Executor Remuneration and Passing of Accounts

Executor Remuneration and Passing of Accounts

Re Beerenbrouk 2017 BCSC 1785 is a good summary of the law relating to executor remuneration and the passing of executor accounts.

A farm property worth $2 million was administered for 8 years and was complex and the beneficiary difficult.

The court awarded Capital Fee – (4% x $2 million): $80,000.00, b) Care and Management Fee: 64,000.00, c) 5% of rental income and interest income: 3,488.68 for a Total of $147,488.68

12 The administrator’s application to pass accounts and fix his remuneration is brought pursuant to Rule 25-13(1) which provides as follows:

(1) A personal representative or a person interested in an estate administered by a personal representative may apply, in accordance with subrule (2), for an order for one or both of the following:

(a) an order for the passing of the personal representative’s accounts in relation to the estate;
(b) an order to fix and approve the personal representative’s remuneration.

13 Upon hearing such an application, the options available to the court are provided in Rule 25-13(3):

(3) In an application under subrule (1), the court may do one or more of the following:
(a) hear and decide any matter relating to the accounts or the remuneration of the personal representative;
(b) direct the registrar to conduct an inquiry, assessment or accounting in relation to any matter relating to the accounts or the remuneration of the personal representative;
(c) make any other order or give any direction that the court considers appropriate in the circumstances.

The maximum amount for remuneration that may be charged by a personal representative is set out in s. 88 of the Trustee Act:

88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper.

(2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

30 The parties do not disagree on the test for an administrator’s remuneration. The criteria to be considered in determining the amount of remuneration which should be awarded are set out in Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at para. 23, wherein the Court states:

[23] From the American and Canadian precedents, based upon statutory provision for compensation to trustees, the following circumstances appear proper to be taken into consideration in fixing the amount of compensation: (1) the magnitude of the trust; (2) the care and responsibility springing therefrom; (3) the time occupied in performing its duties; (4) the skill and ability displayed; (5) the success which has attended its administration.

31 The compensation claimed must bear “some reasonable relationship to the work and responsibility involved”: Brown v. Martin, 2007 NLTD 115 (N.L. T.D.) at para. 9.

32 Maximum remuneration is not awarded as a matter of routine. Appropriate remuneration is a matter of what is fair and reasonable in all the circumstances: Zadra v. Cortese, 2016 BCSC 390 (B.C. S.C.) at para. 44.

The maximum amount for remuneration that may be charged by a personal representative is set out in s. 88 of the Trustee Act:

88 (1) A trustee under a deed, settlement or will, an executor or administrator, a guardian appointed by any court, a testamentary guardian, or any other trustee, however the trust is created, is entitled to, and it is lawful for the Supreme Court, or a registrar of that court if so directed by the court, to allow him or her a fair and reasonable allowance, not exceeding 5% on the gross aggregate value, including capital and income, of all the assets of the estate by way of remuneration for his or her care, pains and trouble and his or her time spent in and about the trusteeship, executorship, guardianship or administration of the estate and effects vested in him or her under any will or grant of administration, and in administering, disposing of and arranging and settling the same, and generally in arranging and settling the affairs of the estate as the court, or a registrar of the court if so directed by the court thinks proper.

(2) The court or a registrar of the court if so directed by the court, may make an order under subsection (1) from time to time, and the amount of remuneration must be allowed to an executor, trustee, guardian or administrator, in passing his or her accounts, in addition to any other allowances for expenses actually incurred to which the trustee, executor, guardian or administrator may by law be entitled.

(3) A person entitled to an allowance under subsection (1) may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding 0.4% of the average market value of the assets.

30 The parties do not disagree on the test for an administrator’s remuneration. The criteria to be considered in determining the amount of remuneration which should be awarded are set out in Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at para. 23, wherein the Court states:

[23] From the American and Canadian precedents, based upon statutory provision for compensation to trustees, the following circumstances appear proper to be taken into consideration in fixing the amount of compensation: (1) the magnitude of the trust; (2) the care and responsibility springing therefrom; (3) the time occupied in performing its duties; (4) the skill and ability displayed; (5) the success which has attended its administration.

31 The compensation claimed must bear “some reasonable relationship to the work and responsibility involved”: Brown v. Martin, 2007 NLTD 115 (N.L. T.D.) at para. 9.
32 Maximum remuneration is not awarded as a matter of routine. Appropriate remuneration is a matter of what is fair and reasonable in all the circumstances: Zadra v. Cortese, 2016 BCSC 390 (B.C. S.C.) at para. 44.

I consider a care and management fee for eight years to be appropriate, which is until sometime shortly after the entire estate was held in trust such that no care or management was required. The care and management fee is also based on an average estate value of $2.0 million.

64 To summarize, I have utilized the following amounts in consideration of the administrator’s remuneration:

a) Capital Fee – (4% x $2 million): $80,000.00
b) Care and Management Fee: 64,000.00
c) 5% of rental income and interest income: 3,488.68
d) Total: $147,488.68

Trevor Todd

Trevor Todd is one of the province’s most esteemed estate litigation lawyers. He has spent more than 40 years helping the disinherited contest wills and transfers – and win. From his Kerrisdale office, which looks more like an eclectic art gallery than a lawyer’s office, Trevor empowers claimants and restores dignity to families across BC. He is a mentor to young entrepreneurs and an art buff who supports starving artists the world over. He has an eye for talent and a heart for giving back.

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