An executor’s right to commission
Where a family member is acting as executor, commission is seldom claimed. In circumstances where the estate is large and the duties of the executor are likely to be onerous, clients sometimes consider providing for a legacy in lieu of commission. Some wills are drafted with details of the commission to be allowed to the executors. If such provisions were being considered, careful attention to the drafting of them would be necessary. If the legacy is not considered adequate by the appointed executor, he or she may renounce the executorship or renounce the benefit and apply for commission as appropriate.
Section 68, Succession Act provides for the court to authorise the payment of remuneration or commission to a personal representative for his or her services as personal representative.
The award of commission is in the discretion of the court. Only in exceptional circumstances, such as where the personal representative has committed a breach of trust, is an application likely to be refused. Australian and New Zealand courts appear on the whole to have been reluctant to grant commission where the personal representative’s behaviour has been irregular.
Agreement by beneficiaries to pay commission
In lieu of an application to the court for the award of commission, the amount may be settled by private agreement between the personal representative/trustee and the interested beneficiaries and in practice this is the usual basis upon which commission is paid. Commission payable to a personal representative in respect of the administration of a deceased’s estate is deemed to be a testamentary expense and accordingly the interested beneficiaries are those entitled to the residue of that part of the estate from which the testamentary expenses are payable. Under most wills the interested beneficiaries will be the residuary beneficiaries.
Payment of commission pursuant to a private agreement is preferred because of:
- the saving by the interested beneficiaries of the substantial costs involved in an application to the court for commission; and
- the expectation by the court that the personal representative should endeavour to adopt the most economical procedure to finalise the estate.
The circumstance of the estate may however prevent settlement of the commission by private agreement as, for example, where minors or persons not yet born are interested beneficiaries.
Quantum of commission likely to be awarded
For a private executor, there is no statutory scale provided as the basis upon which commission is payable. Each case must be dealt with on its merits. It will be noted that the scale reflects the principle that easy work will be allowed less commission than difficult work19 ie. there is no ‘flat’ rate regardless of the extent or difficulty of the work.
The extent to which the above scale can be used as a current guide is difficult to state. Considering estates generally, the practice has been to award commission on corpus within the ranges of 1.50%-3% and on income in the range of 3%-5%.
The Public Trustee
Pursuant to s 17, Public Trustee Act 1978, the public trustee charges a fee for the administration of a deceased estate and currently bases that fee on an hourly rate disclosed on its website.
Apportionment of commission
When appropriate, the court will apportion the commission awarded in respect of periods of time e.g. where an executor dies in the course of the administration, the award of commission which is made is appropriate to the period during which the deceased executor was involved in the administration. An apportionment of commission amongst the personal representatives/trustees is not normally made as commission is said to be awarded as a total sum to the executors or trustees as a body.