Are Executors Entitled to Compensation?

Estate executors may have extensive and time-consuming responsibilities to fulfill, and, in most cases, they receive compensation for their efforts through executor’s fees. Sometimes, the person who writes the will specifies how to compensate the executor, but some wills make no mention of compensation for the executor. Is the executor still entitled to compensation when their estate plan doesn’t mention fees?

Wills Without Provisions for Executor’s Fees

In short, yes – executors in British Columbia are entitled to compensation even when the will does not make any mention of executor’s fees. In such circumstances, the beneficiaries must unanimously agree upon a reasonable amount to compensate the executor.

According to the Trustee Act, the executor is entitled to a maximum of 5% of the gross aggregate value of the estate (the combined value of all assets) unless the will specifies otherwise. In most cases, 5% is a high figure for executor’s fees, and it is more common to pay fees worth 2-3% of the estate’s value.

If the beneficiaries and executor cannot come to an agreement, the Courts determine the fees owed to the executor. Additionally, if any of the beneficiaries are minors or mentally incapable, the Court will determine the fees.

How the Courts Determine Fair Executor’s Fees

When determining executor’s fees, the courts will consider the interests of both the executor and the beneficiaries. The case of McColl Estate (Re) (1967) summarized the criteria that British Columbia courts use to make this decision:

1. The magnitude (value) of the trust;
2. The care and responsibility involved in administrating the estate;
3. The time occupied in the administration of the estate;
4. The skill and ability displayed by the executor; and
5. The degree of success achieved in the final result of the administration.

The complexity of the estate plan plays a crucial role when determining executor compensation. For example, if the estate includes multiple small properties around the world, it can be hugely time-consuming and exhausting for the executor to finish the administration. On the other hand, if the estate is primarily cash, it will likely be a reasonably simple task for the executor to administrate the estate.

British Columbia Caselaw

The case of Sangha (Re) (2018) raises the question of how large of an executor’s fee is fair in the situation where a will does not specify executor’s fees. Since the will had only one beneficiary, the courts tasked themselves with determining a fair amount to compensate the executor to protect the interests of both parties. The executor was seeking 4% of the estate’s value ($91,644). The judge considered each of the 5 factors mentioned above to determine a reasonable fee. In summary, the judge noted the following:

1. The estate was not of particular complexity – it primarily consisted of a home in Vancouver, a vehicle, 3 bank accounts and personal various belongings (such as jewelry). These assets required minimal administration by the executor.
2. The proper care and responsibilities of demanded of executorship were taken. The executor had probate of the will granted, and paid appropriate taxes on behalf of the estate.
3. The administration process was not particularly time-consuming.
4. The skill and ability of the executor was deemed to be very low. The executor had terribly mishandled the sale of the testator’s jewelry.
5. While the executor successfully administered the estate and the vehicle, the liquidation of the jewelry was extremely unsuccessful, and this mishandling impacted the beneficiary financially.

In the end, the Judge decided that a more reasonable fee for the executor’s service was $35,000.

If you’re a beneficiary of an estate and believe that an executor is being unreasonably compensated, contact an experienced estate lawyer today. We can help to ensure that the amount payed in executor’s fees is fair to all interested parties.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.