What if the will directs that there’s no executor fee?
- Explaining that if the will is silent about executor fee, the executor is entitled to a percentage fee
- Explaining that if the will sets out the fee, that fee is what applies, and how a “zero fee” situation can be dealt with
- Recommending that a will-maker put their mind to executor fee and fix the fee in the will to avoid uncertainty and unfairness
My topic two weeks ago was how lucrative executor work can be. There’s another side to that coin.
First, a reminder of why executor work can be lucrative.
There’s no mention of executor fees in most of the wills I’ve reviewed. When the will is silent about executor fees, section 88(1) of the Trustee Act kicks in entitling the executor to remuneration “…not exceeding 5%…”. That’s a maximum. A more likely court endorsed executor fee is in the range of 3%.
When I was growing up, a millionaire was thought of as “Richie Rich”. Today, the average price of a detached home in Kelowna is more than $1 million. With only the home considered, executor fees would be a whopping $30,000.00.
For a much lower estate, perhaps where the estate consists solely of a mobile home worth $150,000.00, executor fees would max out at $7,500.00.
But the fee entitlement in the Trustee Act applies only if the will is silent on the subject.
Section 90 of that act says (I’m paraphrasing) that the fee entitlement set out in section 88 has no application if the amount of remuneration is set out in the will.
I’ve covered this ground before in my column published October 6th, 2024. I explained that you can avoid the unfairness and uncertainty of a percentage executor fee by setting a fixed fee in your will.
I also shared how you might set the amount of that fee in a way that avoids feelings of unfairness among siblings. If you have trouble finding that column online, let me know and I’ll send it to you.
But what about if the will says that the executor is not to be paid any fee at all?
I’ve seen that recently.
I think I understand how that might come about. A parent views the appointment of one of their children as executor to be a privilege, not a way to increase their inheritance.
But acting as executor is a bunch of work! The appointed child might not feel so privileged.
There’s no obligation on a named executor to actually step into that role. The appointed child can simply bow out. A sibling could take on the job, but why would they be any more motivated?
Nobody gets their inheritance unless one of them steps up to do the executor work. They could hire a professional executor, but that would cost an arm and a leg.
The siblings are thrown back to their childhood facing a huge chore. Who takes on this chore which doesn’t lend itself well to being split between them?
I have a solution, but I cannot take credit for it. Credit goes to a judge who decided a case in Ontario over 75 years ago. The case Re Robertson, 1949 CanLII 89. Quoting from the decision: “…[if the] terms of compensation in the will are inadequate, he may bargain with those interested…as a condition of acting…”.
The siblings can agree between them that the one who steps up to act as executor will receive some extra amount of the estate. The will doesn’t allow for remuneration, but the agreement between the siblings does.
I recommend avoiding situations of unfairness and uncertainty by putting your mind squarely to your executor’s remuneration and dealing with it in your will.
