Appointing one child as executor over another can be uncomfortable enough. Add a significant executor fee and you鈥檙e asking for a palace revolt!
In last week鈥檚 column I shared law about executor compensation which assesses compensation in large part on the value of your estate.
I referred to a recent case as an illustration, where executor fees totalling over $75,000.00 were assessed for an uncomplicated $1.8 million estate. The judge had described the care and responsibility involved by the executor as minimal.
I gave another illustration where maximum (5%) executor fees were assessed, but that amounted to only $12,125.00 because the total value of the estate was $242,503.71.
Our home is often our most significant estate asset.
It takes the same executor work to deal with a $1.5 million home as it does with a $150,000.00 modular.
But the executor fees are dramatically different.
The executor chosen to handle the larger estate will be looked at by their siblings with envy. Siblings of the executor handling the low value estate will be feeling relief.
One solution might be to name all your children as executors. That way, each of them is entitled to share in an executor fee.
Good idea in theory, but maybe not so much in practice.
You will be forcing your children to work together, taking on tasks they are likely unfamiliar with and making decisions they might well disagree about, all the while second guessing who is shouldering the larger burden.
I was always the splitter when I was growing up. You can get close to equal, ripping a donut in half to share with your brother, but never exact. He always ended up with that little bit more and me with that little bit of resentment!
Expecting your children to split up unfamiliar executor tasks to be equal and fair, particularly if one of your children is the organized doer and the other is a little more towards the disorganized procrastinator end of the spectrum, might be asking for trouble.
I don鈥檛 subscribe to the 鈥渢hey鈥檒l just sort it out鈥� parenting approach. Sure, they鈥檒l sort it out. But with personality and power dynamics, not necessarily in the fair way you hope for!
If co-executors and beneficiaries don鈥檛 agree on the amount of executor remuneration or how it should be shared between the executors, that disagreement is resolved by the court.
What an ugly court application that would be.
There is another solution.
You can set the amount of executor compensation in your will.
The law says that a will-maker鈥檚 determination of executor compensation is final.
There is a very interesting legal decision out of Ontario where this issue came to a head: Re Robertson, 1949 CanLII 89 (ON SC).
In that case, executor compensation was set out in the will for each of five named executors to be $100.00. It was an estate that required years of administration and had a value of millions of dollars.
Ontario has similar legislation as British Columbia. It has a section in its Trustee Act that allows for 鈥渇air and reasonable鈥� executor compensation.
It also has a provision that eliminates the application of that section if the will sets the amount of compensation.
The Ontario Court decided that those executors were stuck with the $100.00.
British Columbia has an almost identical provision.
It works both ways. An executor might be stuck with an unfairly low amount of compensation. But on the other hand, could receive an unfairly high amount.
There鈥檚 nothing stopping you from specifying executor compensation at, say, $500,000.00. That would be as binding as the will that specified $100.00
If you think that, say, $25,000.00 is fair compensation for your executor regardless of whether your estate is $250,000.00 or $2.5 Million, you can specifically set out that amount of executor compensation in your will.
You could include a discussion about executor remuneration with your children at the same time you discuss who will be your executor.
Consensus can hopefully be achieved about who will shoulder the burden of being your executor and how much compensation will be paid out of the estate for that work.
If the amount of compensation feels fair to everyone and the role of executor is viewed as the work that it is rather than an honour, bad feelings that would otherwise arise after your death will be avoided.
Paul Hergott
Lawyer Paul Hergott began writing as a columnist in January 2007. Achieving Justice, based on Paul鈥檚 personal injury practice at the time, focused on injury claims and road safety. It was published weekly for 13 陆 years until July 2020, when his busy legal practice no longer left time for writing.
Paul was able to pick up writing again in January 2024, After transitioning his practice to estate administration and management.
Paul鈥檚 intention is to write primarily about end of life and estate related matters, but he is very easily distracted by other topics.
You are encouraged to contact Paul directly at paul@hlaw.ca with legal questions and issues you would like him to write about.
