Executor compensation disputes
Estate disputes often boil down to a dispute about how much compensation the estate trustee is entitled to.
If trustee compensation cannot be agreed to, then it should be fixed as part of a passing of accounts.
Estate trustees are entitled to reasonable compensation
Being an estate trustee is a job. It usually requires considerable effort, persistence, risk, and judgement. Estate trustees should be compensated fairly and should not be expected to work for free.
On the other hand, administration of a simple estate does not warrant payment of excessive fees. For instance, just because real estate values have escalated does not mean that all estate trustees are entitled to windfall compensation. Similarly, if the executor has not done a great job, has failed to maximize the value of the estate or has ‘caused the beneficiaries loss’ by slow administration, it may be appropriate to reduce the estate trustee’s compensation to increase the value of the estate for the beneficiaries.
What estate trustees should do
1. Keep detailed records, including receipts, and ideally logs of work done (with time and expenses if possible).
2. Provide beneficiaries with a proper accounting of the estate including all assets, liabilities, income and expenses and provide this accounting to the beneficiaries. Be prepared to provide supporting documentation (receipts etc.) if requested. Learn more about estate accounts here.
3. Claim reasonable compensation and provide a basis for the compensation claimed. Learn more about reasonable compensation here.
4. In the absence of timely consent from beneficiaries to their claimed compensation, pass their accounts in Court and have a Court review and fix the compensation payable to the estate trustee.
What beneficiaries should do
1. Allow the estate trustee reasonable time, freedom and flexibility to administer the estate.
2. Avoid causing the estate trustee or their legal counsel unnecessary work or stress. Do not educate yourself about estates by asking the trustee’s lawyer questions.
3. Assert the beneficiary’s right to full accounting in a timely fashion from the estate trustee.
4. Consent to reasonable compensation and object to unreasonable compensation claims.
5. If the estate trustee demands unreasonable compensation and refuses to pass their accounts, get a Court order compelling the estate trustee to pass their accounts.
6. Contest the accounts, in a reasonable cost-effective way by focusing on material issues and obvious excesses and ignoring trivial matters.