Executor Compensation and Fees (NJ)Show Table of Contents
If the will does not specify how executor compensation should be calculated, NJ estates must follow state compensation rules (see NJ calculator below).
How Much Should an Executor be Paid in NJ?
In New Jersey, the estate executor is known as a "fiduciary".
New Jersey law sets base compensation according to the gross value of the estate:
- 5.0% on the first $200K
- 3.5% on the next $800K
- 2.0% on anything more
So, for example, a New Jersey estate worth $100K would yield $5K in executor fees, and one worth $600K would generate $24K in executor fees.
Note that assets with named beneficiaries (such as an IRA) are not normally included in the above calculations, since they are not considered to be part of the probate estate, and pass directly to the beneficiaries.
You are also entitled to 6% of the income earned by the estate. Portions of income required to be withheld for tax purposes should still be included in this calculation.
Finally, the court can also allow additional compensation for "extraordinary" services. Common interpretations of "extraordinary" include overseeing the sale or lease of real estate, running a business, conducting litigation, preparing tax returns yourself, handling tax audits, and so on.
If the will specifies a particular compensation, you may renounce this compensation in writing to the court, and instead be compensated according to the general statutes described above.
Multiple Executors: If there are multiple executors, the total compensation is increased by 1% of the gross value of the estate per additional executor. In dividing total compensation among executors, no executor may receive greater than the amount a single executor would be due.
NJ Compensation Calculator
EstateExec provides the following executor compensation estimator for NJ estates, but please keep in mind that circumstances may vary, and that there may be special situations addressed by local custom or law. By using this estimator, you acknowledge that EstateExec provides any results as informational input only, not as legal advice, and cannot be held responsible for any inaccuracies for, or misunderstandings about, any given estate.
You can use this calculator now, but if you use EstateExec to help you track the settlement process, it will automatically analyze your estate and suggest values for the Estate Value and Income fields below (you can create an estate for free).
See also Compensation for general remarks on executor compensation.
Executor Compensation Considerations
Timing: Generally, any executor compensation is paid during the final stages of estate distribution, as one of the last things the executor does. Be careful in situations in which there is not enough to pay yourself and all other outstanding debts, as this may expose you to legal issues. However, in most states, executor compensation has precedence over almost all other debts (for example, in NY, only funeral expenses have a higher precedence).
Communication: You may wish to discuss your compensation with the other heirs early during the process, so they don't end up surprised and unhappy when they notice their shares are somewhat less than expected. You may also want to leave the door open to modify your planned compensation as the process unfolds and you determine how much or how little work will actually be required on your part.
Optional: Keep in mind that collecting executor fees is optional. Even if the will specifies compensation, or if state laws support specific fees, the executor can choose to forego that compensation, and many do. That being said, serving as an executor is A LOT of work, and there's a reason that state laws support such compensation.
Tax Optimization: One reason an executor might choose to forego explicit compensation is that executor compensation is taxable, while inheritances are generally not taxable. Consequently, if the entire estate (or a large portion of it) is going to be inherited by the executor, you may end up with more after-tax value if you forego executor compensation.
Trusts: Note that trustee compensation for managing a trust is handled differently than that of executor compensation for settling an estate (see Trustee Compensation).
Expense Reimbursement: An executor is also entitled to reimbursement from estate proceeds for legitimate and reasonable estate administration costs, such as death certificate copies, notarization of documents, the EstateExec licensing fee, and even travel costs strictly associated with managing the estate. Once you have established an estate banking account, you can often pay for these costs directly from that account, so that no reimbursement is necessary, but you should keep good records in case you later have to justify your expenditures to the IRS or to estate heirs. Executor expenses can be reimbursed when desired, although certain probate proceedings may require prior approval. While executor expenses are generally not considered when calculating executor compensation (i.e., executor fees), if the executor incurs substantial costs paying for services that would normally be directly handled by an executor, a probate judge may sometimes require that the default executor fee be reduced accordingly.