Is a New York Estate Administrator's Commission Based on the Gross Estate?

By Albert Goodwin, Esq., New York estate attorney

In New York, an estate administrator's commission is computed on the probate assets the administrator receives and pays out. The figure is not reduced by the estate's debts or expenses. It is also not the federal "gross estate," which is an estate-tax concept that sweeps in property the administrator never touches. People asking whether commissions come out of the "gross" or "net" estate are usually mixing those two questions together, so this page takes them one at a time, then turns to the issues that come up only in intestate estates, where there is no will and the fiduciary is an administrator rather than an executor.

The Short Answer

• Gross versus net of debts: commissions are computed on what the administrator takes in and what the administrator pays out, and paying the decedent's debts, funeral bill, taxes and administration expenses is a paying out. Debts do not shrink the base.
• Probate versus non-probate: only property that passes through the administrator's hands is counted. A joint account that passed to the surviving owner, an IRA with a named beneficiary and a life insurance policy payable to a person are not in the base, even though all of them are in the federal gross estate under Internal Revenue Code section 2031.
• Statute: the schedule is in SCPA 2307(1), and the rule treating property as money for commission purposes is in SCPA 2307(2). The full text is also available from the New York State Senate.

"Gross" Has Two Different Meanings Here

The word "gross" causes most of the confusion. In tax practice, the gross estate under IRC 2031 is every asset the decedent owned or controlled at death, including jointly held property, retirement accounts, life insurance the decedent owned and property in a revocable trust. An administrator's commission has nothing to do with that number. If a decedent had $2,200,000 in total assets but only $1,500,000 came into the administrator's hands, the commission base is $1,500,000.

In accounting practice, "gross" is used in a second sense: commissions are computed on amounts before liabilities are subtracted. An administrator who collects $1,500,000 and uses $200,000 of it to pay creditors is still credited with receiving $1,500,000 and paying out $1,500,000. In that sense, and only that sense, the commission is "gross, not net." The accurate description of the base is probate principal received and paid out, plus income earned on it during administration.

The SCPA 2307 Rate Schedule

SCPA 2307(1) sets a sliding scale. The rates are marginal: each band applies only to the slice of value that falls inside it.

The statute describes each rate as being "for receiving and paying out." In an accounting, the commission is shown in two halves, one for receiving and one for paying out. If the administrator received $500,000 and paid out $500,000, the receiving commission is half of the schedule amount and the paying-out commission is the other half. The split matters when an administrator has received assets but not yet distributed them, because only the receiving half has been earned at that point.

Commission by Size of Probate Estate

Use this table to check any calculation. The amounts shown are the full commission for a sole administrator who received and paid out the entire base.

For an amount between two rows: take $34,000 for the first $1,000,000 and add 2.5% of the excess up to $5,000,000. Above $5,000,000, take $134,000 and add 2% of the excess.

What Counts in an Intestate Estate

SCPA 2307(2) provides that the value of "any real or personal property" and its increment that is "received, distributed or delivered" by the fiduciary is treated as money in computing commissions. In an estate without a will, the property that meets that test typically includes:

• bank accounts in the decedent's sole name with no payable-on-death designation, which the administrator collects with the letters of administration;
• brokerage and investment accounts in the decedent's sole name with no transfer-on-death registration;
• retirement accounts and life insurance only where the estate is the beneficiary or no beneficiary survived, so the proceeds are payable to the estate;
• refunds, final wages, security deposits and other receivables collected by the administrator;
• vehicles, jewelry, art and other tangible property the administrator sells, or delivers to distributees at an appraised value;
• real property the administrator actually sells (see below);
• interest, dividends and rent collected during administration.

Payments out that count toward the paying-out half include funeral expenses, the decedent's debts, estate and income taxes, administration expenses such as the bond premium and legal fees, and distributions to distributees under EPTL 4-1.1.

What Is Excluded

Property that never passes through the administrator's hands fails the "received, distributed or delivered" test in SCPA 2307(2) and is not commissionable. In an intestate estate the usual exclusions are:

• joint accounts and jointly owned real estate with right of survivorship;
• Totten trust (in-trust-for) accounts and payable-on-death accounts;
• IRAs, 401(k)s and annuities with a living named beneficiary;
• life insurance payable to a named person;
• property held in a revocable or irrevocable trust;
• real property that vests directly in the distributees and is not sold by the administrator.

SCPA 2307(2) also excludes specific legacies and devises. That exclusion rarely arises for an administrator, because specific gifts exist only under a will. If you are an administrator c.t.a. serving under a will whose executor cannot act, the specific-bequest exclusion does apply to you, and the rules on the executor compensation page are the better fit.

