Serving as executor is a huge responsibility. It is for that reason that it is written into the law in New York that when a person serves as executor, they are entitled to a commission that equals a percentage of the estate based on the total amount of that estate. Determining the amount of the total estate when it comes to figuring out how much the commission is isn’t as simple as just adding up everything that the decedent had any sort of ownership interest in. There are rules in place as to what it is that counts towards the “estate”, at least as far as determining commission is concerned.
One area where there is no “yes” or “no” answer when it comes to how the size of the estate will be determined for executor commission purposes is when real property is concerned. For that, whether the value of that real property is added into the estate really counts on how that property was owned.
If real property, such as a house, is owned by the decedent alone and is not left to anyone in the will, it would be considered part of the estate, meaning that the value of the house would be added to the estate value when it comes to determining how much the percentage will be for the commission.
However, if real property were owned jointly, such as when spouses own a home together, that property would not be considered part of the estate, meaning that the value of that property would not be included when determining the commission for the executor.
If a piece of real property is specifically left to someone in a will, such as when a grandfather who owns an apartment leaves it to their grandchild in his will, the value of that property would also not be included when determining the size of the estate for figuring out the commission.
Where this can be confusing is when someone owns many pieces of property when they die and those pieces of property are all owned different ways. Coming up with a commission in that case may not be so simple, mainly because some property would be included when coming up with the amount of the commission while other property would be left out.
Adding more money to the estate for purposes of determining the commission is important for a couple of reasons. First, and most obvious, is that if the estate is larger the commission will be larger. But the actual percentage that is given to the executor changes depending on the size of the estate also. For example, for an estate that is $500,000, 5% of the estate would be the commission for the first $100,000. For the second $200,000, the rate would be 4%. For the rest of the estate, in this example $200,000, the percentage would be 3%.
What this means is that the executor does not get a simple flat percentage of the entire estate, but rather a graduated amount based on the total. When you start adding in real property, especially from a place like Long Island or New York City where the property value may add a significant amount to the estate, this can make a huge difference in the amount the executor collects. Because of the complexity of figuring out executor commissions, finding a great Long Island estate attorney is essential. If you need help from a Long Island estate attorney, call us at (516) 777-0647.