In British Columbia, unless a will specifically states otherwise, s. 88(1) of the Trustee Act sets out an executor or trustee’s entitlement to remuneration under either of a deed, settlement or will.
It allows a fair and reasonable allowance, not exceeding 5% of the gross aggregate value, including capital and income, of all the assets of the estate. The Act also provides for an annual care and management fee of 0.4% of the average market value of the estate’s assets.
Remember that 5% is the maximum remuneration that can be claimed. If the administration of an estate is one of average complexity, then an executor is likely entitled to 3% of the income and capital as well as the management fee.
Some of the factors that a court or registrar in British Columbia will consider when reviewing an executor’s accounts include:
• the time taken to administer the estate;
• the degree of care and responsibility required;
• the size or complexity of the estate;
• the nature and value of the assets;
• the skill or ability exercised in the estate’s administration; and
• the success ultimately achieved.
In addition to the capital and income remuneration described above, s. 88(3) provides for a further care and management fee of up to a maximum of 0.4%. The court has the discretion to determine what that amount should be and will consider the same factors described above. The decision in Re Pedlar (1982), 34 BCLR 185, sets out a means to determine the average market value of the estate whereby the market value is determined at the beginning of a 12 month period, the market value at the end of that period is then added and the total amount is then divided in half. Generally, the estate’s capital will be charged two-thirds of the care and management fee and the income will bear the remaining one-third of the fee.
An executor is also entitled to be reimbursed for any expenses he or she may have properly and reasonably incurred in the administration of the estate. Although an executor may retain the services of professionals such as lawyers or accountants and pay their reasonable fees and disbursements from the estate, those services must be ones that an executor could not reasonably have performed in their personal capacity as executor. The reasonableness of the payment of any professional fees may come under scrutiny when the executor prepares to pass his or her accounts. If, in the court or the registrar’s opinion, the payment of the fees was not reasonable or proper, the executor may be required to reimburse the estate.
The formal passing of an executor’s accounts can be a complex and lengthy process. Often the services of a lawyer are required to assist in the preparation of those accounts and to appear on behalf of the executor at any subsequent court hearing. If the amount of remuneration claimed by an executor is consented to by all the estate beneficiaries, the process of passing the accounts can be significantly simplified. If that approval or consent is not obtained, approval for the executor’s compensation must be obtained by court order under s. 89 of the Trustee Act or on a passing of accounts under Supreme Court Rule 21-5(70).
Finally, in the event there are minor or incapacitated beneficiaries who are thus incapable of consenting to an executor’s accounts, the Public Guardian and Trustee of British Columbia must be provided with notice of those accounts. The executor is then required, pursuant to s.99 of the Trustee Act, to pass their accounts before the court in order to obtain a discharge and before any remuneration can be paid from the estate.