When a person dies, their surviving loved ones are left to sort out what is to be done with all of the deceased’s earthly possessions. If the deceased person had created a final will and testament, then that document provides detailed information with respect to the wishes of the deceased regarding what possessions they wanted to bequeath to specific persons. A will also typically names someone as the executor or executrix of the estate. This is the person that the deceased trusted to carry out their wishes and administer the estate in accordance with the terms of the final will and testament.

The amount of work involved in administering an estate varies widely, depending upon the complexities and intricacies of the estate itself. Regardless of how complicated (or uncomplicated) the administration of an estate becomes, the person administering the estate, the executor or executrix, is entitled to compensation for all of the time and effort they put into achieving the resolution of the estate. However, this raises the question of how much compensation an executor is entitled to receive and how the figure will be determined.

A Father Dies, Leaves Estate to His Children

The case of Almeida Estate (Re) 2023 BCSC 2135 involved the estate of Carlos Luis Batista Almeida (the “testator”), who died on April 8, 2021. In his will, the testator named his five children, Jeanine, Almerinda, Linda, Dalila and Carlos, as beneficiaries of his $242,503.71 estate. The testator’s estate included a bank account at a credit union, a vehicle, and various pieces of jewellery. At the time of his death, the testator had also held a joint bank account with one of his children, Jeanine, in which the proceeds of the sale of real property were held. That bank account, which did not form part of the estate because it was jointly held with Jeanine, held $701,000 at the time of the testator’s death. All of the children agreed from the outset that, even though the funds were held in a joint account, the testator had intended to include that bank account as part of his estate and to equally divide the proceeds of the property sale amongst all five of his children.

Further to that agreement and the testator’s final will and testament, Jeanine prepared informal accounts in June of 2022 that she, Carlos and Linda all approved; however, Almerinda and Dalila did not approve the accounts. At a hearing in January of 2023, a Master directed a reference to the registrar to pass the accounts for a certain period of time and to recommend a fair and reasonable allowance to be paid to Jeanine for her handling of the administration of the estate, to compensate her for “her care, pains, troubles and time expended in and about the administration.” This left it to the court to determine an appropriate amount to be paid to Jeanine as the executrix of the estate.

The Principles of Remuneration for Executor Services

The court noted at the outset that the legal principles with respect to executor remuneration in British Columbia are as set out in the precedent decision Bernhard v Wist, in accordance with which executor remuneration is governed by section 88 of the Trustee Act, which dictates that an executor is entitled to a maximum of 5% of the gross value of the estate, a maximum of 5% of the income earned by the estate during its administration, and an annual “care and management fee” of 0.4% of the average market value of the assets. However, not all three forms of compensation are granted to every executor. Rather, “the percentages provide a rough guide to assist in the appropriate computation of the executor’s remuneration,” with the ultimate assessment of appropriate compensation left to a court, which “must be satisfied that the compensation claimed ‘bears some reasonable relationship to the work and responsibility involved.’ Factors to be considered by the court in assessing the appropriate fee include:

“the magnitude of the estate, the care and responsibility involved, the time occupied in the administration, the skill and ability displayed and the success (or lack thereof) achieved in the administration.”

The court further noted that, in assessing the capital fee, “the gross aggregate value of the state is the realized value of the original assets of the estate” and that “if the estate suffers any losses as a result of an executor’s actions (or inaction), the executor is obliged to repay the estate, with interest.” An executor is also entitled to recover any monies paid by an executor to a lawyer for legal services associated with the administration of the estate, so long as such costs “have been reasonably and properly incurred and do not relate to work that the executor could have performed.”

Application of the Principles to the Case at Hand

In applying the above-described principles to the case, the court first noted that Jeanine had borrowed $100,000 from the testator in 2005, which was to be paid back monthly. When the loan was made, Dalila held power of attorney over the testator’s finances; however, power of attorney was later transferred to Jeanine. Repayment had been made during Dalila’s tenure as power of attorney and during Jeanine’s tenure in that position until 2018 when repayment efforts ceased. Jeanine testified that the testator had waived payment of any further interest from that point onward. Dalila disagreed with this interpretation of events and noted no proof of any such agreement to waive repayment. The court carefully weighed the evidence and determined that the testator had waived his right to pay any further interest on the loan to Jeanine. In deciding, the court was satisfied that the loan was informal, often arising between parent and child, and it also noted that only Dalila disputed the terms of the loan repayment calculation, with the other beneficiaries of the estate content to accept the terms as Jeanine stated them.

As to payment of an executrix fee, Jeanine sought to receive 5% of the value of the testator’s estate of $242,503.71, which amounted to $12,125. Jeanine contended that she was entitled to the full amount dictated by the Trustee Act because, in addition to administering the full estate, she was also administering the joint account she had held with her father, which all siblings agreed should properly form part of the estate. She further noted that Dalila had unnecessarily prolonged the proceedings, which meant that Jeanine should be entitled to the maximum compensation. Dalila argued that Jeanine should receive no more than $6,000, which equated to 2.5% of the estate.

The court concluded that the amount claimed by Jeanine was reasonable, as she had “performed her role as the executor capably and was required to respond to the continual requests for information from Dalila. Dalila’s incessant demands for information required Jeanine to spend more time than she otherwise needed to spend on administering this modest estate”. Given that Jeanine had behaved reasonably, appropriately and with the proper skill and ability, the court was satisfied that she was entitled to the full 5% fee of $12,125. The court further ordered that Jeanine was owed repayment for the $10,451.23 in legal fees she had incurred regarding her administration of the estate.

Vancouver Estate Litigation Lawyers Helping You with Your Estate Disputes

If you are involved in a dispute related to estate law, such as a disagreement about the terms of a will or trust or problems with an executor or power of attorney, then the estate lawyers at Meridian Law Group in Vancouver have the talent and experience required to guide you through the process of resolving your issue. From our offices in downtown Vancouver, the lawyers at Meridian Law Group are proud to serve all British Columbians dealing with the complicated, often fraught process of estate administration.

Contact Meridian Law Group online or by telephone at (604) 687-2277 to schedule your confidential consultation.