Executor’s Fees: What You Should Know

In British Columbia, settled law entitles estate executors to remuneration for their work in administering an estate. In fact, this was restated by the Supreme Court of Canada in Cowper-Smith v Morgan, a case argued and won by League and Williams’ principle, Darren Williams. However, existing legal framework dictates the amount an estate executor can receive for their work in administering the estate, and even outlines situations where an executor isn’t eligible for compensation. Further, executor’s fees may be reduces for a number of reasons.

Standard Executors’s Fees

It is common practice to compensate estate executors for their work, even when they are not professional estate administrators. Section 88 of the Trustee Act lays out the maximum awards an estate executor is entitled to:

• Maximum 5% of the total value of the estate
• Maximum 5% of the income earned by the estate during the admin period
• Annual fee for management of assets at 0.4% of their value

The estate’s income often includes dividends on investments, which the executor holds on trust for the estate.

These remuneration percentages serve as guidelines, and not every executor will receive the maximum statutory compensation. Sometimes, will writers include provisions in their will for the executor’s remuneration, setting aside a fee they deem fair for the work done. Further, in estate litigation surrounding the renumeration of executors, the court will look to ensure that the funds awarded to an executor bears reasonable relationship to the amount of work the executor did, the and the skill they demonstrated in handling the estate.

The courts will consider the unique circumstances of the estate administration in deciding what a reasonable award to an executor is. This will often include:

• The estate’s total value, or nature of its assets
• The responsibility required of the executor
• How successfully of skillfully the executor carried out their duties

Denial of Executor’s fees

It’s important to remember that executors are fiduciaries of the estate they administer, meaning they have special legal responsibilities to act in the best interest of the estate and its beneficiaries. Breach of fiduciary duties is grounds for total removal of an executor, and any interested party can petition the courts to do so. For more on this, read our article on removing unfit executors.

Executors may receive compensation significantly lower than the statutory guidelines, or nothing at all, if they fail to administer the estate with due care and skill, or if they don’t properly perform their services. One way the law ensures beneficiaries are able to assess the executor’s administration of the estate is through a passing of accounts. This is a process that estate executors are responsible for in every estate administration. Before the beneficiaries receive their inheritance, the executor must produce a detailed account of all the money that entered and left the estate during the administration. It’s important that interested parties are always mindful of this accounting, ensuring the executor didn’t mismanage the estate either inadvertently or with malicious intent.

If the will doesn’t address the issue of executor’s fees, beneficiaries can raise a claim if they believe the executor received too much compensation. Should the courts find that the award doesn’t share a reasonable relationship with the work completed, they can reduce the executor’s compensation or deny compensation altogether.

If you’re a beneficiary concerned that the administration of an estate is being mishandled by an executor, contact an experienced estate lawyer today.

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.