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Monday, November 8, 2010

Court declined to approve executor's accounting

On this blog we talk quite a bit about what an executor should and shouldn't do when acting on behalf of an estate. This story is about what not to do. It involves an executor who included a charge for $96,000 in accounting fees. The judge refused to approve the accounts. The judge in this case is giving the executor a chance to give some evidence backing up that fee, which the judge thought was way out of line. It remains to be seen what the judge will decide to do in the end. Click here to read this story about the case, called Re Hall Estate, from the blog of BC lawyer Stan Rule.

5 comments:

  1. I am in process of winding up an estate. My near relative died intestate. The family decided that I should be appointed the Administrator of the estate. I completed all of the filings to necessary obtain the Letters of Administration in BC Supreme Court. BC law permits a fee of 1%-4% for the Administrator. It was a simple estate, gather in all the assets, pay bills, file income taxes, obtain CRA Clearance Certificate. I did everything needed to wind up except prepare income taxes which was done by professional accountant.

    I want 1% of gross estate recovered for my work as Administrator and 1% for the legal work for the grant of probate which involved obtaining consent from two creditors plus the three heirs.

    I think this is reasonable. I have not behaved badly and everyone has received what they are entitled to. I would rather not have to apply to pass the accounts.

    On a percentage basis, how much does professional counsel charge to get Letters of Administration. Is it typically 1.5% of the gross amount recovered or perhaps more or less? Gross value recovered was $660,000

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  2. Hi,

    It's not always necessary to have accounts passed by the court. In fact, the majority of estates that I've worked on have not needed court approval because the residuary beneficiaries have agreed to the executor's compensation (fees plus out-of-pocket expenses).

    As you wind up the estate, you should submit a full accounting of the estate to the residuary beneficiaries and ask them to sign a release that indicates they approve of your actions as executor. If you obtain releases from them, you can all skip the delay and expense of having the accounts passed by the court.

    A related question: perhaps this is just an issue with how you worded your question, but how are you going to be paid if all of the beneficiaries have already received the estate?

    You are pretty close with your estimate of 1.5% There will always be variations between firms, as well as between cities and provinces. In Alberta, our suggested guidelines allow lawyers to take 1% plus a set fee of $2,250, but I've heard many lawyers say that they charge more because the guidelines haven't changed in over 15 years.

    Lynne

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  3. "Everyone has received what they are entitled to."

    To clarify, all of the heirs have received a generous interim distribution and the remaining assets to distribute are sitting in the estate bank account fully accounted for. I have not yet taken my fee and can't do so until everything else is complete and of course, my fee is agreed upon in writing by the heirs or assigned at a hearing to pass the accounts. I am also a beneficiary of the estate with 1/3 to me, 1/3 to sister and 1/3 to other sister.

    Under BC Law (Sec (99) Trustee Act RSBC 1996) the trustee must apply to pass the accounts within 2 years of appointment. This can be avoided if all of the beneficiaries agree in writing with the trustees accounting.

    In Alberta, is the 1% calculated on the gross value of estate recovered or 1% of the total assets listed in Affidavit of Administrator or like document?

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  4. My Mum recently passed away. We asked My sister-in law about the will and when she is going to file it. Her answer was that her and my brother have spent all of my mum's money, over $250,000 and there is nothing to distribute. My mums intentions in her will were that her assets were to be distributed evenly to her 4 children. My mum told me numerous times about the will. They are telling me that my mum who had allzheimers gave them permission to use it all. They just lost their house to foreclosure and they are heading to bankruptcy court. We will never see any money, but how can they be brought to justice.

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    Replies
    1. Thats really unfortunate. Im sorry to hear that

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