When your Will is probated your Executor is entitled to receive a commission for their work. And while you can define what that commission is in your Will, most people choose New York’s statutory guideline for that commission (the concern is that if the fee is too low no one will want to be Executor, since you can’t force someone to do the job). In New York, that statute is created by the Surrogate’s Court Procedures Act, Section 2307, and it has a lot of juicy details that differentiate it from other state’s more-streamlined statutory commissions:
Keep in mind that any assets which pass through a living trust, a joint account, or assets passing by “operation of law” (such as life insurance policies) will NOT be considered probatable property and will NOT be included for the sake of Executor “Asset Management Fees.” Also, if you have a relatively small estate that will not have to pay estate taxes and your Executor is your only beneficiary (perhaps he or she is your only child) your Executor may not want to be paid Asset Management Fees because these commissions are considered income (and are thus taxable) to the Executor.
First, an Executor is entitled to reimbursement for expenses he or she has paid to administer the Will prior to and during Probate, provided these expenses are “reasonable and necessary.” After that, the guidelines are based on percentages of the total assets they must administer over. These fees are based on a sliding-scale:
- 5% for the first $100,000 probated ($0 to $100,000)
- 4% for the next $200,000 probated ($100,001 to $300,000)
- 3% for the next $700,000 probated ($300,001 to $1,000,000)
- 2 ½% for the next $4,000,000 probated ($1,000,001 to $5,000,000)
- 2% for all additional assets probated ($5,000,001 and Above)
The Executor receives ½ of this commission rate for assets collected, and ½ for assets distributed. Therefore, assets with large debts will lead to a lesser commission than a similar size estate with no debts.
By default, an Executor who is required to distribute Real Estate does NOT receive a commission unless that property is actually sold. This default can be addressed by explicitly declaring in your Will that you would like your Executor to receive compensation for handling real property, even if it is not being sold.
Assets passing through Probate that do not have obvious dollar values (such as jewelry or real estate) shall have their dollar amount approved by the Surrogates’ Court. Any “specific legacy” (Ex: “I give my gold earrings to my daughter Jane’) or “devise” (such as the transfer or real estate) are NOT commissionable.
This Subsection covers multiple commissions for Executors of Wills. Remember that these are guidelines; if the Testator wants a different commission arrangement for multiple Executors he or she should spell out his or her desires in the Will.
If the value of assets passing through Probate is worth less than $100,000 and there is more than one Executor:
- The Executors must split the commission of one Executor based on the amount of services each Executor has provided for the estate.
If the value of assets passing through Probate is worth between $100,000 and $299,999:
- If there are 2 Executors, the Executors must split the commissions of one Executor in half.
- If there are more than 2 Executors, the Executors may split commissions of 2 Executors (i.e. twice the statutory guidelines) based on the amount of services each Executor has provided for the estate UNLESS the Executors have a written agreement to split the commissions in a different percentage (but total commissions per Executor cannot exceed the amount due to one Executor).
If the value of assets passing through Probate is worth $300,000 or more:
- If there are 1, 2, or 3 Executors, the Executors each get the statutory commission (i.e. two or three times the statutory guidelines, divided equally)
- If there are more than 3 Executors, the Executors have to split the commissions of three Executor based on the amount of services each Executor has done for the estate UNLESS the Executors have a written agreement to split the commissions in a different percentage (but total commissions cannot exceed the amount due to three Executors).
Lastly, an Executor who is required or entitled to collect rent from properties owned by the Testator’s estate is permitted to keep 5% of the rent actually collected. If there are multiple Executors, they must split this 5% between them based on the services they provide to collect that rent.