Compensation for Executors and Administrators of New Jersey Estates
The manner in which the personal representative of an estate can be compensated can vary. For an executor, compensation may be set by the terms and conditions of a Will. The major alternatives for compensation include: (a) a clause authorizing the executor to take a commission based on the state statute, (b) a clause directing that the executor take reasonable compensation for services rendered, (c) a clause that sets a flat fee for compensation, and (d) a clause that states that the executor will serve without compensation for services rendered. For an administrator, compensation is set solely by state statute. (Trustees under living trusts and other instruments are governed by separate laws.) In any of the foregoing instances, however, the commission or compensation of the personal representative may be adjusted by a court of competent jurisdiction.
Absent a clause defining or limiting the commissions of an executor, the compensation of an executor or administrator of an estate is set by statute. The statutory guidelines are as follows:
Income Commissions – Commissions in the amount of six percent (6%) may be taken without court allowance on all income received by the fiduciary. (N.J.S.A. 3B:18-13).
Corpus Commissions – Commissions on all corpus received by the fiduciary may be taken as follows: - 5% on the first $200,000 of all corpus received by fiduciary; - 3.5% on the excess over $200,000 up to $1,000,000; - 2% on the excess over $1,000,000; and - 1% of all corpus for each additional fiduciary provided that no one fiduciary shall be entitled to any greater commission than that which would be allowed if there were but one fiduciary involved.
Such commission may be reduced by the court having jurisdiction over the estate only upon application by a beneficiary adversely affected upon an affirmative showing that the services rendered were materially deficient or that the actual pains, trouble and risk of the fiduciary in settling the estate were substantially less than generally required for estates of comparable size. (N.J.S.A. 3B:18-15).
Corpus Commissions; Unusual or Extraordinary Services – The court may, on an intermediate or the final settlement of the fiduciary’s accounts, allow corpus commissions in addition to those herein above provided, on a showing that unusual or extraordinary services have been rendered by the fiduciary for which the fiduciary should receive extra compensation. (N.J.S.A. 3B:18-16).
Taking Annual Amounts on Account of Corpus Commissions – Fiduciaries may annually, without court allowance, take sums as follows on account of corpus commissions:
- if there is but one fiduciary, the amount so taken may equal one-fifth (1/5) of one percent (1%) of the value of the corpus, and; - if there are two or more fiduciaries, the amount so taken may equal the commissions which may be taken pursuant to this section when there is but one fiduciary, plus one-fifth (1/5) of the commissions for each fiduciary more than one. (N.J.S.A. 3B:18-17).
Value of Assets for Computing Commissions Taken Annually – In computing the amount of commissions which may be taken annually pursuant to N.J.S. 3B:18-17, the value of any item of corpus at the time when the item is received by the fiduciary, referred to in this section as the “presumptive value" of the item, may be used as the value of the item, or, at the option of the fiduciary, the value of the item at the end of the period for which the commissions are taken may be used. (N.J.S.A. 3B:18-18).