How Do I Calculate My Executor’s Fee?
An executor’s fee is the amount of money that’s charged by the individual who’s been named or appointed as the executor of the probate estate for handling all of the necessary tasks in the probate administration.
If you’ve been appointed an executor of someone’s estate, you may be entitled to a fee for your services.
The executor or personal representative fee could be based upon a variety of factors. Some of these factors may be dependent upon the law in your state, says nj.com’s recent article, “Both of my parents died. How do I calculate the executor fee?”
In most states, the executor fee is set by statute. For example, in New Jersey, it is 5% of the first $200,000 of assets taken in by the executor, 3.5% of the next $800,000 of assets, and 2% on anything in excess of $1 million. Likewise, California has a sliding scale based on the amount of the estate.
The New York General rule. Under New York Surrogate’s Court Procedure section 2307, executor fees are based on the value of the probated estate. Fees range between 2 and 5% of the total amount of estate money the executor receives and pays out.
Under the NY Surrogate’s Court’s rules, executor fees are calculated as follows:
- For receiving and paying out money not exceeding $100,000, the executor fee is 5%
- For receiving and paying out additional money not exceeding $200,000 at the rate of 4%
- For receiving and paying out additional money not exceeding $700,000 at the rate of 3%
- For receiving and paying out additional money not exceeding $4,000,000 at the rate of 2.5%
- For receiving and paying out all sums above $5,000,000 at the rate of 2%
However, in Minnesota and Nebraska, the law states that the fee should be “reasonable.”
The amount of work involved is determined by the specific estate. The executor is generally responsible for collecting the estate assets, paying the debts and taxes (if any) and then giving what’s remaining to the heirs.
If you elect to take the commission, it’s taxable income which must be shown on your personal income tax return.
In New Jersey, if there are co-executors, the statute says that an additional 1% can be included to the commission. However, any one executor cannot receive more than the amount to which a sole executor is entitled.
Note that the executor only receives a commission on what he or she takes control of as executor.
This means that the executor doesn’t get a commission on assets that have beneficiary designations on death or that are jointly owned with right of survivorship. These assets pass outside of the will and the executor doesn’t take possession of these assets.
How Do I Calculate My Executor’s Fee? In many instances, the probate estate of the first spouse to die is less than the second. That’s because many of the assets were held jointly with right of survivorship. As a result, they aren’t probate assets and are not subject to the commission.
If that’s the case, the commission on the first spouse’s estate would be much less than the commission on the second estate.
Reference: nj.com (October 10, 2019) “Both of my parents died. How do I calculate the executor fee?”