Re Mikaloff 2018 BCSC 756 reviews the criteria relating to the appropriate amount of executor remuneration on a passing of accounts application.
The deceased died in 2015 and directed that her will be distributed among nine beneficiaries equally.
The main asset was a Vancouver home, and following a challenge to the validity of her will and a wills variation application by a beneficiary, the matter came before the registrar to fix the amount of executors remuneration.
The executor claimed 4.5% of the capital and .4% of the average annual value of the assets is a care and management fee.
The register, observe that 5% is the maximum that can be charged for an entire administration of an estate, and in the present case, although the vast majority of the work in administering the estate had been completed, the administration was not complete.
An award of 4.5% at this time would undoubtedly equate with the 5% maximum by the time of the final passing of the accounts.
The value of the estate was $1.7 million, and the fact that the property had to be secured and maintain while the two estate actions render course, with the executor traveling to Vancouver from Victoria each month for 14 months, and the fact that the executor was required to instruct counsel and the two actions but did not appear in court, the registrar awarded the executor C of 3% and a care and management fee of .4%.
The legal principles applicable to determining entitlement of an executor to remuneration is summarized in Re Chau Estate 2016 BCSC 2541 at paragraphs 14 – 16 and 18 – 19:
Section 88 of the Trustee Act governs that a personal representative or administrator is entitled to remuneration to a maximum of 5% of the gross aggregate value, including capital and income of all of the assets of the estate of the date of passing.
Section 88 (3) states that a person is entitled to an allowance under subsection 1, and may apply annually to the Supreme Court for a care and management fee and the court may allow a fee not exceeding .4% of the average market value of the estate assets.
The criteria to be considered in determining the appropriate amount of remuneration are set out in a number of cases, the leading of which is Re Toronto General Trust Corporation v. Central Ontario Railway Company(1905) OWR 350 at 354:
The criteria are:
- the magnitude of the trust,
- the care and responsibility involved,
- the time occupied in administering the trust,
- the skill and ability displayed,
- and finally the success achieved
In the final result remuneration does not need to be fixed as a percentage of the gross aggregate value of the estate. It may be calculated as a lump sum, provided it does not exceed 5% of the total value of the estate Re Turley Estate ( 1955) 16 WWR 72 (BCSC)
The factors to be considered in awarding the annual care and management fee are set out in Re Pedlar (1982) 34 BCLR 185 (SC) at paragraphs 14 and 15:
“each application must be decided upon its own facts. Some of the important factors to be taken into consideration in determining whether any care and management fee should be allowed and, if allowed, the extent of such care and management fee, not exceeding .4% of the average market value of the assets of the estate bracket include the following:
a) The value of the estate assets being administered;
b) the nature of the estate assets being administered – such as an active business, farm, real property held for investment or appreciation, a portfolio investments in the type of such investments
c) the degree of responsibility imposed upon the trustee with the terms of the will or other instrument, including the length or duration of the trust
d) the time expended by the trustee and the care and management of the estate;
e) the degree of ability exhibited by the trustee in the care and management of the estate
f) the success or failure of the trustee and the care and management of the estate
g) whether or not some extraordinary service has been rendered by the trustee in the care and management of the estate
The foregoing list of factors is not intended to be exhaustive, it has been derive, primarily from a consideration of the Ontario Court of Appeal decisions In re Mortimer 1936 OR 438 and Re Smith (1953) OR 185.
The court recognizes that there may be other factors deserving of consideration depending upon the circumstances involved in a particular application.