Executors Fee Slashed By Court For Mis-Management of Estate

Executors Fee Slashed By Court

Re Stolarchuk Estate 2011 BCSC 1681 discusses the various principles involved in the calculation of an appropriate remuneration for an executor.

The deceased died in October 2004 leaving his estate consisting primarily of her house and an adjacent lot.

Her will bequeathed her estate equally to her four children, one of whom was the executrix.

The executrix attempted unsuccessfully to negotiate with her siblings to purchase the property from the estate for several years, and finally ended up selling the property through a realtor in 2009 for $250,000.

The executrix submitted an account for her remuneration at $17,000.

The court fixture remuneration at only $3000.

The registrar found that the executrix failed to realize on the estate assets and to distribute them in a timely fashion. She also acted wastefully in maintaining the phone and cable service to the house.

The court relied upon the following legal principles in assessing executors remuneration:

In Bernhard v. Wist, 2011 BCSC 101, I had occasion to outline the legal principles relevant to executors remuneration:

[100]       Section 88 of the Trustee Act governs executor’s remuneration. The executor is entitled to:

a)   a maximum of 5 per cent of the gross aggregrate value of the estate;

b)   a maximum of 5 per cent of the income earned during the administration of the estate; and

c)  an annual “care and management fee” of 0.4% of the average market value of the assets.

 

[101]       However, the percentages stipulated in s. 88 are not necessarily to be applied in every calculation of remuneration. The percentages provide a rough guide to assist in appropriate computation of the executor’s remuneration: Re Turley Estate (1955), 16 W.W.R. 72 (B.C.S.C.). In the end, the court must be satisfied that the compensation claimed “bears some reasonable relationship to the work and responsibility involved”: Re La Chance, [1955] 15 W.W.R. 141 (B.C.S.C.).

 

[102]       Various factors are to be considered when determining the appropriate executor’s fee. Those factors include the magnitude of the estate, the care and responsibility involved, the time occupied in the administration, the skill and ability displayed and the success (or lack thereof) achieved in the administration: Re McColl Estate (1967), 65 W.W.R. 110 (B.C.S.C.). Similar, but not the same, types of considerations apply with respect to a care and management fee: Re Pedlar (1982), 34 B.C.L.R. 185 (S.C.).

[103]       In terms of calculating the capital fee, the gross aggregate value of the estate is the realized value of the original assets of the estate.

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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