Who and how to appoint an Executor in your Will in South Australia

Choosing who will take on the role of Executor of your Will can sometimes be challenging.

Most Will-makers (aka ‘Testators’) appoint a trusted friend or family member as their executor. This person will end up playing a very important role, with a lot of responsibility.

If they instruct an experienced lawyer who specialises in Wills and Estates, then most of the ‘heavy-lifting’ will be done for them by the lawyer. This might include closing the deceased’s bank accounts, selling real estate and other property, dealing with impatient or disappointed beneficiaries and perhaps even dealing with a Court claim made by someone who is contesting the estate.

Can Executors also be Beneficiaries?

Yes – most executors of Wills are also beneficiaries of the estates that they administer. You can be both executor and beneficiary of a Will.

However, a conflict can sometimes arise, because the duty of the executor is to be fair and impartial to ALL beneficiaries, claimants and creditors of the estate, without fear or favour. If the executor themselves should wish to make a claim against the estate, then they will need TWO sets of lawyers to act for them: one in their capacity as Executor (ie on behalf of the estate overall) and the other to act for them in their personal capacity (ie as claimant or creditor). This is because the same lawyer cannot act both for the estate and against the estate at the same time.

The role of an Executor – and should they be paid?

Being an executor is a big job. They need to track down your Will, engage a lawyer, apply for probate if required, manage your estate’s assets, settle debts and pass on inheritances to your beneficiaries. Depending on how complicated your estate is — or whether your beneficiaries end up disagreeing — this can take considerable time and effort.

With that much work involved, it’s understandable to ask whether your executor — particularly one who isn’t otherwise a beneficiary — should be paid for taking it on.

• When people write their Will, they often assume one of two things:
• The role won’t be too demanding, so there’s no need to pay for it; or
• The executor is already a beneficiary, so separate payment isn’t necessary.

In other cases, though, the Will-maker will set out that the executor is to be paid — this is common where an independent professional, such as a lawyer or accountant, takes on the role.

So what happens if you’re appointed executor, but the Will says nothing about paying you for the time and effort the role involves?

There are three possible options:

1. You can apply to the Supreme Court of South Australia under section 96 of the Succession Act 2023 (SA) for an order allowing you to be paid an executor’s commission;
2. If every beneficiary agrees in writing, you can charge an executor’s commission — though it still needs to be reasonable in the circumstances and shouldn’t exceed the usual commission rates; or
3. Without one of the above, you can’t be paid for the work you do as executor. You may still be able to recover genuine out-of-pocket expenses you’ve personally paid while administering the estate, but this doesn’t extend to your time or effort — there’s no hourly rate on offer. Any reimbursement must be reasonable, reflect normal market rates, and can’t include a profit margin.

Gift or Payment for Executors

A Will can expressly set out that the executor is to be paid for administering the estate. Where a Will leaves a gift to the executor, that gift is generally treated as conditional on them actually carrying out the role — so if the executor dies before finishing the job, the gift may lapse.

Even without a payment clause, an executor can ask the Court for a commission for the work performed, under section 96 of the Succession Act 2023 (SA). A lawyer acting as executor usually cannot claim a commission on top of their normal legal fees for the same work.

Executors who aren’t professionals themselves can still bring in help — financial advisers, accountants or lawyers — to administer the estate, with any fees for that assistance paid out of the estate.

You can build a payment clause into your own Will so your executor is paid for administering your estate. This is common where a professional — a lawyer or accountant, for example — is appointed, and most professionals will insist on it before agreeing to act. Note that in South Australia, a solicitor must disclose their fees for acting as executor before you sign the Will, and the Will needs an express charging clause allowing them to bill for that role — so make sure you’ve received that fee disclosure first.

Even where the Will doesn’t mention payment at all, an executor may still be entitled to seek remuneration — usually called an executor’s commission. There’s no fixed amount; it depends on how complex the estate is and how much time managing it actually takes.

A professional executor generally cannot claim a commission on top of their usual professional fees — it’s one or the other, not both. A lawyer, for instance, can’t act as executor and take a commission while also having their own firm bill professional fees for the same work.

Another option is to leave your executor a gift under the Will — a set sum of money, for example, or a particular item.

A gift can work well where the executor is a trusted family member or friend who’d feel uncomfortable asking for formal payment.

Courts may treat a gift to an executor as conditional on them completing the role, so if your executor dies or otherwise fails to carry out their duties, the gift could fail — unless the Will says clearly that it’s unconditional. An experienced Wills lawyer can help make sure your intentions for the gift are set out clearly, reducing the risk of a dispute later on.

What is executor’s commission

Executor’s commission is simply payment to an executor for the time and effort they put into administering an estate — winding up the deceased’s affairs, settling outstanding debts, and distributing what’s left to the beneficiaries.

South Australian legislation allows an executor to claim a commission, but doesn’t fix an amount. Back in 1920, the SA Supreme Court set out a scale for this — now known as the Barr Smith scale, after the case that established it (originally expressed in pounds, shillings and pence, since converted to modern currency). The Court held that the following approach was reasonable:

On specific assets that are brought into the estate, including cash, money in bank accounts, and life insurance policy benefits, the executor is entitled to commission of:

• 5% on the first $2,000;
• 1% on the amount from $2,000 to $200,000; and
• 75% on the amount over $200,000.

On other assets realised such as real estate, the executor’s commission should be:

• 5% on the first $2,000; and
• 5% on amounts over $2,000.

On assets, such as real estate, that are transferred to the beneficiaries without being sold first, the executor’s commission should be:

• 25% on the first $20,000; and
• 75% on amounts over $20,000.

The Supreme Court of South Australia has since released an ‘Indicator’ setting out the commission typically payable where:

• the estate is worth less than $1 million; and
• there are no special or unusual circumstances that would justify a higher commission.

The Indicator makes it clear that the allowance is always subject to the Court’s discretion to allow a higher or lower amount depending upon the circumstances of the case. Ultimately the Court will decide what is ‘just and reasonable’ in the circumstances of each individual estate. The nature and extent of the executor’s activities, the amount of work undertaken and how complicated that work was will all impact on the amount to be allowed.

Summary

When deciding whether to pay an executor or give a gift, you can consider:

• Professionals: If you appoint a professional executor, such as a solicitor or accountant, they will usually charge a fee for their services. This fee might be a hourly rate for the work that they perform, or it might be a percentage-based commission, but not both.
• Complexity: Most simple estates will not require extensive work, while a large or complicated estate might demand significant time and effort.
• Relationship: Close family members or friends may feel uncomfortable accepting payment but might appreciate a gift.
• Clarity: Clearly specifying your intentions in a well-drafted and up-to-date Will can help avoid misunderstandings or disputes among beneficiaries.

If you would like further advice about administering an estate, or if you are concerned an Executor is not administering an estate properly, contact our friendly team.

When it comes to Wills, Probate, Deceased Estates, asset protection & estate planning in Australia, you can trust the oldest law firm in South Australia, Genders & Partners to guide you through the tough decisions you must make for your family’s future care and welfare.

If you have any questions, or would like further information, please email us. Would you like a quick phone call to discuss? Feel free email us or use this link and book a timeslot for a free 15-minute phone consultation on my schedule

We can help you to protect yourself and your family. We look forward to being of service.

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Disclaimer

The information contained in this document is intended as general information only and has been prepared without taking into account the needs, objectives or financial information of any particular person.

Prior to making any decision, you should assess whether the information is appropriate to your particular needs, objectives and financial circumstances.

While Genders and Partners has taken reasonable care in the preparation of this information, subsequent changes in circumstances (including legislative change) may occur at any time and may impact on the accuracy of this information.