However, there is a catch. This ensures that they will get paid for the time they have spent administering the Estate as well as reimburse any out of pocket expenses that they have paid. How much does an executor get paid? Alternatively, you can also choose to leave a cash legacy for your Executor in your will instead of compensation. Even if the will does not have a compensation clause, state law provides a formula for arriving at a reasonable fee. Removal of the Executor 95 6. If paid to an executor who is a layperson and who is not in the business of handling estates, the estate should have a business number with CRA and compensation is subject to withholding tax and other deductions, t-slips must be issued, etc. Several states do not permit you to pay your own compensation without a court order, so ask your attorney before you write yourself a check. Requirement to Pass Accounts 94 4. Typically, a will either names a flat fee or states that the executor can claim “reasonable compensation.” If a will doesn’t mention compensation, state law usually gives executors the right to reasonable compensation, and it may provide a formula for arriving at the executor… The executor’s burden is often referred to as “pains and troubles”. The estate lawyers at Kahane Law Office in Calgary, Alberta can help if you need more information. Discuss executor fees up front. First, similar provisions should not conflict with one another. Often when the calculation of compensation is more complex, such as with corporate executors, the compensation of executors may be dealt with in a compensation agreement between the testator and the executor. Section 61(1) of the Trustee Act states: A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice. The probate judge has the option of setting a reasonable amount of compensation when the state is overseeing the payment based on their judgment of what is appropriate. Requirement to Account to Beneficiaries 93 3. The executor is a professional who also drafted the will and it contains a clause that authorises the payment of commission. If there is no such clause present in the Will, an Executor cannot charge the Estate directly for professional fees. Compensation issues for the Solicitor/Accountant/Executor (First published in STEP Inside December 2011) When a solicitor is named executor to an estate, compensation issues may arise. This conflict between a beneficiary’s right and a settlor’s desire to protect a trustee has been considered in a few recent court cases where the court was faced with whether to uphold an exemption clause or not. An executor is the person who has the legal duty to follow the directions listed in your Last Will. Some people feel uncomfortable accepting payment because they fear other family members will think that it is greedy or unfair. The executor is the person appointed by the will to administer the estate and distribute the estate assets according to the terms of the will. Secondly, if tax is being paid from a fund, it should be one arising in the trust rather than under the Will. For an executor, compensation may be set by the terms and conditions of a Will. Executor compensation does indeed account for all capital distributions to the beneficiaries. (xii) Executor’s remuneration. Unless expressly provided in the will, ss. Should the beneficiaries agree to executor compensation, the executor may need to provide an informal accounting or asset disclosure to the beneficiaries. The idea that executors of wills should be compensated is typically considered common sense and is rarely disputed. Courts generally accept that the executor is entitled about 5% of the estate’s value, plus an ongoing management fee of 2/5 of 1% of the average annual value of the estate assets during the settlement process. Being an executor requires a considerable amount of time and effort and it is a big responsibility. The Will states that the Executor is not entitled to compensation—this is typically done in circumstances where the Executor is also an Estate beneficiary, or in circumstances where the Executor is a close loved one and the Will-maker believes that the Executor has a moral duty to act as Executor without receiving compensation for doing so; or Many fiduciaries in the same family as the decedent are quick to waive fees. This clause in your will could state the exact amount of compensation a Executor will receive. My executor shall have all the powers allowable to executors under the laws of this state. After you pass away, your executor has the general task of sorting out your finances. I direct that no bond or security of any kind shall be required of any executor. Estate Management Fees. The preparation of accounts, income tax returns, management of investments, and other estate administration are the duty of the trustee. Discuss the issue of executor fees with your family and your executor when making your estate plan. Under North Carolina law, an executor may receive up to five percent of the value of the estate’s “receipts and disbursements" as compensation. Judges can reduce or cancel compensation for executor delay, mistakes or misconduct. Estate Expenses As part of administering an estate, an executor is sure to incur some expenses along the way, such as the cost of … You calculate this fee as 2/5 of 1% of the average value of the gross assets you administer. You may also claim a management fee. Sometimes a clause in the will states that the estate must pay a certain fee to the executor for completing his or her executor’s duties. 1. Estate disputes often boil down to a dispute about how much compensation the estate trustee is entitled to. Executor compensation is seen as taxable income since it is a payment from the Estate for services rendered by the executor. Under a will, there is typically a clause that deals specifically with compensation of the executors. 403-225-8810. "At clause 11 of the Transfer Deed there is a covenant to be given by you to the effect that you will during your ownership of the Property comply with the terms of the Lease and compensate THE EXECUTOR if any claim is made against him for any breach … 14 Possible Consequences for an Executor Who Makes a Mistake on an Estate 91 1. Limiting the trustee’s liability also denies a beneficiary the fundamental right to seek compensation when a duty is breached. It usually requires effort, persistence, risk, and judgement. This clause could also incorporate into the Will a comprehensive Compensation Agreement which would have been negotiated between the testator and the Personal Representative prior to their passing. Appointing an outside party as executor can avoid “qualms among people for executor’s fees, for valuations or for distributions,” Carpio says. 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