Attwood Marshall Lawyers Estate Litigation Senior Associate, Lucy McPherson, explains how an Executor appointed in a Will can apply for Executor’s commission and what’s involved in the application process.
What are the obligations placed upon an Executor during the administration of an estate?
The appointment of an Executor is a very important decision for a Will-maker. The duties of the Executor can be quite onerous. The administration of an Estate can take a long time to complete in certain scenarios and the tasks required to be performed can be time-consuming for the Executor appointed to the role.
Those duties can include:
- arranging the collection and burial or cremation of the deceased’s body with funeral directors including providing relevant information required to complete the Death Certificate;
- arranging the funeral and wake (if applicable);
- securing the assets of the deceased and attending to any matters required that were in place at the time of death (including looking after any pets or other urgent matters);
- notification of the death to any relevant family members, government departments, banks, service providers and other relevant entities;
- locating the original Will and engaging lawyers to act in the estate;
- obtaining a grant of probate or letters of administration from the Supreme Court;
- calling in the assets of the estate, which can involve extensive investigation in relation to various affairs, including taxation, structuring and acting as trustee of trusts;
- tending to the payment of the deceased’s debts, including funeral and administration expenses;
- defending any litigation or claims made on the estate;
- any other matter that requires a representative’s input on behalf of the estate.
Can an Executor be remunerated for their work administering an estate?
The short answer is yes. The Court can award Executor’s commission. This is where a Court remunerates an Executor for their ‘pains and troubles’ during the administration of the estate, provided they have done the right thing in performing their duties and have not acted in a way that would disentitle them from a claim for commission.
Executors are not automatically entitled to commission. Executor’s commission needs to be ordered by a Court. Alternatively, if all residual beneficiaries in the estate are of majority, that is that they are adults, then they can all agree on an amount of commission to be paid to the Executor to avoid a Court application. Usually, this agreement is in writing and signed by all parties.
If the Executor is a beneficiary under the Will, can they still receive commission?
When a Will-maker is considering who to appoint in the role as Executor, they can also consider if they want to compensate the Executor as a beneficiary for their time given in performing these duties.
If a Will-maker wishes their Executor to be remunerated for their services, it can be a good idea to include them as a beneficiary in the Will and that legacy to be in lieu of any Executor’s commission. This approach can help avoid any doubt, Court application or disagreement at the time of the finalisation of the administration of the estate on the issue of Executor’s commission.
If the Executor is a beneficiary under the Will, this does not mean they cannot also make a claim for commission. The Court will look at how much has been left to the Executor as a beneficiary and will adjust any commission accordingly if the award is granted.
Does Executor’s commission differ between New South Wales and Queensland?
There are some minor differences between States, however, the general theme of the legislation is quite similar.
Queensland legislation is broader in its application for an award of Executor’s commission. In Queensland, the Court can award what it considers “fit” in the circumstances, so it is a discretionary exercise for a Judge.
In New South Wales, the legislation is quite similar however, there are additional requirements on an Executor who seeks an award of commission.
One of the additional requirements is that an Executor must file and pass their accounts for the administration of the estate. This is a requirement set by the Court to make the Executor accountable for their conduct before an award of Executor’s commission is made.
This additional requirement is in existence in New South Wales but not in Queensland.
How does an Executor make a claim for commission?
We generally encourage the Executor to first approach the residual beneficiaries in relation to the proposed claim for commission prior to making an application to a Court.
The reason we do this is to try to avoid the unnecessary expense, if possible, of going through the Court process.
If the consent from the residual beneficiaries is not forthcoming, or if there are beneficiaries in the estate who are minors, then an application would need to be brought before the Court.
An Affidavit needs to be provided to the Court by the Executor, setting out their ‘pains and troubles’. This means outlining the work or attendances they have done during the course of the administration of the estate, which they consider warrants an award of commission.
In an application to the Court for Executor’s commission, generally where the Executor is successful in receiving an award of commission, the costs are payable out of the estate.
Costs are at the absolute discretion of a Judge, who will consider all the circumstances in the application.
An example where Executor’s commission is denied by the Court
Recently, Attwood Marshall Lawyers acted in defending an application for Executor’s commission brought in the Supreme Court of Queensland. We were successful in defending the action and the Court refused to award Executor’s commission.
In that matter, we acted for a residuary beneficiary in that estate where the Executor had not performed his role properly or appropriately.
The Executor:
- Had not attended to his duties in a timely fashion
- Had preferred his own interests over those interests of the estate and the beneficiaries
- There was a conflict in his duty to the estate and his duty to himself in the actions he was undertaking in the course of the administration of the estate
We successfully defended the application for commission. The Court dismissed the application on the basis of the inappropriate conduct by the Executor. Not only was the commission not awarded, the Executor was also made responsible for the costs of the application. (Re Estate of Badstuebner [2020] QSC 144)
Stepping into the role of Executor
An Executor should be advised of their potential entitlements to commission when they undertake the role as Executor in administering an estate.
When an Executor is appointed under a Will, it does not mean they have to accept the role. This is something every potential Executor needs to be mindful of. There is no obligation to take the role and it is important to fully understand how onerous the role can be. They can renounce their role, providing this is done before they have ‘intermeddled’ in the estate.
When we take instructions for clients to make a Will, we recommend that they ask the person they are appointing as Executor if they are willing to take on that role. It is not a role that should be taken lightly, especially if the estate is complex in nature.
We believe you should obtain legal advice as soon as possible after you discover you are an Executor, or after the death of the deceased Will-maker. The reasonable legal costs and any out of pocket expenses incurred by you as an Executor are usually payable from the estate funds or assets. It is very important you obtain legal advice from lawyers who are experienced in this area of law. In many cases the Executor agrees to leave the matter with whoever the lawyers are holding the Will. This may not be a wise choice! You should do your homework and find out whether the lawyers are experienced in this type of work. It may save you a lot of time, stress and money!
How is Executor’s commission calculated?
Executor’s commission is usually awarded on the percentage of the income and capital in the administration of the estate. It’s not a calculation of an hourly rate of the time that has been spent administering the estate. It is more so an exercise of looking at the assets and realisation of the capital and income during the course of the administration.
Those percentage figures can fall anywhere between 0.5% and 5% of the total estate income and capital. Sometimes it is a difficult exercise to work out what is a fair amount of commission to award. There are various factors taken into account, including whether lawyers have been engaged to administer the estate, the size and complexity of the estate assets, the emotional stress of dealing with family members, whether claims are brought against the Estate involving litigation, etc.
How can Attwood Marshall Lawyers help?
Attwood Marshall Lawyers is a leading estate administration and estate litigation firm. We are very experienced in acting for Executors in estate matters and can provide you with the best advice on dealing with these matters. We can take the stress and burden of acting in the estate off your hands so that you can get on with your life. If you have any enquiries concerning estate administration in your capacity as an Executor, or need estate litigation advice, call our dedicated team today. Please contact Wills and Estates Department Manager, Donna Tolley, on direct line 07 5506 8241, email dtolley@attwoodmarshall.com.au or free call 1800 621 071.
