When a sibling steps up to manage a parent’s estate, the first few weeks are predictably consumed by grief and immediate logistics. Fast forward eight months, and the true weight of the role sets in. That executor has likely spent hundreds of hours emptying a co-op in Brooklyn, tracing missing brokerage accounts, filing final income tax returns, and negotiating with creditors. When the time comes to distribute the remaining assets, they rightfully expect compensation for their labor. Just as predictably, the other beneficiaries balk at the idea of paying their sibling out of the family inheritance.
At Morgan Legal Group, we see this dynamic play out frequently in Surrogate’s Court. The tension usually stems from a fundamental misunderstanding of what an executor actually does—and how New York law values that work. Executor compensation is not a discretionary bonus or an inheritance advance. It is a statutory right designed to compensate a fiduciary for taking on significant personal liability and a heavy administrative burden.
The Statutory Framework of SCPA § 2307
Fiduciary compensation is not pulled out of thin air. If a will does not specify a fee structure, New York law dictates exactly how much an executor is entitled to receive. Under the Surrogate’s Court Procedure Act (SCPA) § 2307, executor commissions are calculated on a strict sliding scale based on the value of the probate estate.
The statutory commission schedule is structured 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
Consider an estate valued at exactly $1,000,000. The executor does not simply take a flat percentage of the total. The commission is calculated incrementally: $5,000 for the first tier, $8,000 for the second tier, and $21,000 for the third tier—resulting in a total statutory commission of $34,000. This fee is paid out of the estate’s funds before the remaining assets are distributed to the residuary beneficiaries.
Which Assets Count Toward the Commission?
A common point of confusion among both executors and beneficiaries is the base value used for the calculation. The statutory percentages apply exclusively to the probate estate—meaning assets that pass through the will. They do not apply to the gross taxable estate.
If a parent leaves a $2 million life insurance policy directly to a named beneficiary, or if they hold a $500,000 brokerage account with a transfer-on-death designation, those funds bypass probate entirely. The executor does not take a commission on those non-probate assets because they are not legally responsible for administering them. Similarly, real estate that passes to a named individual by operation of law is excluded from the commission calculation—unless the will explicitly directs the executor to sell the property and distribute the proceeds.
The Impact of Multiple Executors
Families often appoint co-executors—usually two siblings—assuming that sharing the burden is the most equitable approach. While this can foster collaboration, it also complicates compensation.
SCPA § 2307 provides specific directives for co-executors based on the size of the estate. If the probate estate is valued at less than $100,000, the co-executors must split a single statutory commission. If the estate is valued at $100,000 or more, the law permits up to three co-executors to each claim a full statutory commission. If there are more than three executors, three full commissions are divided equally among them.
While multiple full commissions are legally permissible in larger estates, they severely deplete the final inheritance pool. This is a primary reason we advise clients to be deliberate when naming fiduciaries. Appointing three children as co-executors might prevent hurt feelings in the short term, but it heavily taxes the estate during administration.
Income Tax Considerations for the Fiduciary
Inheriting money and earning a commission are treated entirely differently by the IRS. An inheritance is generally not subject to income tax for the recipient. Executor commissions, however, are classified as earned income.
When an executor takes their fee, they must report it on their personal income tax return. Because of this, when an executor is also the sole or primary beneficiary of an estate, we frequently advise them to formally waive their right to the commission. By waiving the fee, they allow the funds to pass to them as a tax-free inheritance rather than taxable income. This strategy requires careful analysis of the estate’s overall tax picture, but it is a standard consideration in prudent legacy stewardship.
Drafting Intentional Compensation Terms
You are not strictly bound by the default rules of the Surrogate’s Court. A well-drafted estate plan addresses fiduciary compensation directly, removing ambiguity and preventing future familial disputes. As the testator, you have the authority to override the statutory schedule.
We often structure wills to include specific compensation clauses. You might direct that an executor serves without compensation, which is highly common when a surviving spouse is appointed. Alternatively, you might cap the fee at a specific dollar amount, establish a flat fee, or expressly state that the executor is limited to a single shared commission regardless of the estate’s size.
The goal is to be intentional. Silence in a will defaults to the statute, which may or may not align with your wishes for your family’s wealth. By addressing the financial reality of estate administration upfront, you remove a major source of friction from the probate process. Stewardship.
To establish clear directives for your fiduciaries, request a document review session with our office to evaluate how your current will structures executor appointments and compensation.