Real Property Passing by Intestacy

Real property is the asset most often miscounted. Under EPTL 4-1.1 and 11-1.1, title to the decedent's real property vests in the distributees at death, subject to the administrator's power to sell it for the purposes allowed by law. The commission consequences depend on what the administrator does with it:

• Sold by the administrator: the proceeds are received and paid out, and the sale is commissionable. Where a mortgage is paid off at closing, courts generally compute the commission on the estate's equity, the sale price less the mortgage balance, because the administrator never received the lender's share.
• Not sold, title passing to the distributees: the house does not ordinarily enter the commission base. The administrator may have signed a deed or an affidavit confirming the distributees' title, but the property was neither received into the estate nor distributed out of it in the statutory sense. Rent collected while the estate held the property is still commissionable, and SCPA 2307(6) adds a separate 5% of gross rents for managing it.
• Sold by the distributees after administration: no commission, because the sale was not the administrator's transaction.

Because the treatment of real property depends on facts and on the Surrogate's discretion under SCPA 2307(2), an administrator who intends to take a commission on real estate should raise the question with counsel before filing the account.

A Worked Example

A decedent dies in Queens without a will, survived by three adult children. One child is appointed administrator. The assets are:

• $1,500,000 in bank and brokerage accounts in the decedent's sole name;
• a $300,000 IRA naming the three children as beneficiaries;
• a $400,000 house with no mortgage, which the children decide to keep.

The administrator pays $200,000 in debts, funeral expenses, taxes and administration costs, and distributes the remaining $1,300,000 equally to the three children. The house is deeded to the three children without a sale.

Step one is the base. The IRA passed by beneficiary designation and the house vested in the children, so neither is counted. The base is $1,500,000, the probate cash and securities the administrator received. The $200,000 in debts does not reduce it.

Step two is the schedule:

• 5% of the first $100,000 = $5,000
• 4% of the next $200,000 = $8,000
• 3% of the next $700,000 = $21,000
• 2.5% of the remaining $500,000 = $12,500

Total commission: $46,500, shown in the account as $23,250 for receiving and $23,250 for paying out.

For comparison, two common mistakes produce different numbers. Computing on the $1,300,000 left after debts gives $41,500, which understates the commission. Computing on the $2,200,000 federal gross estate gives $64,000, which overstates it and would be rejected on an accounting. Note that in this example two of the children did not serve, so the $46,500 comes off the top before the three-way split: the administrator nets $46,500 plus one-third of the remainder, and each sibling receives one-third of the remainder. That is the arithmetic that drives the waiver discussion below.

Issues That Arise Only for Administrators

Executors and administrators use the same schedule, but the intestate setting changes who serves and what the commission means to the family.

The administrator is usually also a distributee

SCPA 1001 gives priority for letters of administration to the surviving spouse, then children, then other distributees in order of inheritance. The person taking the commission is therefore almost always also an heir. Every dollar of commission is a dollar taken out before the shares are divided, so it comes partly out of the administrator's own share and partly out of the other distributees' shares. The other distributees can object to the commission in a formal accounting proceeding if it is computed on the wrong base or claimed on property the administrator never handled.

Sole distributee as administrator

A surviving spouse with no children, or an only child, often serves as sole distributee and sole administrator. In a solvent estate the commission is pointless: the administrator would be paying taxable income to himself or herself out of an inheritance that would otherwise be tax-free. Most sole distributees waive. The exception is an insolvent or nearly insolvent estate. Under SCPA 1811, reasonable administration expenses, which include commissions, are paid before the decedent's general creditors. A sole distributee of an insolvent estate may take the commission as a way to receive something from an estate that would otherwise go entirely to creditors, subject to the court's review of the account.

Bond

Administrators are frequently required to post a bond under SCPA 801 unless the distributees consent to dispense with it or the court does so. The bond premium is a reimbursable administration expense under SCPA 2307(1), separate from the commission. The bond amount is based on the value of the personal property to be collected, which is roughly the same universe of assets as the commission base, so an administrator who has calculated one has a head start on the other.

Public Administrator

When no eligible distributee is available to serve, the Public Administrator of the county is appointed under SCPA 1001. The Public Administrator receives statutory commissions under SCPA 2307 on the same schedule, together with an additional statutory allowance toward the expenses of the office under SCPA Article 11 (New York City counties) or Article 12 (other counties), and counsel fees for its outside attorney under SCPA 2110 as approved by the Surrogate.

Kinship proceedings and unclaimed shares

Where the distributees are unknown or cannot prove their relationship, the court may direct that their shares be deposited with the New York City Commissioner of Finance or the county treasurer under SCPA 2222. The deposit is a paying out by the administrator, and the paying-out half of the commission is earned on it. A claimant who later establishes kinship through an affidavit of heirship or a kinship hearing receives the deposited share, less nothing further for the administrator's commission, which was already allowed when the account was settled.

