Executor Remuneration

The legal principles re executor’s remuneration and charges for legal services, are set out in Bernhard v. Wist, 2011 BCSC 101:

Section 88 of the Trustee Act, [R.S.B.C. 1996, c. 464] governs executor’s remuneration. The executor is entitled to:

a) a maximum of 5 per cent of the gross [aggregate] 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.

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.).

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.).

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.

If the estate suffers any losses as a result of an executor’s actions (or inaction), the executor is obliged to repay the estate, with interest. The interest is calculated pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79, unless there is a finding that the executor has used estate monies for his or her own benefit. In that circumstance, the executor may be required to pay compound interest (see Waters, D.W.M., Waters’ Law of Trusts in Canada, 3rd edition at pp.1228-1229).
An adverse inference may be drawn against an executor’s reliability if he or she fails to produce relevant documents as requested by the beneficiaries or ordered by the court: Booty v. Hutton, [1996] B.C.J. No. 2286 (S.C.).

The executor is entitled to be reimbursed from the estate for a solicitor’s bill for legal services rendered provided that those legal costs have been reasonably and properly incurred and do not relate to work that could have been performed by the executor. Fees paid for any services that could have been performed by the executor should be deducted from the executor’s remuneration: Re Lloyd Estate (1954), 12 W.W.R. (N.S.) 445.

Furthermore, an executor is not entitled to employ a solicitor to do work that the executor could do, such as ordinary letters, attendances, paying insurance premiums and the like, attending to banking matters and other ordinary duties that do not require the skill or expertise of a solicitor: Sharp v. Lush (1879), 10 Ch. 468 applied in Re Smith, [1972] 2 O.R. 256 (Surr. Ct).

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