The question we are often asked by executors is – “Will I be paid for my time spent as executor? In this information sheet we explain the Executor’s Commission – what it is, and how it works.
There is no doubt as to the complex issues that arise in administering an estate, particularly in instances where you are nominated as an executor but do not have any entitlement as a beneficiary under the deceased’s Will. In this case, an entitlement known as the ‘Executor’s Commission’ has been implemented in the Succession Act 2006 (NSW) (‘the Act’) to pay for the executor’s time and effort in undertaking their executorial duties.
What is the Executor’s Commission?
Section 86 (1) of the Act, allows for a commission payable to the executor for their time and effort (pains and troubles) spent in administering the estate, as is just and reasonable. The court will normally allow commission based on a percentage of income collections, capital realisations and assets transferred in species, and not as a lump sum payment.
If you are appointed as a joint executor, usually a joint application is made to the court for commission, however an application can be made by one or several executors if necessary.
Is the Executor’s Commission available to all Executors?
Generally, the commission is available to all executors, with the exception of the executors who participate in conduct that is dishonest, fraudulent or acts that deliberately disregard the duties of an executor. In this case, the court may disentitle such commission.
If you are both the beneficiary under the Will and the Executor of the Estate, the court is likely to consider your entitlement as a beneficiary satisfactory for payment of commission. However, there are instances, where the entitlement under the estate as a beneficiary is insufficient for the executorial duties required and the nett value of the estate. A claim for commission can then be made to the court for their consideration.
How much Executor’s commission am I entitled to?
The Court provides the following guideline as to how they would determine the commission:
– Between 0.25% to 1.25% on assets transferred in specie;
– Between 0.5% to 2.5% on capital realisations; and
– Between 1% to 5% on income collections.
By way of example, where an estate has a nett value of one million dollars ($1,000,000.00), the commission will be approximately ten thousand dollars ($10,000.00)
How do I make a claim for the Executor’s commission?
The process for applying for commission is a timely process and can often delay the final distribution of the estate. Therefore, it is generally in the best interest of the executor and the beneficiaries of the estate if the commission can be resolved without needing to apply through the court. A unanimous agreement between all residual beneficiaries of the estate as to the agreed amount of commission payable to the executor is required.
In the instance where one or more beneficiaries disagree to the sought commission, then an application can be made to the Supreme Court of New South Wales. Applications must be filed with accounts of the Estate, setting out the assets and liabilities, and indicating how you have managed the estate in accordance with the Will.
Do I need professional help?
It is always wise to obtain legal advice in relation to a deceased’s estate. Our senior Wills and Estates Solicitor Conrad Curry will help you navigate the complex application and requirements necessary to administer the estate. If you are an executor of an estate and want to know more about your entitlement to executor’s commission, contact our office on (02) 4050 0330 today or book an appointment online.
