Compensation For Executors and Trustees in British Columbia

Compensation For Executors and Trustees in BC

Many issues in estate litigation arise that pertain to the appropriate amount of compensation for executors and trustees.

The first place to start for the answer is the Trustee Act of British Columbia.

If the will or trust stipulates the amount of the executor or trustee’s compensation, then that will generally speaking be upheld by the courts.

The Courts are inclined to follow the stipulated direction of the testator in this regard.

If compensation is not stipulated in the testamentary document, then the maximum entitlement for an executor is 5% of the gross aggregate value of the estate, as compensation for their time spent, care, trouble and duties carried out.

In addition, the Trustee Act also provides for a maximum fee of .4% of the average market value of the assets on a yearly basis, for the care and management of the assets.

In the experience of, the overwhelming number of initial compensation disputes between the beneficiaries and the executor are resolved without access to the courts.

Most beneficiaries will often agree on a reasonable amount of compensation, as they both recognize the effort carried out by the executor,as well as they are very often in a hurry for their inheritance and do not want to further delay the distribution.

When beneficiaries cannot resolve the fee dispute, the court uses the following criteria in determining the amount of executor/trustee compensation, namely:

A. The time occupied;
B. The success achieved in the final results;
C. The amount involved in the estate;
D. The skill and ability displayed and required;
E. The care and responsibility involved

One of the feeding decisions that is often referred to is McColl Estate (1967) 65 WWR 110 BCSC where the aforesaid criteria were set out by the court

The type of criteria that the court will look at is whether on the one hand it was simply a bank account with a large amount of money, that involved very little work, or on the other hand ,a small problematic estate to the point that it was a thankless job.

In the experience of is not usual to be paid the maximum 5% in most estates.

The average instead being more in the range of 2 1/2 to 3%. .

It is in fact surprising that very few of the contested compensation matters actually proceed to court and there is in fact a paucity of caselaw on the topic.

In the experience of carrying out the duties of executor or trustee can often amount to being a fire hydrant on a street of dogs

Executor/Trustee Personally Liable To Beneficiary For Unauthorized Payments from Estate Assets

Executors and trustees can be personally liable to beneficiaries for improper or unauthorized payments from estate assets.

The Brown v Brown 2011 BCSC 649 is a good example of that principle of law.Continue reading

Disbarred Lawyer Loses Mother’s BC Estate Case

 Estate of Sophia Ewachniuk v Ewachniuk 2011 BCSC 395 is the fascinating sequel of a disbarred lawyer’s continued litigation with his two sisters.

In a previous trial involving the same parties Hix v Ewachniuk 2008 BCSC 811, affirmed 2010 BCCA 317,the court found that the deceased’s 2000 will was prepared by the defendant lawyer son.

The will purportedly left her entire $2 million estate to her lawyer son.

The court declared that will void, stating it was procured by his undue influence.

This subsequent litigation had to do with the estate suing the defendant son for repayment of a promissory note signed by the defendant, in favour of his parents in 1980, for $750,000.

The promissory note did not contain a date for repayment, but indicated that it was payable one year after demand, without interest.

The estate administrator issued a letter of demand to the defendant after their mother’s death in 2008.

The defendant argued that he owed nothing.

The court held that it was the defendant’s burden to prove that the intention of the parties was not to make the promissory note enforceable against him.

The court held that the promissory note is that delayed- demand promissory note that is not statute barred by far the Limitation act, which provides for an ultimate limitation period of 30 years.

The court recited the principle in Miller v. Miller Estate (1987) 14 BCLR (2d) 42 “the court should require a high standard of proof from a person who claims he is owed money by the deceased person, applies to a claim by a deceased person as represented by her estate for money owed to the estate.”

“The evidence of the payment in these types of situation should examined with the most careful scrutiny and indeed at the outset with some suspicion”

The court ordered the defendant son to pay the estate $750,000 plus costs

Court Removes One Co-Executor in Deadlock Between Two

Mr. Justice Butler in Levi-Bandel v. Talesiesin Estate 2011 BCSC 247 ordered the removal one of two co-executor/trustees, where a deadlock had existed between them.

The administration of the estate had ground to a standstill for the previous two years.Continue reading