Remuneration of Personal Representative
A. General Principles
At common law, personal representatives may not profit from their office unless specifically authorized by the terms of the will or trust. This rule has been altered by s. 88 of the Trustee Act, which provides for remuneration to a personal representative. Under this statute, entitlement to fees is based on the aggregate value and annual care allowance when the will is silent as to executor’s fees.
If an executor receives a legacy in the will, there is a presumption that it is in lieu of remuneration. Review the will to determine the basis for the executor’s remuneration.
There is a presumption at law that if a legacy is given to an executor in the will, that legacy is intended to be in lieu of remuneration. However, if the gift is a residual bequest, this presumption does not apply and the executor is entitled to both the residual gift and remuneration. The will may expressly state that the executor may take both a legacy and an executor’s fee and this removes the presumption. Review the will to determine the basis for the executor’s remuneration.
If the amount of remuneration is not fixed by the terms of the will or by agreement, s. 88 sets out the following rules for remuneration:
- a fee not exceeding 5% of the gross aggregate value of the capital of the estate (i.e., the realized value of the original assets without deduction of the value of any mortgages against assets and the value at the date of distribution of any assets distributed in their original form);
- a fee not exceeding 5% of the income earned during the administration; and
- annual care and management fee not exceeding 0.4% of the average market value of the assets.
In an estate of average complexity, the court will allow less than the maximum, typically 3% of the aggregate value plus a care and management fee.
When evaluating entitlement value for executor fees, the court has considered the following criteria:
- the size of the estate;
- the care and responsibility involved;
- the time occupied in the administration of the estate;
- the skill and ability displayed; and
- the success achieved in the final result.
It is preferable to have the beneficiaries approve the fees. Where this is not possible (such as where the beneficiaries are infants or under a disability), the court’s approval of fees can be obtained under s. 89 of the Trustee Act or on the passing of accounts under (Supreme Court Civil Rule 25-13).
Any costs incurred in seeking court approval are assessed as “special costs” and are payable from the estate.