The question is often asked by those appointed executor of a deceased estate, whether they are entitled to a commission for the time and effort required to do everything necessary to sort out the deceased estate.
If the executor is also a beneficiary of the estate or if the will specifically makes provision for the executor to be paid (such as where a solicitor or an accountant is appointed) then payment for the work involved may seem less pressing. The reality is however that there is often a significant amount of work involved particularly when the estate comprises assets requiring ongoing management such as leased residential or commercial properties. The executor also has to deal with beneficiaries and their expectations in the course of paying any debts of the estate and distributing remaining assets.
The answer is ‘yes’, legislation allows executors to claim a commission to be determined by the Court but the amount claimable is not specified. The Court decided in a 1920s case how the calculation should be approached and this has been used as a guide since. More recently the Supreme Court has published an ‘Indicator’ on the commission payable where:
- The value of the estate is less than $1 million; and
- There are ‘no special or unusual circumstances’ which warrant a higher commission.
The amount generally allowed is:
- At least one (1) per cent on the first five hundred thousand ($500,000); and
- At least half of one (0.5) per cent on the balance.
The amount will be allowed whether or not paid agents have been employed in the administration of the estate. This means that an executor is not disentitled to commission if they engage a solicitor or accountant or other professional to assist them in their administration of the estate.
The Indicator makes it clear that the allowance is always subject to the Court’s discretion to allow a higher or lower amount depending upon the circumstances of the case and of course this is the situation with estates in excess of $1 million. Decided cases shed light on what factors a Court will look at but ultimately their question is what is ‘just and reasonable’ in the circumstances. The nature and extent of the executor’s activities, the amount of work undertaken and how complicated that work was will all impact on the amount allowed.
In practise, agreement from all beneficiaries will be sought to an executor’s commission and then confirmed by Deed of Family Arrangement.
If you wish to discuss any of the issues in this article please contact Emma on 8362 6400 or email Emma Marinucci. Join our mailing list to receive updates and advice on current issues.