Executor's fees, lawyer's fees or both?

Today I'd like to answer another excellent question from a reader that I think will be of interest to many of you. The question is:

"Can a lawyer who writes up a will also be an executor of that will? Also, can he claim fees as both a lawyer and as the executor? And who decides how much the executor receives? If there are two executors, do they both get the same amount? Are there any limits to executor fees? Thanks."

Yes, a lawyer who writes up a will can be the executor, though he should not witness the will if he is named as executor.

At the time the will is drawn, the lawyer will claim his usual fee for writing the will. Later, when the testator passes away and the lawyer acts as executor, he will claim an executor's fee, which would be the same as a non-lawyer would claim. The lawyer would only be able to claim a lawyer's fee on top of that if he did legal work for the estate that would have needed a lawyer in any event. For example, if a lawyer would have been hired to file for probate anyway, then the lawyer/executor (or his firm) can do that work and charge the usual lawyer's rate for that work.

When a lawyer or accountant is named as an executor, it's a good idea to include a clause in the will that specifically addresses the fact that they can be paid professional rates for professional work and not for their entire executorship. The lawyer and the accountant should already know what they can charge, but the other people involved in the will might not know.

If the will states how much an executor is to be paid, then that is how much the executor will receive. Occasionally the amount is set out in dollars, but usually it's expressed as a percentage of the estate. Unfortunately, plenty of wills don't address executor's fees.

If the will doesn't address executor's fees, the executor must fall back on the statute law and case law for guidance. Executor fees vary from province to province, though there are usually only general guidelines to follow. Estates vary widely, depending on the kind of assets, the value of assets, the number and location of beneficiaries, whether there are claims or difficulties, the expertise of the executor and a hundred other things. As a general rule, an executor is able to claim between 1% and 5% of an estate, with only the more complicated estates reaching the top of that range.

The amount the executor receives - within the range mentioned - is normally determined by the residuary beneficiaries of the estate. During the final accounting for the estate, when the executor is ready to cut the cheques to the beneficiaries, the executor should put forth in writing a proposal of the fees he or she wants to claim. The beneficiaries are asked to approve the estate accounting including the proposed executor's fee.

If the residuary beneficiaries think the fee is too high (and quite often that's the case) then the executor and the beneficiaries may be able to negotiate a sum that's satisfactory to everyone.

If they can't agree, the executor's fee must be set by the court. This involves a hearing in courtroom. The estate can't be distributed to the beneficiaries until that has happened because the fee may be set higher or lower than the executor had requested.

If there is more than one executor named, the fee is expected to be split among them. It's not always an equal split. Sometimes one executor has taken on more of the work because of geography, time or skill. The executors should work out between themselves how they are going to split the fee, and if they simply can't agree, it has to be decided by a judge.