The role of an Executor is often challenging and stressful. It typically involves a significant amount of work and comes with administration, legal duties, responsibilities and potential exposure to liability.
There are plenty of reasons an executor can experience challenges when managing an estate. For example, if the deceased had a blended family, they could challenge the Will, or their assets could be primarily shares and investments.
As a result, it's common to include a clause for an Executor commission in the Will. This guide covers entitlement to commission and how much is an executors commission.
Who is entitled to an Executor commission?
When you're writing your Will, you choose an Executor to help administer your estate when you pass away. You're not required to pay the Executor you choose for fulfilling the role. However, it's common to pay them an Executor commission for their services. This commission compensates for time, effort and trouble to administer an estate.
The best way to ensure that the Executor receives a commission is to include a valid clause in your Will. Otherwise, the Executor can arrange a commission with the beneficiaries or submit an order to the court for payment.
Applying for Executor commission
Applying for a commission from the court is an expensive and time-consuming process that often delays administering the estate. Executors apply near the end of the administration and need to submit an affidavit covering the entire administration process.
When considering an application for commission, the court will look closely at how the Executor conducted themselves when fulfilling the role. Some factors the court considers include:
- The size of the estate
- The complexity of the Will
- The Executors degree of timeliness, efficiency and diligence when completing tasks
- The amount of work and time to distribute the estate
- The amount of responsibility involved
- Problems or hurdles the Executor experienced during the process
- The number of executors or administrators sharing the role
- Communication with the beneficiaries
Amount of Commission
There is no specific amount of commission an Executor is entitled to. However, the court will typically award a commission in a lump sum or percentage of the estate. Here is an estimate of the ranges:
- 0.25% to 1.25% of the value of transferred assets
- 0.5% to 2.5% on capital gains
- 1% to 5% on income collections
Typically, a commission between 3-5% is for larger, more complex estates. A rule of thumb is that the bigger the estate, the more stress and work and therefore more involvement from the Executor.
Executor commission is a decision that you make when writing your Will. The easiest way to ensure your Executor receives a commission for their services is by including a valid clause in the Will. The amount of the commission when up to the courts considers several factors.
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