Q. Our mother died, leaving her house to A. She left all her other possessions to B, C and D. The house is valued at $400,000. The total value of other assets is also $400,000. All beneficiaries belong to class A. A will get the house without money while B, C and D will share the money equally. B is the executor. How does A provide funds for the executor’s fees?
A. We are sorry to hear of the loss of your mother.
Let’s first see how executor’s fees to work.
There is a revenue commission and a corpus commission.
Together with the income commission, the executor is entitled to 6% of all income won by succession.
It may not be much if the domain is closed quickly.
But for the corpus commission, generally, the executor can obtain a reduction of all assets held by the estate as follows: 5% on the first $200,000 of all corpuses received by the executor; 3.5% on excess over $200,000 up to $1 million and 2% on excess over $1 million.
In your case, when a house is specifically bequeathed to a beneficiary, it doesn’t go into the hands of the executor, said Catherine Romania, estate planning lawyer at Witman Stadtmauer in Florham Park.
Thus, the house will pass directly to the beneficiary, although the executor may be asked to execute the deed to the beneficiary on behalf of the estate, Romania said.
“Furthermore, the regulations provide that the executor or administrator fees are only permitted on real estate that is actually sold by the executor or administrator or is expressly intended for sale by the terms of the deceased’s will,” she said.
For these reasons, a commission is usually not calculated on the value of the specifically bequeathed real estate but only on the remaining assets and as such, in the absence of a direction in the will, it is also only paid ‘from the remaining assets,’ she said.
But if other beneficiaries don’t like the idea that you won’t have to contribute to the executor’s commission, beneficiaries can always agree to a different split, Romania said.
Send your questions to [email protected].
Karin Price Mueller writes the Bamboos column for NJ Advance Media and is the founder of NJMoneyHelp.com. Follow NJMoneyHelp on Twitter @NJMoneyHelp. To find NJMoneyHelp on Facebook. Sign up for NJMoneyHelp.comit’s weekly e-newsletter.