Hypotheticals by Manny Wood. Published in the Coffs Coast Advocate on 13 February 2016.
Jane makes a will appointing John, her friend, as her executor.
When Jane dies, her estate is worth approximately $600,000, including her residence and a substantial sum held in fixed term deposits.
Jane had no children and no partner at the time of her death. Her will left her home to her three siblings and the contents of the term deposits to her nephews and nieces. John was not a beneficiary.
John asks the beneficiaries of Jane’s estate to agree to a payment to him of $10,000 as payment for his “pains and troubles” in administering the estate.
The beneficiaries do not consent to John’s proposal and he applies to the probate registry for an order that he is entitled to a “commission”.
The registry is able to award commission on a discretionary basis and in the absence of misconduct, it is unusual for an executor to be refused commission.
The first step in applying for commission is to file accounts with the registry. The accounts detail the assets and liabilities of the estate together with any income that has been earned.
An executor may be entitled to commission of up to 2% of capital realisations and up to 4% of income collected.
The registrar noted that generally, the role of executor is a gratuitous role that does not automatically entitle an executor to remuneration, but in an exercise of discretion, allowed a commission of $8000 and an additional $3000 in costs, stating that the administration of the estate was relatively straightforward.
Please note that the NSW Trustee and Guardian, if appointed as your executor, is entitled to charge for administering an estate with reference to a different and generally much higher scale of fees.
An executor, who is also a beneficiary of an estate, is generally taken to receive their inheritance in lieu of an entitlement to commission.
