Executor compensation in New York is calculated as follows:
- 5% of the first $100,000
- 4% of the next $200,000
- 3% the next $700,000
- 2.5% of the next $4 Million
- 2% of the rest of the value of the estate
This calculation instruction is written out in SCPA 2307.
Here is our interactive executor compensation calculator for New York, for help with the math involved:
We hope the NY executor compensation calculator has been helpful to you.
Executors of Estates in New York are not expected to carry out their responsibilities free of charge. They are usually entitled to compensation. This compensation is called “commissions.” The amount is set by law, in SCPA 2307.
To calculate the executor compensation in New York, seek the advice of an estate attorney. The calculation can be trickier than people think.
Keep in mind that the statute requires that commissions be split between receiving and paying out. The amount of the executor compensation will be the same as above, but listing it will look different, as the “receiving” fee and “paying out” fee will be specified, each being half of the total executor compensation calculated.
Table of Contents
What Percentage of the Estate Does the Executor Take as Their Compensation
Actually using the percentages can be a bit confusing. Even though the New York executor compensation calculator above does the math for you, you should still be able to double-check and do the math yourself. Here is an additional explanation, which will help you understand how the calculation works:
- 5% of the first $100,000
- 4% of the next $200,000 (so $5,000 plus 4% of estate value up to $300,000)
- 3% the next $700,000 (so $5,000 plus $8,000 plus 3% of estate value up to $1 million)
- 2.5% of the next $4 Million (so $5,000 plus $8,000 plus $21,000 plus 2.5% of estate value up to $5 million)
- 2% of the rest (this is an estate that is worth more than $5 Million, so $5,000 plus $8,000 plus $21,000 plus $100,000 plus 2% of estate value over $5 Million)
The percentage is based on the value of the estate’s assets plus income derived from those assets. For example, interest received from property of the estate is included in when you calculate the executor compensation, but the property itself may not be included because the executor is not involved in the property’s sale. This is sometimes counterintuitive, because the executor usually is involved in retitling the property from the decedent to the beneficiaries. As you can see, it is now always easy to determine which assets are included in the calculation, so an executor is well advised to consult with a New York estate attorney before taking their compensation. It is likely that a preliminary account of the estate will be required when filing for a request for advance commissions.
The executor may be entitled to additional reasonable compensation in connection with property management (5% of gross rentals), litigation or tax matters or management of the decedent’s business matters.
What Assets Are Not Included
Assets passing outside of the estate or left to specifically named beneficiaries in a will are not included in the New York executor compensation calculation.
Assets that pass outside of the estate are not includable in calculating executor compensation in New York , also called “non-probate assets,” are not a part of the estate and the executor, therefore, is not involved in their distribution and cannot charge commissions for them. They include:
- accounts with named beneficiaries
- accounts held jointly with the person who died
- real estate owned jointly with the person who died
- life insurance policies payable to individual beneficiaries
- real estate given to specific beneficiaries is also not a part of the estate
Specific legacy or devise is not includable in commission calculation – the value of real property or personal property left to a specific person cannot be used as a basis of calculating executor commissions. If there is a reason that this property has to be handled by the executor, for example sold and the proceeds distributed, then the property may be includable in commission calculation.
As a rule of thumb, property that the executor is not receiving and paying out is not included in calculating their commission.
How Do I Allocate Executor Compensation if there is More Than One Executor
- Estates Under $100,000 – For estates under $100,000, there is a “one commission rule” – one commission is split between all of the executors.
- Estates from $100,000 to $300,000 – For estates valued between $100,000 and $300,000, there is a “up to two commissions rule” – two commissions are split between all the executors.
- Estates at $300,000 and over – For estates valued at over $300,000, there is an “up to three commissions rule” – up to three fiduciaries can get separate compensation, but if there are more than three fiduciaries, they divide three commissions.
Is Executor Compensation Subject to Income Tax
Yes, typical New York executor compensation is counted as income and is subject to income tax. On the other hand, the IRS and New York Department of Revenue give estate executors an option to not take commissions and not pay income tax. This may make sense for an executor who is the only beneficiary of an estate, or even for someone who is not the only beneficiary, in light of the income-tax savings. This is something that should be discussed with an estate attorney and a tax advisor.
Can an Executor Get an Advance Payment of Compensation
There is no automatic right to advance payment of compensation – they is usually paid at the conclusion of the estate, with our strong insistence that executors receive a waiver from the beneficiaries. However, New York SCPA 2310 and 2311 do authorize the executor to apply to the court for the advance payment of compensation, and will be able to take advance compensation if the judge issues an order allowing them to do so.
What is “Receiving and Paying Out”?
SCPA 2307 states that when NEW YORK executor compensation is calculated, the amount of the compensation should be split in half and the first half is presented as compensation for “receiving” the estate and the second half is presented as “paying out” the estate. Although this does not impact the amount of the compensation that the executor receives, it does impact how the numbers are presented in the accounting document submitted to the court or to the interested parties. An estate attorney familiar with submitting estate accounting documents would know how those numbers should be presented correctly.
What if the Executor Compensation Specified in the Will is Different from the Default Compensation Set Forth by New York Law?
Some wills direct that the executor is to serve without compensation, but those wills are far and few in between. Even fewer wills specify the amount or the percentages of the executor compensation. Typical executor compensation is in accordance with SCPA 2307, but a will can change that default. So it’s always a good idea to double-check your will, because if the will does set the amount of compensation, the direction of the will overwrites the default executor commission rate set forth in SCPA 2307.
Do I Need Written Consent of the Beneficiaries Before I Take My Executor Compensation
Although it is theoretically possible to take the executor compensation at the end of the case without a written confirmation from the beneficiaries, it is almost unthinkable to do so in real-world practice because of the concern that the beneficiaries may challenge the amount at a later date. Obtaining a written waiver and consent from beneficiaries of a New York estate is a must before collecting executor compensation. It is standard practice to obtain beneficiaries’ consent not only on executor compensation but also on all aspects of an estate before the estate is settled.
Serving as an executor of a New York estate may require a great deal of time and expertise depending on the size of the estate and the type of assets. Under NY SCPA 2307, an executor of an estate is entitled to receive compensation for their time and efforts in connection with the management of the estate assets and the distribution of the assets to the beneficiaries.
If you need to calculate executor compensation in New York as per SCPA 2307, and other help in an estate, you can get in touch with New York estate attorney Albert Goodwin at [email protected] or by calling (212) 233-1233.