Being an executor of a deceased estate can be a time consuming and sometimes thankless task.
In recognition of this, whilst an executor is normally expected to act gratuitously, the law provides for certain circumstances in which an executor may be remunerated for their time and effort in administering the estate. This is referred to as executor’s commission.
Executor’s commission – am I entitled to it?
While the process of administering an estate can be complex, merely acting as an executor does not automatically entitle you to any payment from the estate. This is the case even if you are not a beneficiary of the estate.
An executor can receive commission in any of the following situations:
- Where the Will specifically authorises payment to the executor;
- Where the beneficiaries agree; or
- The Supreme Court orders that commission should be paid.
Unless the estate is particularly complex, it would be unusual for an executor who is also a beneficiary to receive payment, as the benefit they stand to receive under the Will is usually considered to be sufficient reward.
Remuneration clause in the Will
A Will-maker may specify an amount of remuneration to be paid to an executor in their Will. This may be either in the form of commission, a percentage, calculated with reference to the value of the estate, or a pecuniary gift in lieu of commission.
An independent professional, such as a lawyer or accountant, may commonly agree with a Will-maker that they would accept appointment as executor on the understanding that they would be paid their usual professional fees for all work completed by them. The remuneration clause in the Will would then normally reflect this.
Wills made on or after 1 November 2017
A remuneration clause in a Will made on or after 1 November 2017 will only be valid if the Will-maker has provided their written informed consent to the inclusion of the clause before making the Will. If such consent cannot be established, the executor may not rely on the remuneration clause.
Consent of Interested Beneficiaries
If the Will is silent as to executor’s remuneration, or a remuneration clause is ineffective as the Will-maker did not provide their prior consent (or it does not set out the amount and type of remuneration to be paid), an executor (other than a professional trustee company) may still receive payment for acting if they have the informed consent of all interested beneficiaries.
An interested beneficiary is a beneficiary whose entitlement would be directly affected if commission were to be allowed to the executor. To be able to consent to commission being paid to an executor, the beneficiary must be at least 18 years of age, and not under a disability that impairs their ability to provide consent.
Section 65D of the Administration and Probate Act 1958 (the Act) outlines the information that an executor seeking to be paid must provide to beneficiaries for their consideration. This includes the basis on which the executor seeks payment, the method of calculation of payment (such as a percentage or fixed amount), the estimated value of the payment, and the beneficiaries’ right to have the payment reviewed by the Court.
An executor who fails to provide this information to the relevant beneficiaries is not entitled to receive payment. A beneficiary is also entitled to obtain independent legal advice before deciding to enter into any agreement with an executor in respect of commission.
In order for the beneficiaries to properly assess the request, and understand exactly what the executor has had to do during the administration of the estate, the request should not be made until the estate administration has been completed or nearly completed.
If any affected beneficiary cannot or does not provide informed consent, an executor cannot rely on the consent of the other beneficiaries to claim commission, even if all other beneficiaries of the estate are amenable.
On application to the Court
An application to the Court should only be made where there is no effective remuneration clause in the Will, and where the interested beneficiaries have either not provided their informed consent to a request from the executor, or are unable to do so.
Pursuant to s 65 of the Act, the Court may award such commission or percentage of the estate that the Court thinks is reasonable for the executor’s “pains” and “troubles. “Pains” generally refers to responsibility, anxiety and worry. “Troubles” generally refers to the work carried out by the executor to administer the estate.
While the Court may theoretically award up to 5% of the value of the estate, in practice, the range is generally between 1% and 3.5%. It is unusual for the Court to award more than 3.5%.
In support of an application, an executor must be able to provide detailed records outlining all work done by the executor personally and the time taken by them dealing with the estate. For this reason, an application should again only be made towards the end of the estate administration process. Relevant factors the Court will generally take into account include:
- the time that the executor was required to spend personally on the administration;
- the nature and amount of work completed by the executor personally, and whether this has benefited the estate;
- the complexity and size of the estate;
- whether the estate has been involved in any dispute or litigation; and
- the extent to which an executor has engaged professional assistance with the administration, to minimise the executor’s own “pains and troubles”.
Reimbursement & payment of estate expenses
Separate to commission, an executor is entitled to be reimbursed for all debts and expenses incurred by them in the administration of the estate.
An executor may also engage tradespeople and other professionals to assist throughout the administration process where appropriate, and pay their reasonable fees out of the estate. However, an executor cannot then claim commission on work which has been delegated to other persons.
How we can help
Executor commission is not an automatic right, and an executor should consider obtaining legal advice before making a claim for commission.
The Deceased Estates team at Moores would be pleased to assist you with any queries you may have about seeking or responding to a request for executor’s commission.
Contact us
Please contact us for more detailed and tailored help.
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Disclaimer: This article provides general information only and is not intended to constitute legal advice. You should seek legal advice regarding the application of the law to you or your organisation.