Can the lawyer who writes the will be an executor? How much can he charge?

The relationship between lawyers and executors is in theory pretty simple. The executor represents the estate and hires the lawyer to give legal advice and to prepare probate documents. However, in practice there is often confusion among clients, executors and beneficiaries as to the role the lawyer is supposed to play. The following question, which is really a group of separate but related questions, was sent to me some time ago by a reader. Because this reader's questions are those I hear so often in my work, I thought everyone would be interested in the answer.

The question:

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?

Certainly a lawyer who writes a will can be an executor of the will. There is no conflict there. However, if the lawyer who writes the will is also a beneficiary, that's a problem. Over the years I've met a handful of elderly people who are so grateful for help and attention that they have wanted to leave me something in their wills that I prepared for them. I've never accepted this, and I never will. Even if I knew for sure I hadn't influenced them in any way, the optics of the situation would be terrible.

At the time the lawyer drew up the will, he or she would have billed the client legal fees for that service. If the client later passes away and the lawyer is the executor, the lawyer can only charge executor's fees and not legal fees for the executor work.

Having said that, you must realize that an executor normally hires a lawyer to prepare probate documents, and pays the lawyer legal fees for that. If the executor is a lawyer, it is acceptable if he or she hires himself or herself (or their office, partners etc) to do that. The lawyer can charge legal fees for the probate work. This is not charging legal fees for the whole estate; I am referring to the steps involved in preparing the probate documents, filing them, going to court if necessary and obtaining the Grant of Probate.

The billing and recording of the lawyer's time on the estate might be complicated, as the lawyer is filling two roles. The executor's rate of pay and the lawyer's rate of pay are likely quite different, and will be billed and paid at different times.

As for who decides how much the executor receives, I wish more people addressed this in their wills. If there is an amount or a percentage stated in the will, that is how much the executor will get. The will rules. The majority of wills, though, don't say anything about executor's fees. When nothing is said in the will, the executor calculates how much he or she thinks is appropriate, based on time spent, complications (missing beneficiaries, overseas beneficiaries, missing assets, etc), size of the estate (bigger estate = more responsibility), number of beneficiaries, any losses the executor may have caused to the estate, and similar factors.

The executor asks for this amount by including it in his or her final accounting that is presented to the residuary beneficiaries at the end of the estate. If the beneficiaries agree, they sign off and the executor [ays himself or herself out of the estate.

If the beneficiaries don't agree, and believe me they frequently don't, they can attempt to negotiate the fee with the executor. If that is unsuccessful, the amount of executor fees must be set by a judge. Keep in mind that no beneficiaries can be paid their shares until this question is resolved, because nobody will know what the judge is going to decide.

There are limits on how much an executor can charge (where there is no guidance in the will). Each province and territory has a Trustee Act that says something about fees, but in many areas it only refers to a "fair and reasonable fee", which is certainly open to interpretation. The courts have dealt with this frequently and clearly, and the range of "fair and reasonable" is interpreted as between 1% and 5% of an estate.

The final question is whether two executors split a fee equally. Yes, they split the fee, but the split should only be equal if the amount of work done by them was approximately equal.