In BC, a personal representative (whether executor or administrator) will generally be entitled to claim a fee for the work done in administering an estate.
Although such fees may be set out expressly in the terms of a will or trust deed, in an agreement between the will-maker and the personal representative (often incorporated by reference into the will), or even in an agreement between the personal representative and the beneficiaries after the will-maker’s death, in many cases the remuneration of a personal representative is dealt with under the Trustee Act of BC.
The Trustee Act provides for remuneration in the form of a one-time fee not exceeding 5% of the gross aggregate value of the capital of the estate and 5% of the income earned during the administration. These statutory maximums are just a starting point, however, as the amount claimed must also be reasonable in the circumstances, and maximum remuneration is not awarded as a matter of routine. Where a personal representative caused excessive delay in the administration of an estate, acted negligently, fraudulently or in a manner that was simply not in the best interests of the beneficiaries, little to no remuneration will be appropriate. In determining the reasonableness of a proposed fee, it is necessary to consider:
- the magnitude of the trust or estate;
- the care and responsibility involved;
- the time occupied in the administration;
- the skill and ability displayed; and
- the success achieved in the final result.
The Trustee Act also provides for an annual “care and management fee” not exceeding 0.4% of the average market value of the assets. When assessing what, if any, fee should be allowed, the relevant factors include:
- the value of the estate assets being administered;
- the nature of the estate assets being administered;
- the degree of responsibility imposed on the trustee by the terms of the will or other instrument, including the length or duration of the trust;
- the time expended by the trustee in the care and management of the estate;
- the degree of ability exhibited by the trustee in the care and management of the estate;
- the success or failure of the trustee in the care and management of the estate; and
- whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate.
Given that the ‘Average Joe’ acting as a personal representative for the first time can lay claim to what can amount to significant remuneration set out in the Trustee Act, it may come as a surprise that most professional trust companies charge considerably less than the statutory defaults set out above. As a result, more and more will-makers are opting to appoint corporate executors whose fees are clearly set out and agreed to up front, and can ultimately result in a savings for the estate.
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This article is intended for information purposes only and should not be taken as the provision of legal advice. Grace C. Cleveland is a lawyer with the law firm of Cleveland Doan LLP and can be reached at (604)536-5002 or grace@clevelanddoan.com.
