Executor Compensation In Alberta
An Executor, now known as a Personal Representative is the person who manages and finalizes an estate. While the executor duties vary depending on the estate, the executor follows a person’s will. As a part of these responsibilities, the executor lists the estates, assets, debts, notifies beneficiaries, pays out creditors and beneficiaries, etc. This process is often time consuming and laborious. Our firm is often asked, about the ability of the executor to receive payment for performing this task. Executor compensation or executor fees (sometimes even known as executor entitlements) is both appropriate and also contentious in many estates. Learn more here or call the wills and estates lawyers at Kahane Law Office for more help. With offices in both Calgary and Edmonton, we help clients throughout Alberta.
Repayments Of Expenses To A Personal Representative
Typically, if beneficiaries argue about executor fees, these involve two parts. Firstly, out of pocket expenses paid by the executor make up the easiest set of fees. Secondly, detailed below, are the fees paid to the personal representative for completing their work for the estate. For repayment of out of pocket expenses, the main principal is one of reasonableness. If the executor spends money as a part of finalizing an estate, they can get reimbursement for the costs they incur. For example, these expense include the cost for accountants, funeral expenses, lawyers, travel expenses, notaries, property management, etc. Since estates vary greatly, what makes up a reasonable expense for one estate, will not necessarily make up a reasonable expense for another.
Is An Executor Or Personal Representative Entitled To Get Paid
In Alberta, an executor or a personal representative is entitled to compensation for they work they do. If there is a will in place, it can specify how much compensation an executor may receive. Oftentimes this may be a specific dollar amount or a percentage of the overall estate. If the will fails to mention compensation, then the executor has the option to either propose their own compensation and get approval form the residual beneficiaries or the Alberta Courts. on the other hand, if the will states that the executor will not have compensation, then the executor is able to make an application with the Alberta Courts to get compensation. Oftentimes, the court will refer the Alberta Suggested Fee Guidelines to determine whether the proposed compensation should be accepted or modified.
How Much Is Appropriate For Executor Fees
Even if a will fails to compensate the executor, they can still get reimbursement for their out of pocket expenses. These expenses include legal fees, accounting fees, parking and other expenses that one may incur in the process of fulfilling their duties as an executor. Since out-of-pocket expenses tend to have a set price, they are often easier to pay. Executor compensation, on the other hand, is harder to quantify. The Courts will consider a variety of factors in their determination of the executor’s compensation.
Factors That Determine Executor Compensation
Schedule 1, Part 1 of the Surrogate Rules of Alberta outlines the following factors that Courts may consider when determining the appropriate compensation for executors:
- (a) the gross value of the estate;
- (b) the amount of revenue receipts and disbursements;
- (c) the complexity of the work involved and whether any difficult or unusual questions were raised;
- (d) the amount of skill, labour, responsibility, technological support and specialized knowledge required;
- (e) the time expended;
- (f) the number and complexity of tasks delegated to others;
- (g) the number of personal representatives appointed in the will, if any.
How A Will Impacts Executor Compensation
If the will fails to mention compensation, the Executor has the option to propose their own compensation schedule and get approval either from the residual beneficiaries or the Alberta Courts. The executor or the probate lawyer can draft the compensation schedule with a release form. If the beneficiaries sign the release form, they will approve the compensation amount. However, if the residual beneficiaries refuse to compensate the executor, then the executor has the option to submit an application with the Alberta Courts and get approval on compensation from them.
Alberta Executor Fees Guidelines
In Alberta, the Surrogate Court offered help for personal representatives to determine what amount is a reasonable executor fee. Remember, these guidelines are just that. The guidelines are not the law, however, a court will often reference them. Alberta Executor fee Guidelines have four parts:
Compensation Based On Estate Capital
Firstly, the guidelines offer suggested compensation based on a percentage of the capital in an estate. For example, the percentages break down as follows:
- 3% – 5% of the first $250,000 of estate capital;
- 2% – 4% of the next $250,000 of estate capital; and
- 5% – 3% of all remaining estate capital.
Executor Compensation Based On Revenue
Secondly, in some estates, an executor or personal representative must manage revenue generating assets. Management of assets vary greatly depending on the nature of the assets. Therefore, compensation for maintaining and managing the revenue varies as well. The guidelines suggest executor fees of 4% – 6% of the revenue receipted for the benefit of the estate.
Estate Care And Management
Thirdly, the guidelines suggest executor compensation for assets that the executor cares for and manages for the estate. For example, these executor fees break down as follows:
- 3% – 0.6% of the first $250,000 of estate capital;
- 2% – 0.5% of the next $250,000 of estate capital; and
- 1% – 0.4% of all remaining estate capital.
Executor Compensation For Other Work
Lastly, additional executor compensation is available for work outside the norm of the duties that fall on a personal representative. For example, these services provided for an estate include, winding up a company, preparing tax returns for the estate or assets of the estate, performing a management roll in a business owned by the estate, etc.
Getting The Help That You Need When Managing An Estate
If you are unsure how to incorporate executor fees into your will, or if you are an executor and want to ensure that your costs are covered, the Alberta wills lawyers or probate lawyers, respectively, at Kahane Law Office can help you understand how the process works and assist you as you calculate an appropriate fee. A skilled and qualified attorney makes your job easier, and less stressful. In addition, they ensure that you receive appropriate compensation for your efforts. They work with you and often for you in terms of managing an estate.
The Calgary probate lawyers and estate lawyers at Kahane Law Office can help you when a family member or loved one has passed away and you are executor for them. You can reach us toll-free at 1-877-225-8817, 403-225-8810 locally or email us directly here today to contact us.