A frequent question I hear from clients drafting wills or from personal representatives (executors) probating or administering an estate, is how much compensation should executors receive for their efforts? The process can involve many hours of work, and many months or years of management. Often an executor is a friend or relative of the testator (person who made the will) and would not expected to be compensated, especially if they are also a beneficiary of the will. However, executors are often surprised about how much work is involved.
Some clients instruct me to fix a specific amount of compensation in the will. This ensures that the executor receives compensation, where they might otherwise be reluctant to claim it. When the amount is fixed, no greater amount can be awarded without agreement of the beneficiaries or court order (Surrogate Rules, Schedule 1, Part 1, section 4). Sometimes a fixed amount may prove to be too little or too much, relative to the actual amount of work.
My clients often instruct me to include the following clause in wills:
I declare that my Trustee shall be entitled to receive fair and reasonable compensation for services performed including compensation for any disbursements including solicitor client fees notwithstanding that the disbursements are for services the Trustee may perform.
A flexible amount can be a more realistic reflection of the services performed by the executor. A number of factors are set out in the Surrogate Rules (Schedule 1, Part 1, section 2) in determining the appropriate compensation:
(a) the gross value of the estate;
(b) the amount of revenue receipts and disbursements;
(c) the complexity of the work involved and whether any difficult or unusual questions were raised;
(d) the amount of skill, labour, responsibility, technological support and specialized knowledge required;
(e) the time expended;
(f) the number and complexity of tasks delegated to others;
(g) the number of personal representatives appointed in the will, if any.
Each case will depend on the particular circumstances of that estate. I’m told as a rule of thumb, executors typically receive in the range of 1%-5% of the value of the estate.
Please contact NW Calgary Law at 403-288-0009 if you have any questions about the administration of estates.