Executors’ Obligations
The appointment of an executor is a significant decision for a will-maker to make. It is also a significant decision for a nominated executor to accept his or her appointment. Executors and/or administrators are subject to a significant number of obligations with respect to a deceased person’s estate. These include:
- Arranging the funeral and burial (or cremation) of the deceased’s body;
- Obtaining a grant of administration (assuming a grant is required for the proper administration of a deceased estate);
- Calling in the assets of the deceased (sometimes involving extensive investigation into the deceased’s affairs);
- Quantifying and paying the deceased’s debts – as well as funeral and estate administration expenses;
- Defending any claims brought against the deceased’s estate;
- Distributing the deceased’s assets in accordance with the deceased’s Will;
- Administering as trustee any testamentary trusts established pursuant to the deceased’s Will; and
- Maintaining accounts of the administration of the Estate.
Depending on the extent and complexity of the deceased’s assets, as well as whether any claims are brought against an executor, the general expectation is also that executors and administrators complete their administration of the Estate within a year of the deceased’s death (the ‘executor’s year’).
Having regard to the extensive nature of an executor’s obligations, there is provision in all States and Territories for executor’s to apply to be awarded executor’s commission.
That is, remuneration for the executor’s work in administering the Estate.
Victoria – Administration and Probate Act 1958 (Vic)
The relevant provisions are found in sections 65 and 65A to 65E Administration and Probate Act 1958 (Vic). In summary:
- An executor, administrator or trustee may apply to the Court to be paid commission for their ‘pains and trouble’ [in discharging their obligations] as is ‘just and reasonable’;
- The maximum allowable amount of commission is 5% of gross estate;
- The Court may order that an amount of commission paid to an executor be reduced or repaid to the Estate if already drawn (on the application of any interested beneficiary, creditor or of the Court’s own motion).
Tasmania – Administration and Probate Act 1935
The relevant provision is found in section 64 of the Administration and Probate Act 1935 (TAS) and mirrors the Victorian provisions save that there is no provision specifying that the Court reduce an excessive amount of executor’s commission.
Western Australia – Trustees Act 1962 (WA)
The relevant provisions are in section 98 of the Trustees Act 1962 (WA). In summary, they replicate the Victorian provision except that:
- The commission is awarded for the executor’s ‘services’ as opposed to ‘pains and trouble’; and
- As is also the case is Tasmania, there is no provision specifying that the Court may reduce an amount of commission paid to an executor on the grounds that it is excessive.
New South Wales – Probate and Administration Act 1898 (NSW)
The relevant provisions are found in section 86 of the Probate and Administration Act 1898 (NSW). They mirror the Victorian provisions save that there is an added provision in the Probate and Administration Act which specifies that no commission shall be paid to an executor, administrator or trustee who neglects or omits without good reason to pass the accounts relating to the estate pursuant to legislation or order of the Court.
The relevant Supreme Court of New South Wales fact sheet summarise that on an application for executor’s commission, the actual rate that will be allowed is discretionary and will depend upon the circumstance of the case. As a general rule, the following rates of commission are suggested:
- Between 0.25% to 1.25% of the value of the assets transfers in specie;
- Between 0.25% to 2.5% on the income on capital realisations; and
- Between 1% to 5% on income collections.
The fact sheet also suggests that the Court will take into account all relevant matters when determining what rate of commission is fair and reasonable, including:
- The size and complexity of the will and the estate;
- The efficiency and diligence shown by the executor in completing tasks;
- The amount of work required and responsibility assumed in order to disburse the estate; and
- Complications encountered in the course of administering the estate (such as dealing with claims against the Estate).
Northern Territory – Administration and Probate Act 1969 (NT)
The relevant provisions are found in section 102 of the Administration and Probate Act 1969 (NT). In summary, they mirror the provisions in New South Wales.
Queensland – Succession Act 1981 (Qld)
The relevant provisions are found in section 68 of the Succession Act 1981 (Qld). The Court may authorise the payment of remuneration or commission to an executor or administrator of a deceased’s estate for the executor or administrator’s ‘services’. The amount of commission will be as much as the Court thinks is ‘fit’, and may be subject to any attached conditions as the Court thinks fit (these conditions might include, for example, the filing of accounts).
Australian Capital Territory – Administration and Probate Act 1929 (ACT)
The relevant provision is found in section 70 of the Administration and Probate Act 1929 (ACT) which provides that the Court may allow an executor’s or administrators’ commission in a sum or percentage amount that is ‘just’ having regard to the services provided by the executor or administrator.
Conclusion
The questions of whether executor’s commission is payable and if so, how much, are often not easy to answer. Beneficiaries who have concerns above a claim for executor’s commission, or how much is proposed to be charged, should think about seeking independent legal advice, particularly in the case of a large estate.
This article was written Simon Crawford, Partner and Christian Teese, Senior Associate.
