Executor’s Fees: Are Executors Entitled to Compensation When it’s Not in the Will?

Executors of an estate can have extensive and time-consuming responsibilities to fulfill and, in most cases, are compensated for their efforts through executor’s fees. Sometimes, the will-writer specifies how the executor should be compensated in their will, however, some wills make no mention of how the executor should be compensated. When the will does not discuss executor’s fees, is the executor still entitled to compensation?

Wills Without Provisions for Executor’s Fees

In short, yes – executors in British Columbia are still 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.

Under the Trustee Act, an executor is entitled to a maximum of 5% of the gross aggregate value of the estate (the value of all the assets added together) unless otherwise specified in the will. 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.

When the beneficiaries and executor cannot come to an agreement, the courts are responsible for determining the exact amount which the executor will be payed. Additionally, if any of the beneficiaries are not of legal age (19 years or older) or not mentally capable, the beneficiaries will not be considered legally capable of coming to a unanimous decision, and the executor’s fees will be determined by the courts.

How the Courts Determine Fair Executor’s Fees

When deciding on the amount the executor’s fees should be, the courts will try to pick a number which they believe is fair to both the executor and the beneficiaries of the estate. The case of McColl Estate (Re) (1967) summarized the criteria that British Columbia courts use to make this decision, noting the following factors which are to be considered:

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 in determining how much an executor should be compensated. 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.

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. The will had only one beneficiary, so the courts were tasked with determining a fair amount to be paid 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). It was determined that 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 ruled that an executor’s fee of $35,000 was a more reasonable fee to be payed for the executor’s service to the estate.

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.