I don't know where you got that phrase. It is not in the statute. What the statute says for executor and attorney's fees is this:
1. Except as otherwise provided in paragraph (f) of this subdivision on the settlement of the account of any fiduciary other than a trustee, a donee of a power during minority or a donee of a power in trust, the court must allow to him or her the reasonable and necessary expenses actually paid by him or her and if he or she be an attorney of this state and shall have rendered legal services in connection with his or her official duties, such compensation for his or her legal services as appear to the court to be just and reasonable and in addition thereto it must allow to the fiduciary for his or her services as fiduciary, and if there be more than one, apportion among them according to the services rendered by them respectively the following commissions:
(a) For receiving and paying out all sums of money not exceeding $100,000 at the rate of 5 percent.
(b) For receiving and paying out any additional sums not exceeding $200,000 at the rate of 4 percent.
(c) For receiving and paying out any additional sums not exceeding $700,000 at the rate of 3 percent.
(d) For receiving and paying out any additional sums not exceeding $4,000,000 at the rate of 2 ½ percent.
(e) For receiving and paying out all sums above $5,000,000 at the rate of 2 percent.
N.Y. Surr. Ct. Proc. Act Law § 2307 (McKinney). Note the phrase used: "receiving and paying out all sums of money". Payments to creditors are part of the estate funds "paid out." However, the court cases also have very old rules regarding such things as how the commission is computed when debt is secured by estate property, etc.
The New York scheme is unique among states in part because the scheme is very old: it has remained unchanged for 203 years. As a NY court observed:
Since 1817 commissions of executors have been based solely upon two acts, one for receiving and the other for paying out or distributing assets of the estate. Although this concept has been termed outmoded and hoary with age (Fifth Report of Commission on Estates, Leg.Doc. (1966) No. 19, pgs. 136, 139), New York has apparently tenaciously clung to it notwithstanding numerous revisions, including the last in 1967 (SCPA 2307).
The rationale for the initiation and retention of the basis of computation has been that at least it assures uniformity and is a pragmatic approach to an otherwise difficult problem. ‘(I)t is important to bear in mind that the statutory schedule of rates is only an effort to measure the reasonable value of All services. The commissions represent compensation for the entire administration, not merely the first act (receiving) and the last act (paying out). The division of the commission into two parts is merely a convenient way of providing payment’ (Matter of Roth, 53 Misc.2d 1066, 1069, 281 N.Y.S.2d 225, 229).
In commenting on the shortcomings of the statute, Surrogate Wingate stated: ‘A fiduciary performs many acts. The legislature has seen fit to remunerate two only of their mumber. One is receiving. The other is paying out or distributing. In effect, all others are gratuitously performed. The system of remuneration thus established, as this court has frequently observed, is unsatisfactory and unscientific to a degree’ (Matter of Cruikshank's Estate, 169 Misc. 514, 516, 8 N.Y.S.2d 279, 281).
In re Fanara's Will, 69 Misc. 2d 724, 724–25, 330 N.Y.S.2d 445, 446 (Sur. 1972).