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Understanding New York Executor Fees: A Comprehensive Guide
When a loved one passes away, their estate often enters a legal process known as probate. A crucial role in this process is played by the executor, the individual or institution appointed to manage the deceased's assets, pay debts, and distribute the remaining property according to the will. In New York, executors are entitled to compensation for their services, known as a commission. This guide, along with our NY Executor Fee Calculator, will help you understand how these fees are determined.
What is an Executor?
An executor is the person named in a will to carry out the instructions of the deceased. Their responsibilities are significant and can include:
- Locating and securing all assets of the estate.
- Notifying beneficiaries and creditors.
- Paying debts, taxes, and administrative expenses.
- Managing investments and property.
- Distributing assets to the rightful beneficiaries.
- Filing necessary legal documents with the Surrogate's Court.
Given the complexity and time commitment involved, New York law provides for executors to be compensated for their efforts.
How are Executor Fees Calculated in New York?
New York executor fees are statutory, meaning they are set by law under the Surrogate's Court Procedure Act (SCPA) ยง 2307. The commission is calculated as a percentage of the "gross estate value" or "principal received and paid out" by the executor. This generally refers to the value of all assets that pass through the executor's hands, excluding specific bequests of property that don't require management or sale by the executor (e.g., a house left directly to a specific heir, unless the executor has to sell it to pay debts).
The commission rates are tiered, meaning different percentages apply to different portions of the estate's value:
- 5% on the first $100,000
- 4% on the next $200,000 (i.e., from $100,000.01 to $300,000)
- 3% on the next $700,000 (i.e., from $300,000.01 to $1,000,000)
- 2.5% on the next $4,000,000 (i.e., from $1,000,000.01 to $5,000,000)
- 2% on any amount above $5,000,000
Examples of Executor Fee Calculation:
Example 1: Small Estate
Let's say an estate has a Gross Estate Value of $50,000.
- The entire $50,000 falls into the first tier (5%).
- Commission = $50,000 * 0.05 = $2,500
If there is one executor, they receive $2,500. If there are two executors, they split the $2,500, each receiving $1,250.
Example 2: Mid-Sized Estate
Consider an estate with a Gross Estate Value of $250,000.
- First $100,000 @ 5% = $5,000
- Remaining $150,000 ($250,000 – $100,000) @ 4% = $6,000
- Total Commission = $5,000 + $6,000 = $11,000
If there is one executor, they receive $11,000. If there are two executors, each receives a full commission of $11,000, for a total of $22,000. If there are three executors, they split two full commissions ($22,000), each receiving approximately $7,333.33.
Example 3: Larger Estate
For an estate with a Gross Estate Value of $1,500,000.
- First $100,000 @ 5% = $5,000
- Next $200,000 @ 4% = $8,000
- Next $700,000 @ 3% = $21,000
- Remaining $500,000 ($1,500,000 – $1,000,000) @ 2.5% = $12,500
- Total Commission = $5,000 + $8,000 + $21,000 + $12,500 = $46,500
Again, the distribution among multiple executors follows the rules outlined below.
Impact of Multiple Executors
The number of executors can significantly affect the total commission paid out by the estate, especially for larger estates:
- Estate Value Less Than $100,000: The total commission calculated (as if there were one executor) is split among all appointed executors. For example, if the commission is $2,500 and there are two executors, each receives $1,250.
- Estate Value $100,000 or More:
- Two or Fewer Executors: Each executor is entitled to a full commission. So, if there are two executors, the estate pays two full commissions.
- More Than Two Executors: The total commission paid by the estate is capped at two full commissions. These two full commissions are then divided equally among all the executors. For instance, if there are three executors, they would split the amount equivalent to two full commissions.
Important Considerations:
- Waiver of Commission: An executor can choose to waive their commission, often done by family members who are also beneficiaries to maximize the inheritance for all. This waiver must be in writing.
- Extraordinary Services: In rare cases, if an executor performs services beyond the scope of typical duties (e.g., managing a complex business for an extended period), the Surrogate's Court may award additional compensation. This is not part of the standard commission calculation.
- Attorney Fees: Executor commissions are separate from attorney fees. If the executor is also an attorney, they can receive both executor commissions and reasonable attorney fees for legal services provided to the estate, but this must be disclosed and approved by the court.
- Tax Implications: Executor commissions are considered taxable income to the executor and are deductible as an administrative expense for the estate.
Understanding New York executor fees is vital for both executors and beneficiaries. Our calculator provides a quick estimate, but always consult with an experienced estate attorney for specific advice regarding your situation.