I do not practice in NY, but in NJ my educated guess would be that the funds would go back into the residue for distribution. The current acting executor would be entitled to their single share of the commission. Keep in mind that typically the executor receives their commission on the amount "received" at the beginning in inventory. Assuming no one objects and the commission is reasonable or at the statutory rate the actual acting exec should have no problem claiming.
Unusual question -- because people so rarely are willing to give money back. At any rate, the fact that there were two executors did not decrease the amount to which either was entitled; in fact, each was entitled to a full commission. I point this out because the fact that one co-executor decided to refund to the estate his or her full commission does not in any manner increase the amount to which the other co-executor is entitled. The additional funds were presumably sent to the other executor in a check made payable to the co-executor in his or her fiduciary capacity and, as such, would be part of the estate.
Michael S. Haber is a New York attorney. As such, his responses to posted inquiries, such as the one above, are limited to his understanding of law in the jurisdiction in which he practices and not to any other jurisdiction. In addition, no response to any posted inquiry should be deemed to constitute legal advice, nor to constitute the existence of an attorney/client or other contractual or fiduciary relationship, inasmuch as legal advice can only be provided in circumstances in which the attorney is able to ask questions of the person seeking legal advice and to thus gather appropriate information.
An executor is entitled to 5% of the estate as an Executor's commission. This amount is taxable as income to the person receiving it.
If there are Co-Executors of an estate, then they typically split the commission. If one of them decides not to take their commission, the other Executor could take the total 5% fee. However, i this situation, it sounds like everyone agreed to close the estate adn the assets and commision were distributed and your Co-Executor decided not to take their half of the commission and paid it back to the estate. In that case, it could be argued that the commission should be split among all of the heirs.