An executor of an estate is entitled to take a commission, or fee, in New Jersey. This short video covers how it works.
When a person passes away, their will must be probated and their estate must be administered. Depending on whether they had a will or not, usually either an executor or an administrator would be appointed to administer their estate. Administration is essentially all the steps that need to be taken between when the person passes away, and when their money gets paid out and property distributed to their heirs, beneficiaries under their will, etc.
Estate administration can be a lot of work, and the executor or administrator is entitled to take a fee under New Jersey law. The fee consists of corpus commission, based on the assets held in the estate, and income commission, based on the income the estate generates. Both follow formulas set under New Jersey law.
Under N.J.S.A. 3B:18-14, executors are entitled to take corpus commission of 5% on the first $200,000, 3.5% on the next $800,000, and 2% beyond that. Under N.J.S.A. 3B:18-15, executors are entitled to take commissions of 6% on income. Sometimes it may be confusing what is income vs. what is corpus.
Executors don’t have to take commission, but they’re entitled to do so under New Jersey law. Commission is subject to income tax.
I always advise my clients when they’re making a will that executor commissions can sometimes rub family members the wrong way – for example, if only one child serves as executor and gets more than their siblings because of commission, it can cause resentment. It’s important to consider family dynamics in these appointments.
If you need help calculating an executor or administrator commission, probating a will, administering an estate, filing estate or inheritance taxes, making a will, or other legal work, please call or email FriedmanLaw today.