10 Oct My parents died. How can I set the executor fee?
Q. My parents died five months apart. I am the executor. How is the executor fee calculated fairly? A double fee sounds too much even though it’s so much work.
A. We’re sorry to hear about the loss of your parents .
New Jersey’s executor fee is set by statute.
It is 5 percent of the first $200,000 of assets taken in by the executor, 3.5 percent of the next $800,000 of assets and 2 percent on anything in excess of $1 million, said Yake Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.
On a $1 million estate, for example, the commission works out to $38,000, he said.
Hauptman said how much work is involved depends on the estate but the executor is responsible to gather the estate assets, pay the debts and taxes, if any, and then distribute what is left to the heirs.
“If you choose to take the commission, it is taxable income which should be reflected or your personal income tax return,” he said. “If there are co-executors, the statute provides that an additional 1 percent can be added to the commission but in no case may any one executor receive more than what a sole executor is entitled to.”
Keep in mind, that the executor only receives a commission on what he/she takes control of as executor.
In other words, Hauptman said, the executor does not receive 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 does not take possession of these assets.
“Often the probate estate of the first spouse to die is less than the second because many assets were held jointly with right of survivorship and so are not probate assets and are not subject to the commission,” he said. “If that is true, then the commission on the first spouse’s estate would be much less than the commission on the second estate.”
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This story was originally published on Oct. 10, 2019.
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