Traditionally the office of an executor, administrator or trustee of a deceased estate is a gratuitous one unless a contrary arrangement is made in the Will of the deceased; however in Australia the Court is able to grant an allowance of executor’s commission.
Sarah Ford died in April 2011. Probate on her Will was granted to her executor and nephew Geoffrey in May 2011. Her estate was valued at $641,143.33, and consisted of:
(a) Sarah’s House ($350,000);
(b) building society accounts ( $289,943.33); and
(c) furniture and personal effects ($1,200).
The will provided that after the payment of all the deceased’s debts, funeral and testamentary expenses Geoffrey was to:
(a) to sell the Sarah’s home and contents, and to divide the net proceeds between four named beneficiaries (two siblings, a sister-in-law and a brother-in-law); and
(b) to divide the money in Sarah’s building society accounts between 15 named nephews and nieces, one of whom is Geoffrey.
In May Sarah’s nephew Ian offered to buy her house, Geoffrey consulted with the beneficiaries and agreed to this offer. Settlement of the sale of the property was completed by the end of July 2011. The sale was made with little delay and without fuss.
As Sarah’s house was the major asset of the estate it’s sale to a member of family without the need to engage a real estate agent to conduct a marketing campaign or conveyancing delays, administration of the estate should have been simple.
However delays occurred because Geoffrey had withheld distribution of the estate as a means of forcing the beneficiaries to agree to him taking a commission of $10,000.
In Australia an executor must apply to the Court for commission to be paid in their favour. The reason that they need to apply to the Court is that the office of executor is that of a fiduciary.
“someone who has undertaken to act for and on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence.”
An executor is not entitled, to profit, or advantage from their office as a fiduciary if not duly authorized to do so.
Geoffrey believed that by doing most of the administration work himself he saved the estate a considerable sum in legal fees. He also argued that by not agreeing to pay him the commission in the first place the estate was worse off – therefore the beneficiaries should personally bear some or all of his costs in the proceedings.
In earlier court proceedings Geoffrey was ordered to make an interim distribution of estate property, and to pay the beneficiaries costs. In a subsequent hearing the Court determined that Geoffrey be paid a commission of $7,853.22, with $3,250 costs to be paid out of the estate.
Geoffrey applied for this determination to be reviewed as he believed he should have been allowed an additional sum of $1,366.75.
The Court agreed and increased the commission to $12,469.97 however it decided that Geoffrey made this application in his own interests, and not as an incident of due administration of the estate, therefore he had to pay his own costs.