In a recent British Columbia decision, the court refused to award the executors of an estate any remuneration for their administration of the estate, finding that they had breached their fiduciary duty in the process.
Beneficiary Contests Executors’ Claims for Remuneration and Fees
The testator died in 2015. In his will, he left his entire estate to a friend living in Croatia.
Also stipulated in the will was the appointment of a husband and wife, who were friends of the testator, as joint executors of the estate. The will further specified that the executors could claim remuneration in the amount of 10% of the net value of the residue of the testator’s estate for acting as executors.
On June 3, 2019, a British Columbia court ordered a passing of accounts of the estate for which the executors submitted a statement of account. While most items were consented to, the sole beneficiary objected to certain fees claimed by the couple. Those fees included a notary bill, the costs of taking the testator’s ashes to Croatia, care-giving expenses and legal bills, all of which amounted to approximately $71,521. Additionally, the executors sought $110,035 as “remuneration and future legal costs”.
The sole beneficiary objected to the amounts claimed by the executors for several reasons, including that:
- The executors had breached their fiduciary duty by attempting to sell the testator’s house to their daughter for roughly 50% less than its fair market value;
- The costs of taking the testator’s ashes to Croatia was an unauthorized and expensive holiday for the two executors at the estate’s expense; and
- The alleged care-giving expenses were exaggerated and unproven.
In response, the executors blamed their lack of experience and bad advice for some of the alleged conduct. In addition, they argued that the will allowed them to claim remuneration as executors regardless of their conduct in administering the estate.
Court Refuses to Award Remuneration to Executors
The court began by explaining that an executor is generally entitled to remuneration to a maximum of 5% of the gross aggregate value of the estate, unless the will provides otherwise. While the court acknowledged that the testator’s will allowed the executors to make a claim for remuneration, the amount of that claim had not been fixed. As a result, the court applied criteria set out in previous case law for the determination of the appropriate amount of remuneration, which includes:
- The magnitude of the trust;
- The care and responsibility involved;
- The time occupied in administering the trust;
- The skill and ability displayed; and
- The success achieved in the final result.
After reviewing the evidence, the court concluded:
“In terms of the skill and ability displayed, and the success achieved, the executor’s efforts were a dismal failure. Their attempt to sell the deceased’s home at roughly half the market value, to their daughter, necessitated the beneficiary to commence a legal action and obtain a certificate of pending litigation in order to prevent the sale of the deceased’s home. […]
In my view this is a significant factor to be considered in relation to the fee claimed. The actions of the executors were an egregious breach of their fiduciary duty. If they had been successful, the beneficiary would have been swindled out of 50% of the estate’s value, and the executor’s daughter, their only child, would have thereby profited. This is not a situation where the executors acted honestly and reasonably, and ought to be excused for their breach of trust …. In my view, the actions of the executors are sufficiently egregious to disentitle them to any fee.”
In the result, the court therefore refused to award any amount of remuneration to the executors for their administration of the estate. However, the court did allow some of their fee claims, including partial fees for the trip to Croatia, care-giving expenses and legal fees.
Estate disputes are complicated: they involve high levels of emotion, usually by individuals who are grieving the loss of a family member or who are dealing with a loved one who is very ill. Such disputes can become quite lengthy and can take months or even years to resolve, prompting individuals to take sides, creating acrimonious divisions, and eating into the value of an estate.
At Campbells LLP, our team of compassionate and highly skilled Oakville estate litigation lawyers have been assisting clients with estate disputes and resulting litigation since 1999. We are proud of the strong, long-lasting relationships that we build with our clients and provide a steady sounding board and legal advice to guide them through what can be one of the most emotionally draining times in their lives. With our help, we can ensure that the legacy of our client’s loved ones is carried out exactly as they wished, that their health and well-being is taken care of, and that their estate is protected.
At Campbells LLP, our exceptional estate lawyers can represent you in all estate litigation matters. We know that many individuals work during the week and cannot meet during the day. One of our lawyers would be pleased to meet you in the evening or during the weekend, by appointment, if your schedule so requires. Contact us online or at (905) 828-2247. We look forward to speaking with you and going through this process by your side.