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Executors Fees: What Beneficiaries Should Know

Executors Fees: What Beneficiaries Should Know

It is settled law in British Columbia that estate executors are entitled to remuneration for their work in administering an estate or executors fees. 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, there’s legislation and case law which dictate how much an estate executor can be awarded for their work in administering the estate, and even situations where an executor isn’t eligible to be compensated for their work.

Standard Compensation for Estate Executors

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 income earned by the estate will often include dividends on investments, which are held on trust by the executor for the estate.

These percentages for renumeration are meant as guidelines, and not every executor will receive the maximum statutory compensation. Sometimes, will writers will include provisions in their will for renumeration of the executor, setting a fee aside that they think is 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.

Will writers should consider including a clause dictating the compensation their executor will receive for administration in their will.

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

Reduced or Denial of Compensation

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.

Some executors will receive compensation which is significantly lower than the statutory guidelines, or nothing at all, because they did not administer the estate with due care and skill, or their services were not properly performed. 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. It involves producing detailed accounting for all of the money that went in and out of the estate during the administration, and it must be done before the beneficiaries receive their inheritance. 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.

In instances where the will is silent on the issue of executors fees, beneficiaries have standing to raise a claim if they feel the executor was overcompensated. If 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.

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