Executor Fees in NY explained: learn how fees are calculated, taxed, and what executors can legally receive from an estate today.
My initial expectation as I began to research the laws of probate in NY was that I would simply be directed to a clear and concise description of executor fees as “reasonable fees.” As you can imagine, I was surprised when I came across a statute riddled with brackets, exceptions, and little legal traps. Executor fees in NY are a hot search term for a reason; people want a simple answer, or as close to a simple answer as possible. Moreover, they want the formula and the catchall clauses that could potentially alter the final payout. Fortunately for you, New York implements a statutory commission system due to SCPA § 2307, and as you will see below, the answer is not guesswork; it is a schedule. Staying informed through relevant Legal Updates can also help executors and beneficiaries understand how probate rules and fee-related interpretations may evolve over time.
The Short Answer
In New York, the executor is compensated by the value of the estate that they receive and disburse during the course of administration. The statute supplies a sliding commission schedule in which the first $100,000 is charged 5%, the next $200,000 is charged 4%, $700,000 at 3%, $4 million at 2.5%, and 2% for the rest of the estate that exceeds $5 million. The court also permits the recovery of reasonable and necessary out-of-pocket expenditures by the executor. Besides that, if the executor is also an attorney who performs legal services for the estate, the court may permit the payment of separate legal services that are deemed to be “just and reasonable.”
Executor Duties in New York
The executor is the person who is responsible for following the directions in the will and taking care of the estate.
In New York, probate begins in Surrogate’s Court in the decedent’s county of domicile. Executors file the original will and a certified death certificate with the petition to probate, along with other supporting documents. Executors collect the assets of the decedent’s estate, pay the debts and administrative expenses of the estate, file and pay the decedent’s final income and estate taxes, and distribute the remaining assets to the beneficiaries. Due to the nature of the tasks, the law allows the executor to receive a commission.
Executor Fees in NY State: The Statute Explained
New York’s statutory scheme for executor’s fees is a system of brackets. New York does not allow a flat percentage for the entire estate. Instead, each bracket has a percentage associated with it, and the sum of all the percentages for each bracket will be the executor’s commission. The first $100,000 of the estate, for example, will be paid at a 5% rate. The next $200,000 will be paid at a 4% rate. The next $700,000 will be paid at a 3% rate, the next $4,000,000 at a 2.5% rate, and any amount over $5,000,000 will be paid at a 2% rate. The statute also provides that property that is received, distributed, or delivered will be regarded as cash for purposes of computing commissions, but particular legacies or devices will not be included.
This statute plays a significant role for the Commissioner of Estates. If a will contains a provision that bequeaths a particular item to a beneficiary, that beneficiary will not receive a share of the residue of the estate for purposes of the commission.
An example in the IRS’s publication 559 is also helpful. The IRS considers life insurance proceeds, which are paid to beneficiaries, to be outside the estate. In uniform probate practice, the executor is paid for administering probate property and not for non-probate property. This is a reasonable conclusion based on the statute and guidance provided by the IRS.
New York Executor Fees
When determining how to calculate executor fees in New York, first apply each tier in the order listed to calculate specific totals. The following structure illustrates how executor commission will be calculated:
Commission = 5% on the first $100,000
4% on the next $200,000
3% on the next $700,000
2.5% on the next $4,000,000
2% on the amount over $5,000,000
Example 1: Calculate Executor Fees for a $250,000 Estate
For a $250,000 estate, the first $100,000 is charged at 5%, which equals $5,000. The remaining $150,000 is charged at 4%, which equals $6,000. Therefore, the total executor commission is $11,000.
Example 2: Calculate Executor Fees for a $1,000,000 Estate
- For a $1,000,000 estate, the totals are as follows:
- The first $100,000 is charged at 5%, which equals $5,000.
- The next $200,000 is charged at 4%, which equals $8,000.
- The next $700,000 is charged at 3%, which equals $21,000.
- As a result, the executor’s total commission on a $1,000,000 estate amounts to $34,000.
Example 3: Calculate Executor Fees for a $6,000,000 Estate
- For a $6,000,000 estate, the totals are as follows:
- The first $100,000 is charged at 5%, which equals $5,000.
