The executor’s fee is compensation for the tasks of gathering up assets, liquidating them, protecting them if necessary, and then distributing them to the estate beneficiaries. When performing these tasks, executors must maintain a neutral position and act in the best interest of all estate beneficiaries. Neutrality can prove challenging in family situations. Where an executor is also a beneficiary, family disputes and ill-will among siblings can lead to impartiality and unfair treatment.
Son appointed executor of father’s estate; failed to remain neutral
In Morrison Estate (Re), 2009 BCSC 217 a son’s failure to remain neutral in administering his father’s estate resulted in reduced entitlement to fees for acting as executor. The father, Mr. Morrison, had four children: Arthur, Elizabeth, Gayle and Robert. Mr. Morrison died in 2007, leaving a Last Will and Testament appointing Arthur as executor. The Will left the residue of his approximately $500,000 estate to all four siblings in equal shares. When searching his father’s records after he died, Arthur found cheques that had been paid to his three siblings over the years. There was no notation in any of the deceased’s records that this money was intended to be repaid. Nevertheless, when it came time to distribute his father’s estate, Arthur deducted amounts for these cheques from the inheritances of two siblings (Gayle and Robert), taking the position that they were debts owed to their father’s estate. Even though most of the cheques found were payable to his sister, Elizabeth, he chose not to deduct anything from Elizabeth’s inheritance. Arthur had no discussion with Robert or Gayle about deductions from their inheritances. Instead, he instructed his solicitor to pay out the amounts and take the position that once the cheques were cashed, Robert and Gayle had no right to challenge the reduction. His solicitor advised that this was unreasonable, but Arthur was undeterred.
Executor’s skill and ability fell below acceptable standard
Arthur claimed the maximum allowable executor’s fee of 5% of the gross value of his father’s estate for his time and effort in administering it. In determining that the executor was only entitled to 2%, the Court was highly critical of Arthur’s lack of neutrality. It was clear that there were ongoing disputes between the executor and two of his siblings, Robert and Gayle. It was also clear that he did not have a dispute with his sibling, Elizabeth, and in fact was compassionate toward her. As executor, Arthur instructed his solicitor not to provide any information to the beneficiaries. This heightened the suspicion of the beneficiaries and the hostility in this estate matter. Arthur then tried to trick them into accepting a reduced inheritance by taking the position that they were waiving their right to review his once they cashed the cheques. None of this displayed neutrality, which BC executor should always endeavour to display. The executor in this case was not acting in the best interest of all of the beneficiaries; he was acting in his own best interest and the interest of Elizabeth.
Other criteria supported executor’s fee at less than the 5% maximum
While Arthur was found to have displayed skill and ability below the acceptable standard expected of an executor due his lack of neutrality, there were additional criteria which supported a fee at lower than the 5% maximum claimed:
- Mr. Morrison’s estate was relatively small and simple. All of his funds were contained in a chequing account and term investment accounts when he died.
- Mr. Morrison’s estate was also on the low end of the scale for care and responsibility, as there was no real property to maintain, clean out or sell. The already liquidated assets only needed to be gathered into a trust account and then distributed.
- The time involved in administering the estate was low. Not including time spent disputing the alleged debts of his two siblings, Arthur’s duties as executor were limited to writing nine letters to his father’s bank and investment company.
- The contested portion of the estate (i.e., the alleged debts) was unsuccessful.
Beneficiaries awarded costs
The beneficiaries had gone to the expense of retaining counsel to challenge the executor’s accounts. That was made necessary by the executor’s refusal to share information and then refusal to negotiate. As such costs of the proceedings were awarded to the two beneficiaries, Robert and Gayle.
Take home point on BC executor’s remuneration
The maximum allowable executors fee in BC is 5% of the gross value of the estate. The skill and ability displayed by the executor must be considered when determining a fair and reasonable amount for a BC executor’s fee. An executor’s failure to remain neutral and incompetence on the part of the executor are two examples of lack of skill and ability that may result in entitlement to remuneration at less than the 5% maximum.