A client’s son, named as the executor of his mother’s estate in Manhattan, recently called my office. He’d assumed the role was a straightforward honor. A few weeks in, he was spending nights and weekends tracking down brokerage accounts, fielding calls from creditors, and preparing her co-op for sale. “This is a full-time job,” he said. “Am I really expected to do all of this for free?”
It’s a common question, and the answer is a clear no. Serving as an executor is not a symbolic gesture; it is a significant responsibility with a high legal and ethical bar. It is a job. And in New York, it is a job that comes with statutory compensation.
The Executor’s Role: More Than Just an Honor
When you name an executor in your will, you are appointing a fiduciary—a person or institution legally bound to act in the best interests of your estate. Their duty is one of stewardship. They become the temporary custodian of your legacy, tasked with a series of critical functions that require diligence, organization, and often, a thick skin.
The work includes:
- Collecting and inventorying all estate assets, from bank accounts to real estate to personal property.
- Notifying beneficiaries, heirs, and creditors of the death.
- Paying all legitimate debts, expenses, and taxes of the estate.
- Managing and protecting estate assets during the probate process.
- Preparing a final accounting for the beneficiaries and the Surrogate’s Court.
- Distributing the remaining assets according to the terms of the will.
This process can take months, sometimes years. It involves meticulous record-keeping and a deep understanding of one’s fiduciary duty. Given the scope of this work and the legal liability the executor assumes, the law provides for their payment directly from the estate’s assets.
How New York Law Calculates Executor Commissions
Unless a will states otherwise, an executor’s compensation is not arbitrary. It is calculated according to a specific formula laid out in New York’s Surrogate’s Court Procedure Act (SCPA). This statute provides a clear, tiered structure for what are known as executor’s commissions.
Specifically, SCPA § 2307 sets the rates as follows:
- 5% on the first $100,000 of the estate
- 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
These percentages are applied to the value of the “commissionable estate”—the assets the executor is responsible for receiving and paying out. If multiple executors serve, they must share a single commission unless the estate’s gross value is $100,000 or more. If the estate meets this threshold, the law allows for up to three full commissions to be paid, depending on the estate’s total value and the number of executors serving.
When an Executor Might Waive Their Commission
Just because an executor is entitled to payment does not mean they must accept it. In many family situations, particularly when the executor is also the primary beneficiary, it can be more prudent to waive the commission.
Why? The reason is taxes. An executor’s commission is taxable income. It must be reported on the executor’s personal income tax return. An inheritance, on the other hand, is generally received free of income tax.
Consider a simple case: you are the sole heir to your parent’s $1 million estate and also the executor. If you take the statutory commission—which would be $34,000—you would have to pay income tax on that $34,000. If you waive the commission, you receive the entire $1 million as an inheritance, with no income tax liability. In this scenario, waiving the fee is the financially logical choice.
The decision becomes more complex when the executor is not the sole beneficiary. Waiving a commission then benefits all beneficiaries proportionally, leaving more assets in the estate for distribution. This is a personal decision, but one requiring a clear understanding of the tax implications.
A will can also specify a different compensation structure. You can state a flat fee, an hourly rate, or even direct that your executor shall receive no compensation at all. Clarity is key. Leaving the topic unaddressed simply defaults the matter to state law.
Choosing an executor is one of the most important decisions in estate planning. The conversation about their role should include an intentional discussion about their compensation. If you are preparing your will, we can review the potential candidates you have in mind and structure the terms of their appointment—including payment—in a way that is clear, fair, and legally sound.
