Question: My aunt has nominated me as the Executor of her estate. Someone told me that I am entitled to payment for serving as Executor, is that true?
Answer: Yes, that is true. Executors get paid commissions which are calculated as a percentage of the value of the probate estate, less any specific bequests (items of real or personal property left to a named beneficiary). The probate estate is defined as all property held solely in the decedent’s name. It does not include jointly held real property or financial accounts as said property does not pass under the Will. Bank accounts which are held in trust for another individual, pension plans, life insurance, IRAs and any other accounts or policies which are paid directly to a beneficiary also do not pass under the Will.
If the probate estate (less any specific bequests to named beneficiaries) is valued at less than $100,000, and if there is more than one Executor, the Executors will be required to share commissions. If the value of the probate estate is more than $100,000 but less than $300,000, each Executor (up to a total of two) is entitled to be paid a full commission. If more than two Executors are serving, they must split two full commissions. If the probate estate is more than $300,000 and if there are more than three Executors, they must split three full commissions, unless the decedent has specifically provided otherwise in the Will.
The commission rate in New York for Executors is 5% on the first $100,000 in the estate, 4% on the next $200,000, 3% on the next $700,000, 2-1/2 % on the next $4,000,000 and 2% on any amount above $5,000,000.
If the probate estate is valued at $500,000, the Executor’s commissions would be calculated as follows:
5% of the first $100,000 ($100,000 x .05) $5,000
4% of the next $200,000 ($200,000 x .04) $8,000
3% of the next $700,000 ($200,000 x .03) $6,000
$19,000 total commission payable
It is important to note, any commission paid to an Executor is taxable income to the Executor. In some cases, the Executor may want to waive commissions. For instance, when the Executor is also the sole beneficiary he or she is going to receive the entire estate as the sole beneficiary, and avoid any income tax. Another example is where the Executor is one of two beneficiaries, where the beneficiaries are to receive the estate equally. If the Executor waives commissions, the Executor will nonetheless receive, as one of two beneficiaries, half of the amount of commission waived.