowledges that gravity. Whether you are creating your own estate plan or have been asked to serve as an executor, understanding this process from the beginning is prudent.
If you have been appointed to manage a loved one’s estate, the first step is often to have the will reviewed by counsel. We can schedule a preliminary review of the will and the duties it outlines for you as fiduciary.
