Do you know how lucrative acting as an executor can be?
It鈥檚 a very unique job.
You can be appointed with zero formal qualifications.
And nothing of experience working in the field.
You set your own hours and don鈥檛 have to record your time.
But ironically, it could be the highest paid work you ever do.
There鈥檚 typically no mention in a will that the executor is entitled to a fee.
But executors are most definitely entitled to one.
There鈥檚 a piece of provincial legislation called the Trustee Act. Section 88(1) of that act says: 鈥溾�n executor鈥s entitled to鈥ot exceeding 5%...of all the assets of the estate by way of remuneration for their care, pains and trouble and their time spent鈥�鈥�
The median price for a single-family home in 麻豆精选 is in the range of $1.15 million. Five percent of that alone is $57,500.00.
Add on $1 million of investments and you鈥檙e up to $107,500.00.
That鈥檚 crazy!
But you might have noticed the words 鈥渘ot exceeding鈥� in the excerpt I provided. An executor is not necessarily entitled to the 5% maximum.
So, then, who decides the amount?
At the end of the process the executor will send beneficiaries an accounting, listing all the money that flowed into the estate, all the expenses incurred, and providing a proposed distribution. The accounting will include whatever amount the executor is claiming as a fee.
Would beneficiaries balk at a 5% executor fee if the executor pointed to section 88(1) of the Trustee Act?
Are they likely to seek independent legal advice about whether the claimed fee is fair?
If the beneficiaries don鈥檛 agree with the amount proposed by the executor they can require the amount to be determined by the court. But that will cost them, and the estate, legal fees.
Are they likely to want the legal battle?
If the matter does go before the court, a more likely compensation award is in the range of 3%.
In the relatively recent case of Borkovic v. Borkovic, 2023 BCSC 2050, the court awarded 3% with a $1.8 million estate that the judge determined was not complicated, consisting of two rental properties, bank accounts and investments. The judge assessed the care and responsibility involved as minimal.
For simplicity, I am not discussing additional executor compensation such as:
- a percentage of income earned on estate assets, and
- an annual percentage for 鈥渃are and management鈥� fees.
The total fees the executor in the Borkovic case was awarded was over $75,000.00.
A much smaller estate will entitle the executor to a much smaller fee. For example, in one case the full 5% was awarded for an estate worth $242,503.71, but that worked out to fees of only $12,125.00.
And of course, a much larger estate can get ridiculous. In one case fees of $400,000.00 were awarded for a $10 million estate.
I鈥檝e written previously about how a will-maker can determine the executor fee in advance, by setting it out in their will. I鈥檝e also written about how a will-maker might determine what a fair fee might be when dealing with siblings. Let me know and I鈥檒l help you if you have trouble finding those columns in my archives.
But if the executor fee is not determined in the will, and it likely is not, the executor might be in for an incredibly lucrative line of work.
You might wonder if you would be capable of acting as an executor. I have previously written about the executor job as being a whole bunch of work. Next week, I plan on writing about how accessible the job really is.
Paul Hergott
Lawyer Paul Hergott began writing as a columnist in January 2007. Achieving Justice, based on Paul鈥檚 personal injury practice at the time, focused on injury claims and road safety. It was published weekly for 13 陆 years until July 2020, when his busy legal practice no longer left time for writing.
Paul was able to pick up writing again in January 2024, After transitioning his practice to estate administration and management.
Paul鈥檚 intention is to write primarily about end of life and estate related matters, but he is very easily distracted by other topics.
You are encouraged to contact Paul directly at paul@hlaw.ca with legal questions and issues you would like him to write about.
