You have a good deal of latitude structuring Executor’s commissions in a Will. There are many subtleties to default Executor commissions that apply if you don’t substitute them; in order to be fair to your Executor, one that you may want to modify relates to instructing your Executor to transfer real estate under the terms of your will.
In New York, Executor commissions are based on collecting and distributing property, primarily intangible investments. These commissions are easy to calculate, since investment assets are easy to price, transfer and sell. But the family home – typically the largest Probate asset – is not so easy to administer, and is not always commissionable.
If the real estate is sold as a part of the estate and the proceeds are divided, it is commissionable (meaning your Executor receives his fee on this asset). And if it is given as part of the “left over” estate (a “residuary bequest”) and the parties agree that one of them shall receive it, it is a commissionable activity. But if a specifically-identified piece of real estate is given to a certain party (a “specific bequest”) it is NOT commissionable.
This last example can be a real pain in the neck for your Executor, as he may understandably feel that not getting paid for this activity isn’t fair and may not pursue the activity with vigor: The Executor may have to do a lot of work, such as convince a coop board to transfer coop shares to a troubled beneficiary, deal with fixing up the family vacation home’s immediate repairs or unpaid taxes, or pay off an outstanding mortgage on the property and in the end receive minimal discernable financial benefit from commissions for his or her work. Real estate transfers are already one of the harder matters for an Executor to deal with, and the statutory default says he doesn’t always get paid for this activity.
You may want to ask your attorney to make sure your will states that your Executor is entitled to commissions based on the value of any real estate transferred to a beneficiary, or receives an additional hourly rate for matters concerning their work surrounding real estate transactions. By doing this you can fairly compensate them for otherwise thankless work and ensure that your Executor does his job in the best possible manner.
