New York Probate and Estate Administration Lawyer Blog
Executors are generally entitled to receive compensation for administering an estate under New York law. In most cases, that compensation is calculated according to a statutory formula based on the value of the probate estate. However, a will may provide that the executor is to serve without compensation. Matter of Goldberg presented the question of whether an executor could receive statutory commissions when the will expressly prohibited payment, but all of the beneficiaries agreed that the executor should nevertheless be compensated.
Background
Bruce Goldberg died in 2007, leaving a will that was admitted to probate in Nassau County. The will named Steven Ostrer as executor. It also contained a provision stating that anyone serving as executor or trustee, including an attorney, would not be paid for performing those duties.
While administering the estate, the executor asked the Surrogate’s Court for permission to receive about $91,000 in advance executor’s commissions. He explained that receiving part of the commissions in one tax year and the remainder in a later tax year would reduce his income tax liability.
The probate estate was worth more than $7.4 million. Most of the estate taxes had already been paid, and all of the specific gifts required by the will had already been distributed.
Although the will stated that the executor was not entitled to compensation, every beneficiary signed a written consent agreeing that the executor should receive the full statutory commission allowed under New York law. Each beneficiary acknowledged that they understood what the will said but nevertheless agreed that the executor should be paid.
Issue
Whether an executor receive statutory commissions when the will expressly states that the executor is to serve without compensation if all beneficiaries knowingly consent.
Holding
Yes. The Surrogate’s Court granted the petition and authorized payment of the statutory commissions because every beneficiary knowingly consented to the payment.
Discussion
Under SCPA 2311, an executor may ask the Surrogate’s Court to approve payment of some or all of the executor’s commissions before the estate is fully settled. This is sometimes done when early payment provides tax benefits or helps avoid financial hardship. Whether an executor is entitled to receive commissions, however, usually depends on both New York law and the terms of the will.
If a will provides for executor compensation, New York law gives the executor certain options regarding how that compensation is received. However, if a will specifically states that the executor is to serve without compensation, New York courts have generally held that the executor must either decline the appointment or serve without pay.
The court recognized that this general rule appeared to apply in this case. What made this case unusual was that every beneficiary signed a written consent agreeing that the executor should receive the full statutory commission, even though the will said otherwise. Each beneficiary acknowledged understanding that the will prohibited compensation but voluntarily agreed that the executor should be paid.
The court noted that it had not found any prior case involving these exact facts. However, it also observed that New York courts have approved payment of statutory commissions in other situations where all affected beneficiaries knowingly consented.
Because every beneficiary agreed to the payment and would bear the financial effect of those commissions, the court approved the executor’s request for advance payment.
Conclusion
Matter of Goldberg shows that there can be exceptions to the general rule that an executor must follow the compensation terms of a will. Normally, if a will states that the executor will not be paid, the executor must either serve without compensation or decline the appointment. In this case, however, every beneficiary understood that the will prohibited payment but voluntarily agreed that the executor should receive the statutory commission allowed under New York law. If you have questions about executor commissions or any aspect of estate administration, an experienced Nassau County probate lawyer can explain your rights and help you navigate the probate process.