Payment to act as Executor

Rod Genders

4 weeks ago

As executor of a deceased estate you need to take a lot of care and responsibility. But what, if anything, are you entitled to receive for your efforts?

In the last month I have received multiple enquiries from executors asking this question. The answer is not what they want to hear.

As executor you may pay (or reimburse) your reasonable out-of-pocket expenses from the estate’s assets.

The reasonableness of the expenses will vary from estate to estate, depending on the size and complexity of the estate and the assets within it, and the overall circumstances of the estate.

#1. Professional fees

Lawyers’ fees are payable out of the estate and would generally include legal fees for solicitors and barristers, as well as Court application fees for:

making an application for Probate or Letters of Administration; and
obtaining other advice and assistance in relation to your role and duties.

Likewise, other professional fees such as funeral director, real estate agent fees (by the way, these are negotiable) and accounting fees are also payable out of the estate.

#2. Out-of-pocket expenses

These are expenses you incur directly related to carrying out your tasks as executor. Common examples are parking fees, travel costs and deposits paid for services required by the estate such as cleaning, insurance or the funeral.

#3. What about payment for your time and effort?

As executor, you are entitled to be remunerated for your time and effort in managing the estate only if:

you obtain an Order from the Court for compensation (this is known as Executor’s Commission”); OR
the Will expressly authorises payment to you (this is known as a “charging clause”; OR
ALL of the residuary beneficiaries unanimously authorise you in writing to claim compensation.

Be warned that under B or C above:

The amount of compensation must be objectively reasonable, so do not be tempted to make up your own figure for what you want; AND
A single dissenting vote from any residuary beneficiary regarding the applicability or amount of compensation will force you to obtain Court approval. Do not attempt to force your opinion upon a reluctant beneficiary; AND
Some residuary beneficiaries may lack the capacity to provide their informed consent for you to claim compensation – IE children or incapacitated individuals. Be extremely careful about attempting to obtain – or accept – the approval of someone else on behalf of the beneficiary, such as the parent of a minor beneficiary who is their legal guardian, or the agent under Enduring Power of Attorney of an incapacitated individual. Such agents/guardians might or might not have the lawful authority to provide such consent, but even if they do, they could also have a conflict of interest;
In the majority of cases, the named executor will not receive compensation for their efforts. This is especially the case if they stand to receive any other benefit under the Will, as there is a principle of law that if you are already a beneficiary under the Will, there is a presumption that this gift is intended to also compensate you for your work as executor. This does not necessarily mean you cannot make a claim for commission. However, the Court will look at how much you have been left as a beneficiary and will adjust any commission accordingly. It is rare that a beneficiary would claim compensation in the absence of express wording in the Will.

#4. Factors that affect whether and how much compensation can be paid to an Executor

The following is a non-exhaustive list of some of the factors that are typically taken into account when assessing whether and how much compensation should be payable to an executor:

The size of the estate, including the categories and values of assets;
The complexity of the Will;
The Executor’s degree of timeliness, efficiency and diligence when completing tasks;
The amount of work and time to distribute the estate;
The amount of responsibility involved;
Problems or hurdles the Executor experienced during the process;
The number of executors or administrators sharing the role;
Communication with the beneficiaries;
Whether a lawyer is instructed;
Whether other professionals are instructed;
Whether probate is required;
Whether and to what extent litigation is involved (ie contests/challenges).

The Court will use its discretion to decide what is a fair, just and reasonable amount of executor compensation to be paid out of the estate. Executors or Administrators who fail to fairly, promptly and reasonably administer the estate might not be eligible for any commission or payment.

Estate administration can get complicated quickly and hiring a professional can save time, stress, cost and risk-exposure both to the estate and the Executor. A lawyer specialising in Probate and the administration of deceased estates should be appointed to assist the Executor.;

Genders and Partners is the oldest law firm in South Australia, established 1848. Contact us to learn how to protect yourself, your family and your assets by assisting you to administer a deceased estate, by visiting our website today and schedule a free no obligation telephone consultation to find out how we can help you and yours.;

Remember – any mistakes you make in administering a deceased estate won’t become apparent until after it’s too late for you to fix them. Get proper advice, and do it right.;

Choosing the right estate administration lawyers can make a huge difference in ensuring proper distribution of your assets after death, minimising or avoiding any legal issues that may arise, and protecting your hard-earned assets. Most importantly, it helps save your family all the trouble, as well as thousands of dollars in legal fees and taxes, after your death.;

Download their free eBook: “7 things you must know about probate and estate administration” here.;

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