Voluntary administration

If the estate's personal property is small enough to qualify for voluntary administration under SCPA Article 13, the voluntary administrator serves without commissions. The trade for the simplified procedure is no compensation.

Attorney-administrators

SCPA 2307-a, which cuts an attorney-executor's commission in half unless the client signed a disclosure when the will was drafted, has no application in an intestate estate because there is no will. An attorney who serves as administrator and also performs the estate's legal work may receive both commissions and reasonable legal fees under SCPA 2307(1), subject to the Surrogate's approval of the fee.

More Than One Administrator

Co-administrators are common when siblings share priority under SCPA 1001. SCPA 2307(5) limits the number of full commissions:

Co-administrators may agree in writing to a different apportionment of the shared commissions. In the $1,500,000 example above, if two of the three children had served, the estate would pay two full commissions, $93,000, before the shares were divided. Families deciding how many siblings should serve should run that number first.

Additional Compensation

• Rents: SCPA 2307(6) allows 5% of gross rents collected when the administrator must collect rents and manage real property, in addition to the regular commission.
• Expenses: SCPA 2307(1) requires the court to allow the administrator's reasonable and necessary expenses actually paid, such as filing fees, the bond premium, appraisal fees and postage. These are reimbursements, not compensation.
• Legal fees: the estate's attorney is paid under SCPA 2110 as approved by the court, separately from the administrator's commission.

When the Commission Is Paid

The default under SCPA 2307(1) is that commissions are allowed "on the settlement of the account," at the end of the administration, either in a formal judicial accounting or in an informal settlement where the distributees sign receipts and releases that approve the commission. Two statutes allow earlier payment:

• SCPA 2310: the administrator petitions the Surrogate's Court for an advance payment of commissions on notice to the interested parties. The court may require an account of what has been received and paid so far and may limit the advance to the receiving half.
• SCPA 2311: the administrator may take an advance without a court order if all interested persons who are adults and competent sign acknowledged consents, within the limits the statute sets.

Any advance is subject to adjustment on the final account. An administrator who takes more than the account ultimately supports must repay the excess with interest.

Tax Treatment and the Waiver Decision

Commissions are ordinary income to the administrator under IRC 61 and are reported on the administrator's personal return. An inheritance is excluded from income under IRC 102. For a distributee-administrator, the commission therefore converts a slice of a tax-free inheritance into taxable income, while reducing the shares of the other distributees.

The estate may deduct the commission on its fiduciary income tax return (Form 1041) as an administration expense, or on the federal estate tax return (Form 706) under IRC 2053, but not both; IRC 642(g) requires an election. New York imposes its own estate tax on estates above the basic exclusion amount, which is $7,160,000 for decedents dying in 2025, and commissions are deductible on the New York return as well. For an estate under both thresholds, the deduction is worth little, and a distributee-administrator usually comes out ahead by waiving.

A waiver should be made early and clearly. Under Revenue Ruling 66-167, a fiduciary who formally waives within a reasonable time after appointment, generally within six months, and acts consistently with the waiver is not taxed on the commission. A fiduciary who waits until the end of the estate and then declines a commission already shown as earned risks being treated as having received it and made a gift of it. Before any commission is taken or waived, the administrator should review the numbers with the estate's attorney and accountant.

Frequently Asked Questions

Does the administrator get a commission on the house if it passes to the heirs without a sale?

Ordinarily no. Title vests in the distributees under EPTL 4-1.1, and the house is not received or distributed by the administrator in the sense of SCPA 2307(2). Rent collected during administration is commissionable, with an added 5% of gross rents under SCPA 2307(6).

Is the commission reduced because the estate had large debts?

No. Paying debts is a paying out. The administrator who collects $500,000 and pays $300,000 of it to creditors is credited with receiving and paying out $500,000.

Can the other heirs object to the commission?

Yes. Distributees may object in an accounting proceeding if the base is wrong, if the administrator claims a commission on non-probate property, or if the administrator's misconduct justifies denial or reduction of commissions.

Is an administrator's commission the same as an executor's?

The schedule in SCPA 2307 is the same. The differences lie in who serves, the absence of specific bequests, the inapplicability of SCPA 2307-a, the bond, the treatment of real property vesting in distributees, and the frequency with which a distributee-administrator should waive.

Related Pages

• Estate administration in New York
• Who serves as administrator when there is no will
• Obtaining letters of administration
• Administrator d.b.n. when a prior fiduciary cannot finish
• Estate accountings and objections
• Executor compensation under a will

Speak With Us

If you are serving as administrator of a New York intestate estate and need to compute, defend or challenge a commission under SCPA 2307, or if you are a distributee reviewing an account, we can help. Contact New York estate attorney Albert Goodwin at [email protected] or 212-233-1233.