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Serving as an executor is a significant responsibility. You manage financial matters, handle legal filings, and ensure beneficiaries receive what they are entitled to. This process can take months or even years, depending on the complexity of the estate. Many executors put in long hours, working with attorneys, accountants, and financial institutions to settle everything properly. Given the time and effort involved, New Jersey law allows executors to receive compensation. The amount and rules surrounding these payments depend on several factors, including the estate’s value and whether the executor chooses to accept a commission.
What Does an Executor Do?
An executor is responsible for managing a deceased person’s estate and ensuring that all legal and financial obligations are met. This role involves handling assets, debts, taxes, and distributions according to the will or state law. The process can be time-consuming and requires careful attention to detail.
Key responsibilities of an executor include:
- Gathering and valuing assets – Identifying bank accounts, real estate, investments, and personal property.
- Paying debts and taxes – Settling outstanding bills, final income taxes, and estate taxes if required.
- Filing legal documents – Submitting the will for probate to the surrogate’s court and handling necessary paperwork.
- Managing estate funds – Keeping track of expenses, maintaining property, and distributing inheritances.
- Communicating with beneficiaries – Keeping heirs informed and addressing any concerns they may have.
Because of the effort involved, New Jersey law allows executors to receive a commission based on the estate’s value.
How Are Executor Commissions Calculated in New Jersey?
New Jersey law allows executors to receive commissions based on the size of the estate they manage. These payments recognize the time and effort involved in handling assets, paying debts, and distributing inheritances. The commission is calculated as a percentage of the estate’s value, following a tiered structure:
- 5% on the first $200,000 of the estate
- 3.5% on the next $800,000
- 2% on amounts over $1 million
For example, if an estate is worth $500,000, the executor would receive:
- 5% of $200,000 = $10,000
- 3.5% of $300,000 = $10,500
- Total commission = $20,500
Executors who manage estate assets that generate income may also receive a 6% commission on that income.
If an estate has more than one executor, the court may approve an appropriate split of commissions based on each person’s contributions. In cases where the estate is unusually complex or involves significant legal disputes, the court has the discretion to adjust the commission.
These payments come directly from the estate’s assets before distributions to beneficiaries. Executors should keep detailed records of their work to justify their compensation if any disputes arise.
Can an Executor Waive Their Commission?
An executor has the right to decline their commission, and some choose to do so, especially when handling a family member’s estate. Accepting compensation may have tax consequences, as commissions are considered taxable income, whereas inheritances are not. Executors who are also beneficiaries often waive their commission to avoid reducing the overall estate value. Before making a decision, it’s wise to consult with an attorney to understand the financial and legal implications.
How We Can Help
At Bozanian McGregor LLC, we guide executors through the probate process, helping them understand their responsibilities and rights. Whether you are deciding whether to accept a commission, facing disputes from beneficiaries, or handling a complex estate, we provide clear legal support. Our team assists with everything from calculating commissions to ensuring proper record-keeping and compliance with New Jersey law. We also help beneficiaries who have concerns about an executor’s compensation or actions. Estate administration can be challenging, but with the right legal guidance, executors can fulfill their duties while protecting their interests and those of the estate.
Understanding Executor Commissions in New Jersey
Executors have significant responsibilities, and compensation can be an important consideration. If you need guidance on your role or have concerns about executor commissions, contact Bozanian McGregor, LLC today to discuss your situation with our team.