- The next $200,000 is charged at 4%, which equals $8,000.
- The following $700,000 is assessed at a 3% rate, resulting in a fee of $21,000.
- The next $4,000,000 is charged at 2.5%, which equals $100,000.
- The remaining $1,000,000 is charged at
Estate size impacts effort differently, but large and small estates typically yield vastly different commissions due to statute brackets. This is similar to a progressive tax framework, but in reverse: each section is ranked and priced solo then cumulatively.
When The Fee Does Not Apply
If property is received, distributed, or delivered in the state of New York, it is treated as money for the purposes of commission calculation unless there is a relevant exception. The statute also excludes specific legacies or devices. Additionally, it explicitly states that the court may set the value of property as it sees fit.
Thus, the commission is concerned with both “the size of the estate” as well as “the type of assets in the estate.” Generally, the focus is on the probate assets. The assets that pass by operation of law, such as a paid up life insurance policy, do not typically affect the compensation of the executor.
Multiple Executors
This is the surprising part. New York statute says that if there is more than one executor, The court allocates the commissions among the executors according to the work each one performed.
For estates whose gross principal value is $300,000 or more, in the absence of more than three executors, the right to full commission is as if each executor acts as sole executor. For wills and lifetime trusts drafted after August 31, 1993, if there are more than two executors, no more than two commissions can be paid unless the decedent provided for a different result in a signed writing.
In practice, the mere naming of co-Executors in a will does not result in each co-Executor being entitled to receive a separate full commission. The terms of the will, the estate’s value, and the number of executors involved can all have a significant impact.
Are Executor Fees Taxable in NY?
The answer is yes, executor fees are taxable. IRS provides guidance on the fee’s receipt for acting as an executor, administrator, or personal representative. The IRS discusses the administration of estates and Executors in IRS Publication 559. The IRS also provides that estate administration expenses can be claimed as a deduction on the estate’s affairs either on the estate’s estate tax return or on the estate’s income tax return, but not both.
So, in response to the question are executor (admin) fees taxable in ny, the answer is almost always yes. The real question that needs to be addressed is how the fee’s receipt will be reported and what the tax implications, if any, will be to the estate and the Executor based on the specific facts and circumstances.
A Few Notable Edge Cases
If a will names an attorney as executor, New York’s SCPA § 2307-a requires that the attorney executor makes a disclosure to the testator prior to the signing of the will. In the absence of a disclosure, the attorney-executor is entitled to receive only 50% of the statutory executor’s commission. The attorney executor is entitled to receive a reasonable attorney’s fee for the services rendered to the estate.
If the will stipulates that a corporate executor is to receive a particular fee, the corporate executor is entitled to receive that fee in the circumstances contemplated in SCPA § 2307.
What Readers Are Really Looking For
Most people reading about probate fees are looking for straightforward answers, not theories or legal jargon. The answer should be:
- A straightforward answer, then
- A fee chart
- Estate value based examples
- A list of which assets count
- A short FAQ regarding taxes, multiple executors, and attorney-executors
We designed the post to answer the most frequently asked questions, while also giving the reader the confidence to move forward.
Final Thoughts
- Take away this one key idea: in New York State, executor fees are calculated based on the value of the assets in the estate, and affected by how many executors are serving.
- Fees are typically taxable to the executor. Special language in the will or attorney-executor guidelines may change this.
- Being familiar with executor fees in NY can minimize family disputes and confusion during the probate process.
- NY law provides an executor commission schedule, making fees predictable. Fees are not open to negotiation.
- Determining fees requires knowing what assets make up the probate estate and also if multiple executors are named.
- Will provisions for special compensation should be considered.
- Since executor fees are treated as taxable income, the potential tax for fees also should be considered prior to making distributions to beneficiaries.
- Beneficiaries should be aware of the tax implications also.
Additional Resources:
- New York Surrogate’s Court Procedure Act (SCPA § 2307): The official New York law that establishes how executor commissions are calculated and paid.
- IRS Publication 559 – Survivors, Executors, and Administrators: Comprehensive federal tax guidance for executors, including estate tax responsibilities and taxable executor compensation.
