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How are Executors to a Will Compensated in New York?

Person waiting for the subway in Manhattan New YorkAn executor is someone appointed by the decedent to carry out the instructions per the will and administer the estate (the balance of the decedent’s property as of his or her death). An executor’s duties include:

1. Having the will probated. Probate is the process by which the surrogate’s court determines if a will is valid. To make a valid will, the decedent must have signed it in front of a notary and two witnesses, and it must not have been signed under duress, fraud, undue influence, or any other condition interfering with the signatory’s free will. Nothing can be done with a will before the probate process. (If the decedent died with less than $30,000 the will does not need to be probated). At the end of the probate process, the court issues Letters Testamentary to the Executor(s), which gives him or her the authority to administer the estate.

2. Collecting, identifying and inventorying property. The Executor(s) will be responsible for locating all of the decedent’s property that will pass under the will and administering it to the proper beneficiaries. Likewise, the Executor(s) obtain appraisals of any items or property that need appraisals.

3. Paying debts. Debts, including funeral expense, will be paid from the decedent’s estate.

4.  Paying taxes. Taxes can include any pending income taxes that the decedent had not had the opportunity to pay, gift taxes, the federal or state estate taxes due, if any.

5. Distributing property. The Executor(s) is in charge of actually distributing the property per the will.

Being an executor is a time consuming process, so it makes sense that they are
entitled to compensation. (Although an executor can waive receiving fees, most would probably not).

Wills, trusts, and estate law in New York is governed by the New York Surrogate’s Court Procedure Act (N.Y. SCP. Law). Section 2307 of this Act provides for a formula for executor fees, which are based on the combined value of the estate’s assets plus income.

For example:
(a) 5% of the first $100,000.
(b) 4% of the next $200,000.
(c) 3% at the next $700,000.
(d) 2.5% for the next $4,000,000.
(e) 2% on any amount over $5,000,000.

Let’s take a large estate as example to see how each of these percentages are handled. For example, if an estate is worth $20,000,000. The Executor would be entitled to compensation as follows:

5% of $100,000 = $5,000
+
4% of $200,000 = $8,000
+
3% of $700,000 = $21,000
+
2.5% of $4,000,000 = $100,000
+

2% of $15,000,000 = $300,000

Total Compensation on a $20,000,000 estate is $434,000.

It is apropos to mention here that executor’s fees are taxable income. Please be advised that this is different from beneficiaries of an estate who are not taxed on funds received from an estate.

Many times there are multiple executors to a will. In that case, what happens to the Executor fee? Where there are multiple executors to a will, the fee will be shared as follows:

a) For estates valued at less than $100,000 the executors would split the fee according to the services rendered by them respectively.
b) For estates valued between $100,000 and $300,000 each executor is entitled to the full fee allowed to a sole fiduciary unless there are more than 2 fiduciaries (in which case the full fee allowed to 2 fiduciaries must be divided among them according to the services rendered by them respectively), unless the fiduciaries have otherwise agreed in writing between or among themselves. (This is similar to situation (a) if there are more than 2 executors.)
c) For estates valued over $300,000 each executor is entitled to the full fee allowed to a sole fiduciary unless there are more than 3, (in which case the fee to which 3 would be entitled must be divided among them according to the services rendered by them respectively) unless the fiduciaries have otherwise agreed in writing among themselves. (This is similar to situation (a) if there are more than 3 executors).

Disclaimer:
"This blog is for informational purposes only and is not intended to create an attorney-client relationship. It is recommended that you speak to an attorney licensed in your jurisdiction before relying on the information in this blog."

2 Responses to How are Executors to a Will Compensated in New York?

  1. Marie Rother says:

    As I live out of state can I be compensated for hotel and plane fare
    Above and beyond a Executorship fees

  2. Frederick L. Bauch, Jr. CPA, BBA, MBA says:

    In NY can the Executor be paid reasonable compensation based on an agreed-upon hourly rate times the total hours worked INSTEAD OF the statutory fixed percentage applied to the total value of the estate assets ?

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