When a person appoints an Executor of their Estate under their Will, it is generally someone that they believe will take care of their assets and properly administer their Estate in accordance with the terms of their Will.
However, being an Executor is not always a simple task. Some estates can be complex and may involve an extensive amount of work for the Executor. Due to the nature and extent of work that may be required, section 68 of the Succession Act 1981 (Qld) provides that an Executor may seek a commission based on the tasks that they have performed and the responsibility that they have undertaken in maintaining the deceased person’s assets and administering their Estate.
An example of some tasks that an Executor may seek to be compensated for are:-
- Settling any debts that arise from the Estate;
- Organising the clean up and sale of a house or property that was owned by the deceased;
- Investing funds if needed;
- Negotiating with beneficiaries; and
- In some cases, defending court litigation by a dissatisfied beneficiary.
Reimbursement of Expenses
Although not legally required, an Executor may have to expend some of their own money during the administration of the Estate. An example of this is when an Executor pays for the funeral and the wake/memorial of the deceased. The Executor is entitled to be reimbursed for this expense. In general, any appropriate payments that the Executor has had to make in the administration of the Estate will be reimbursed.
Claiming the Commission
When an Executor wishes to be paid a commission, they will first look to the Will to see if any provision has been made to pay the Executor a commission.
If there has not been any provision made in the deceased’s Will, then the Executor should attempt to reach an agreement with the beneficiaries regarding the sum of commission they wish to receive.
If the parties cannot come to an agreement on the sum of the commission, the Executor will need to make an application to the Court to obtain an order of the Court that they be remunerated with a commission. The Court will then make a ruling on the amount of commission that the Executor should receive from the Estate. This is usually a small percentage of the Estate assets and the Court will make the ruling based on the terms they deem fit and may attach conditions to the payments as they wish.
As a guide, the Court has awarded commission in the following ranges:-
- Between 1.5% to 3% on capital realisations and
- Between 1% to 5% on income collections.
Whilst it is not unheard of for awards of between 3-5% of capital realisations to be ordered by the Court, this level of payment is generally reserved for the most complex estates. The use of technology and the assistance of solicitors and accountants to help administer an Estate are also taken into consideration by the Court when making an order in relation to the claim of commission.
It is also important for the beneficiaries to be aware that the legal costs of the Executor having to apply to Court to be paid a commission will be funded by the Estate and as such, will deplete the Estate’s asset pool. It is almost always more cost effective in the long run to reach an agreement or compromise with the Executor over the amount of a commission that they should receive.
If you have been made the Executor of an Estate, it may be worth keeping a list of the number of hours worked and a list of expenses that you have expended to administer the Estate. This will help both the beneficiaries and the Court to understand why you wish to claim a commission.
In Your Will
If you believe that the administration of your Estate will be complex and want your Executor to have the option to receive payment for the work that they will need to do to administer the Estate, you are able to make a provision in your Will regarding payment of a commission. This will hopefully alleviate any tension between the Executors and beneficiaries should the Executor choose to claim a commission on the Estate.
If you have any questions about the administration of an Estate or making provisions within your Will to allow for a commission, please contact our office to make an appointment.