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Executor/Administrator Compensation

Can an Executor or an Administrator of an estate or a Trustee receive compensation?

New York law recognizes a Fiduciary’s right to be compensated in their capacity as an agent. A fiduciary is entrusted with the authority to manage and distribute the property of the deceased individual. A fiduciary includes an Executor and Administrator and/or Trustee. This right to be compensated is premised upon the fiduciary’s taking active control of the property of the decedent and then assuming liability for managing and ultimately distributing the assets of the estate.

There is no inherent right to compensation as a fiduciary and the basis of compensation, its entitlement and the amount of compensation can vary based on several factors. An individual can direct in their will or in their trust as to how the Executor or the Trustee will be compensated. However if there is no written direction, the rates of compensation for the fiduciary are governed by statute under Surrogate Court Procedure Act. The calculation is based upon the value property received as well as value of property paid out. The value of real estate held by the decedent may also be a factor in the calculation.

Generally speaking the property of the decedent that does not come into the possession of the fiduciary is not subject to commissions. Excluded property includes non-testamentary assets and all specific gifts under the will. These types of property pass by operation of law directly to its recipient and do not require any management or control by the fiduciary and therefore such assets are not included in calculating the fiduciary’s commissions. Such non- testamentary assets include jointly held property and life insurance proceeds payable to a beneficiary, other than the estate of the decedent. Common examples of property that are specifically bequeathed by the decedent under a will include personal property such as jewelry, furniture and other tangible personal effects. Specific gifts could also include real estate or specific bank accounts listed in a will.

Ultimately, a fiduciary can decide whether to accept commissions or to waive them. Often a sole beneficiary who is also acting in the capacity of the fiduciary will prefer to waive the commissions and possibly receive favorable tax treatment. Sometimes the fiduciary may feel conflicted in accepting commissions out of moral obligation or closeness to the decedent. However extensive management of the estate, accountability to several beneficiaries and allocating set time to the tasks of the estate may require accepting commissions to compensate for the fiduciary’s time and effort.

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