We examine whether non-professional executors – whose role can often be challenging and time-consuming – are allowed to reimburse themselves and/or make a charge for their work in administering an estate.
Executorship can be onerous. Executors are legally responsible for administering the deceased’s estate. This involves collecting in their assets, paying any liabilities, including any inheritance tax, and distributing the estate to the beneficiaries. Moreover, they must always act in the estate’s best interests whilst remaining neutral. This can involve exposing themselves to risks if they act incorrectly and means they need to employ business-like skills.
I use the term ‘executor’ throughout, although note that here this encompasses estate ‘administrators’ (e.g. the people who are appointed to act where there was no Will), or the catch-all ‘personal representatives’.
Power and responsibility
The basic starting position is that, like trustees, executors must act for free. They can be reimbursed for reasonable expenses such as, mileage incurred when carrying out their duties, but they cannot charge for their time.
There are some exceptions to this.
Beneficiaries can authorise executor charging, but they must be unanimous in that decision and they must all be adults with full mental capacity. Executors commonly appoint lawyers to deal with the estate on their behalf, which brings with it professional advisor fees, but what about the lay executor charging in their own right?
An obvious exception is if the Will says the executor can charge. The majority of charging clauses allow professional executors (such as lawyers and accountants) to charge for their services, but there have been instances where provision is made for non-professional executors to charge a fee. However, care must be taken in the interpretation of charging clauses, as it is not always clear cut. Express charging clauses in Wills have said, for instance, that executors who are “engaged in any business or profession” can be paid – but what is the correct interpretation of this? For example, can a person who acts as executor and is in a completely unrelated business charge their usual hourly rate for time spent administering an estate?
This issue came before the Court of Appeal in the case of Da Silva v Heselton . Here it was decided that executors engaged in a business/profession can charge, as long as their usual work done relates to the estate administration. For instance, an executor’s own house clearance and cleaning business charging for time in preparing an estate property for marketing.
The executor in this case was a professional property manager and had billed the estate £300 per month for her time, adding up to £43,350 throughout the entire administration period. The court dismissed the executor’s appeal to be allowed this charge.
The court made it clear that there must be a link between the scope of the executor’s profession and the services provided in progressing the estate administration. The purpose of the charging clause was not, the court said, to make up for fees the executor might have made elsewhere in their profession, but to recompense for work done to progress the estate administration.
The High Court considered charges by professional executors in the case of Shepherd & Co Solicitors v Brealey. In this case, a solicitor acting as executor lost his appeal to claim professional costs of around £153,000 charged for his work administering an estate.
The crux of this case was the absence of a charging clause in the deceased person’s Will. Without that, and crucially without the beneficiaries’ consent, he was in fact not allowed a fee at all. The court ruled that the absence of a charging clause showed the deceased’s expectation that the executor would not charge for their services. Remember, unless exceptions apply, an executor’s role is gratuitous (for free), time-intensive though it often is, and the executor is not obliged to take up the role if they decide they would prefer not to.
The appeal judge confirmed that, without the charging clause, the only other routes that entitlement to fees could be claimed through were:
- a) section 29 Trustee Act 2000 which can authorise payment if prior written consents are given; or
- b) under the ‘Boardman jurisdiction’ (from a 1996 case, Boardman v Phipps, that says executors must account for profits, but can in some circumstances be entitled to an allowance for work and skill that has been of benefit).
As neither of these routes applied in this case, the judge ruled that the solicitor could not claim for his professional costs. The judge ordered that a separate review be made into how much of that £153,000 represented the executor’s own fees claimed and how much were the professional fees of his firm acting in the matter.
Wills should ideally always contain a charging clause if the intention is that executors can be remunerated for their time. Professionally drafted Wills almost invariably contain provision for executors’ fees where professionals are appointed. Whilst the court ordered a separate review into the executor’s costs in the Shepherd case, the costs incurred by litigation are clearly not desirable whatever the eventual outcome.
Whether you are appointed as an executor, making or updating your Will, or otherwise require assistance in this area, one of our experts in the Succession & Tax or the Contentious Trust teams will be pleased to advise.
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