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Reimbursement of expenses
An executor is entitled to be reimbursed by the estate for all appropriate expenses incurred.
Remuneration for services
Executors are also entitled to remuneration for the administration of an estate even if there is no provision in the will specifying payment.
A will may provide for a specific amount or a specified gift to be received by an executor in consideration of their services. It may state a rate of payment in terms of a percentage of the total assets and/or income of the estate.
Otherwise, the executor may seek “commission”.
The extent of commission depends on the nature of tasks performed and responsibility taken for maintenance or care of assets. The executor’s burden for which consideration is payable is often referred to as “pains and troubles”. The extent of commission thus depends on the extent of “pains and troubles” to which an executor is put.
Taking stock of assets, arranging memorials, negotiations with beneficiaries, settling debts, preparation of properties for sale, the conduct of a business pending sale, deciding sale prices and performing sales, investment of funds and if required, managing life tenancies can all be onerous duties.
The executor accepts responsibility as a trustee or fiduciary and can be personally sued for mistakes.
Commission cannot however be levied without an order of the court or unanimous agreement of beneficiaries.
As a rule of thumb, the maximum commission allowed by a court will be 6% on income derived and 5% on capital realised.
The maximums are generally reserved for very complicated, long duration or time-consuming estates.
Executors should keep records of work done in their executorial role to justify commission.
Agreement with beneficiaries
Generally agreement with beneficiaries can be reached if the executor provides particulars of the effort expended and risk/responsibility taken in connection with the performance of each task which was required to be performed in relation to the estate.
Simply request each beneficiary to sign a release as to the appropriate performance of all responsibilities; an acquittal of all responsibility; and authorisation for a particular sum for commission.
The payment from the estate can then be made before the final distribution to each executor.
Application to the court
If agreement can’t be reached, an application to the court can be made. The estate generally bears the expense of the executors legal costs of the application.