Question: I am the nominated executor of my friend’s estate. If I am appointed as executor, would I get paid for the work I do?
Answer: Yes, you would be entitled to be paid for the work you perform as executor. The payment received by an executor is referred to as a commission. In order to determine the amount of an executor’s commission, you would first look to your friend’s last will and testament to see if there is language stating what the executor’s commissions would be. An executor will be compensated pursuant to the terms of the Will if the Will states a commission. If the Will does not say what the commissions should be, the commissions are calculated by a formula provided in New York State Law.
New York State law provides for an executor to receive a commission that varies between 2-5% of the value of property received and distributed by the executor. Specifically, an executor would receive a 5% commission for receiving and paying out all sums of money up to $100,000; 4% for receiving and paying out any additional sums up to $200,000; 3% for receiving and paying out any additional sums up to $700,000; 2.5% for receiving and paying out any additional sums up to $4,000,000; and 2% for receiving and paying out all sums above $5,000,000.
However, an executor does not receive commission on the value of all a decedent’s property. An executor is not entitled to a commission on the value of property that is specifically given to a person or organization in a will (which is called a specific bequest); assets passing outside of the estate (an example would be a bank account payable to named beneficiaries); and real estate that is not sold by the executor. As an example, a decedent specifically leaves his house to his son, has a bank account with his son listed as the beneficiary and a stock account owned individually by the decedent without any beneficiaries. The executor of the decedent’s estate is not entitled to collect commissions on the value of the house or the value of the bank account with his son listed as beneficiary. The executor would only receive a commission based upon the value of the decedent’s stock account.
Additionally, it should be noted that executor’s commissions are considered taxable income. However, inheriting property from an estate is not considered income. As such, an executor who is inheriting from the estate in which they are the executor, may not want to take his/her commission and can waive their right to an executor’s commission.
-- Nancy Burner, Esq. & Roseanne Beovich, Esq.