An Executor or Administrator of a decedent’s estate is entitled to a commission.  The job of the Executor or Administrator is to gather all the assets of the decedent, pay the liabilities, and distribute the funds according to the decedent’s Last Will & Testament or according to the intestacy rules of New York.  The executor or administrator’s commission is based off the size of the estate.

Assets Excluded from Computing Commissions

Certain assets are excluded in calculating the executor’s commission.  Assets not included in the executor’s commission are:

How Commissions are Calculated

Commissions for executors and administrators are codified in SCPA 2307. Executor and Administrator fees are calculated as follows:

Executors are also entitled to 5% of gross rents received on behalf of the estate.

Executors Commissions/Fees count as Taxable Income

Executors should be aware that executor’s commissions are considered taxable income. However, inheriting property from an estate is not considered income.  If the executor is a sole beneficiary, they could waive their commissions and receive their funds as an inheritance and not have to pay income taxes.

Daredevil Dan Example

On December 4, 2015, Daredevil Dan went to Miller & Miller Law Group PLLC and executed a Last Will & Testament. The Last Will & Testament left Daredevil Dan’s watch collection to his friend, Ryan.   The remainder of his estate was to be left equally between his son Jeremy, his daughter, Jenny, and his friend Brian.  He made Jeremy the executor of his will.

On March 26, 2016, Daredevil Dan tried to recreate Houdini’s famous water escape, unfortunately Daredevil Dan was not very good at picking locks, and that was the end of Daredevil Dan.

Daredevil Dan passed away with the following assets:

What assets of Daredevil Dan’s are commissionable to  Jeremy as executor?

The size of Daredevil Dan’s estate would be as follows:

-$2,100,000 for the sale of the Cobble Hill property

-$24,000 in Income from the upstairs Tenant and

-$200,000 from Daredevil Dan’s bank account

Totaling $2,324,000

According to SCPA 2307, Jeremy’s commissions would be

5%    of $100,000 =          $5,000

4%     of $200,000 =         $8,000

3%     of $700,000 =         $21,000

2.5%  of $1,324,000 =     $33,100

              $2,324,000       $67,100

Estimated Total Commission for Jeremy as Executor of Daredevil Dan’s Estate: $67,100.00

Jeremy would also be entitled to 5% of the $24,000 in rent collected = $1,200.00

Jeremy’s full executor’s commission would equal $68,300.00.  If Jeremy were to take his executor’s commission, this would be taxable to Jeremy and must be included on his income tax return for the year.

As illustrated above, there are many intricacies in calculating an executor’s commission and administering a decedent’s estate. Contact Miller & Miller Law Group PLLC for help regarding the administration or probate of an estate.