Business
Executors Face Heavy Workloads Despite Potential Lucrative Fees
The role of an executor can be both financially rewarding and burdensome, a duality that many families overlook when drafting wills. While executor fees can be lucrative, the responsibilities associated with the position often lead to significant stress and conflict among family members. This article examines the complexities of executor work, particularly in relation to the provisions outlined in the Trustee Act and the implications for families navigating these challenges.
Understanding Executor Fees and Responsibilities
Executor fees are not always explicitly mentioned in wills, leading to potential disputes over compensation. When a will does not specify fees, section 88(1) of the Trustee Act allows executors to claim remuneration of up to 5 percent of the estate’s value, with a more common endorsement being around 3 percent. In a region like Kelowna, where the average price of a detached home exceeds $1 million, this could result in executor fees reaching $30,000. In contrast, an estate consisting solely of a mobile home valued at $150,000 would limit executor fees to $7,500.
It is important to note that section 90 of the Trustee Act specifies that the fee entitlement outlined in section 88 is irrelevant if the will itself delineates the amount of remuneration. This complexity can lead to confusion and misunderstandings among family members, particularly if they are uncertain about what to expect.
The Challenges of Uncompensated Executors
A growing concern arises when a will states that the executor will not receive any fee. Some parents may perceive appointing a child as executor as a privilege rather than a financial burden. However, the reality can be quite different, as executing a will often involves a significant amount of work that may not feel like a privilege to the appointed child.
There is no obligation for a named executor to accept the role. If they decline, the responsibility can fall to a sibling, but this does not necessarily incentivize them. In many cases, none of the siblings may be eager to take on the task, especially when it comes to dividing the workload of executing an estate. The option to hire a professional executor exists, but this choice can be prohibitively expensive, leading families to grapple with the complexities of their childhood dynamics as they consider who will shoulder this responsibility.
“…[if the] terms of compensation in the will are inadequate, he may bargain with those interested…as a condition of acting…” – Re Robertson, 1949 CanLII 89
A historical ruling from the Re Robertson case in Ontario provides a potential solution. It indicates that siblings can reach an agreement among themselves, whereby the sibling who takes on the role of executor receives a portion of the estate as compensation, even if the will does not allow for it. This approach can mitigate feelings of unfairness and uncertainty.
Planning for an executor’s remuneration within the will can prevent disputes and foster harmony among siblings. Clear communication about expectations and responsibilities is key to ensuring that families navigate this challenging process with minimal conflict.
In conclusion, while the financial rewards of being an executor can be significant, the associated responsibilities should not be underestimated. Families are encouraged to thoughtfully consider the implications of executor appointments and to establish clear guidelines in their wills to avoid potential disputes in the future.
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