One of the most common questions I am asked is, “do I get paid for being the executor?”
Whilst the role of executor was once upon a time a voluntary one, it isn’t quite that way nowadays.
Over time, and as estates have become more intricate and complex, the law has developed the concept of payment to an executor, which is referred to as ‘executor’s commission’.
What is executor’s commission?
An executor is entitled to receive a commission for their ‘pains and troubles’ of carrying out the work in an estate.
‘Pains’ refers to the responsibility and the anxiety to which an executor is put in the administration of the estate.
‘Troubles’ refers to the work which is done by the executor in the estate.
I am an executor, am I entitled to executor’s commission?
As a general rule, if you are an executor, you are entitled to executor’s commission unless there has been some conduct by you which disentitles to you to the commission.
The misconduct must be serious for an executor to be refused commission – such as dishonesty, fraud or deliberately disregarding the duties of the role.
How much commission am I entitled to as an executor?
The is no hard and fast rule as to the calculation of executor’s commission. It is important to remember that the award of executor’s commission is a discretionary matter, and accordingly it will vary from case to case.
Generally, the Court will consider such things as:
- the size of the estate
- the care and responsibilities
- the time taken to carry out the role
- the skill and responsibility of the executor
As a starting point, the Court will look to exactly what work has been done by the executor in the administration of the estate, and then determine the appropriate amount of remuneration the executor is entitled should receive.
Whilst recent cases are few, there are some examples of how executor’s commission has been applied in Queensland.
In the case of Re Ghidella [2005] QSC 106, the Court considered an application for executor’s commission in respect of an estate with a gross value of around $2.4 million. There were two executors – one was the deceased’s solicitor and the other was the deceased’s daughter.
The executors submitted to the Court that they arranged the funeral, organised bank accounts, instructed solicitors and accountants, organised for the maintenance of the assets of the estate including tradespersons. It was the position of the executors that due to the diversity of the estate assets, a higher than unusual burden was placed on them as executors.
The executors sought an allowance of 5% on income of the estate, and 3% on the capital. This would have amounted to around $87,000 in executors commission.
However, the judge (Justice Jones) held this allowance to exceed greatly what he considered appropriate in circumstances.
An award was made of 1.5% on income and 2% on capital, which totalled around $52,600.
Another case in Queensland is Kirkpatrick v Kavulak [2005] QSC 282. The value of the estate was around $1 million, with income being around $230,000. The Court awarded the executor commission in the amount of 1% on income, and 2% on capital.
How do I go about receiving executor’s commission?
In effect, there are two ways an executor can receive a commission:
- by way of an application to the Court; or
- by agreement with the residuary beneficiaries of the estate.
However, it is important to be transparent and commercial when seeking an executor’s commission.
The cost of applying to the Court for an award of executor’s commission can be significant, and the process complex. Therefore, the best approach is to seek the agreement of the residuary beneficiaries at the outset of the estate.
This will avoid the situation of having to incur unnecessary costs in making an application to the Court and potentially delaying the finalisation of the estate.
I am the executor of a Will, and I would like to take steps to receive executor’s commission
As I mention above, there is no hard and fast rules with executor’s commission. However, the best time to address the issue is at the outset of the estate.
If you are an executor and would like to receive feedback in relation to your role, whether you are entitled to executor’s commission or how to approach the beneficiaries and formalise the payment of the commission, please do not hesitate to contact me.
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