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Serving as an executor can be a daunting task, especially when managing the estate of a loved one. The role comes with numerous responsibilities, and many people are unaware of what these duties entail and how time consuming they can be. Further, most executors do not realise that they may be entitled to compensation for their efforts. This article aims to offer guidance to executors and clarify the circumstances under which compensation may be available.
What Does it Mean to be an Executor?
An executor is an individual who has been appointed by the deceased to administer their estate. The responsibilities of an executor may include:
- applying for a Grant of Probate (if required);
- locating, collecting and safeguarding assets;
- selling or renting of property;
- liaising with beneficiaries;
- ensuring that any taxes or debts owed by the deceased are finalised, and
- distribution of assets to beneficiaries in accordance with the last Will.
Understanding Executor's Commission
Executor's commission refers to the compensation that an executor may be entitled to for their services in administering an estate. This commission serves as remuneration for the time and effort involved in carrying out the duties of executorship.
In Queensland, the calculation of executor's commission is not a one-size-fits-all approach. Instead, it is determined by various factors, including the size and complexity of the estate, the time and effort expended by the executor, and any assistance received from professional businesses during the administration period. An executor can only claim commission if they receive the consent of all the beneficiaries or by making an application to the Queensland Supreme Court.
Generally, when a court is determining the amount of executor's commission to be applied it will be on the following basis.
- Between 1% to 4% on the capital assets of the deceased's estate; and
- Between 2.5% to 5% on the income earned from the estate during the administration period.
It is essential to note that these figures may vary based on individual circumstances and the facts of each case. Just because an executor may have administered a difficult estate, does not mean they are entitled to compensation.
A Case Example from Queensland
One example of how the courts have ruled on executor's commission in the past is the case of In the Estate of Celestino Ghidella [2005]. The Court examined the nature of the activities performed by the executors, which included attending to funeral arrangements, organising bank accounts, instructing solicitors and accountants, and maintaining estate assets. It was noted that while the executors had some involvement in these matters, the day-to-day responsibilities, such as banking income and paying bills, were largely handled by the solicitors retained by the estate. Due to the involvement of professionals, the Court denied the executors request of 5% on income and 3% on capital assets, and instead calculated the commission payable at 1.5% on income and 2% on capital assets.
If you have any questions regarding Wills, Estates or Executors, please reach out to our Wills and Estates Team for advice specific to your circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
