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An estate is responsible for paying all costs of administering the estate. The costs that must be paid will vary depending on the estate. If there is a dispute, the court can review all the costs charged to the estate to see if they have been calculated correctly.
Court costs for Letters Probate or Letters of Administration are based on a percentage of the value of the estate. This is 0.7% or $7 per $1,000 of the value of the estate. For example, if an estate has a value of $60,000, the court costs are $420 (60 x $7). Court costs apply only to the value of the assets which are owned solely by the testator and form part of the estate. There is also a separate application fee. These costs are paid to the court when applying for Letters Probate or Letters of Administration. Costs do not apply to the value of any assets that are jointly owned or that are not part of the estate.
There is a cost to transfer real property to a different owner. Real property must first be transferred to the name of the estate before being transferred to the beneficiaries. This means there will be two land transfer fees for each piece of real property in the estate. If real property is left to a child, there will also be a fee to obtain the Public Guardian and Trustee's consent to sell the land.
If the executor or administrator hires a lawyer to help with the estate, these costs must be paid by the estate. What a lawyer can charge for these services is set out in the Tariff of Costs to the Rules of Court. For services directly related to the administration of the estate, there is a set fee plus a certain percentage of the value of the estate. These are called core services.
Core services include things like:
Lawyers may agree to lesser fees in some situations, such as where the executor or the administrator performs the bulk of these duties.
Non-core services include things like:
Fees for non-core services may be based on a percentage of the value of the estate, a specified hourly rate, a fixed fee or some combination of the above. Before taking on estate matters, lawyers must provide a written explanation of their method for billing for non-core services.
By law, executors under a Will and court-appointed administrators have a right to be paid for their services. These fees vary according to the complexity of the estate and the amount of work a lawyer handles. The executor or administrator may waive fees, but they are usually paid for out-of-pocket expenses.
Sometimes Wills state a specific fee the executor will receive for their services. Other times Wills provide for a specific gift for the executor instead of a fee. If a Will outlines compensation, the executor will not be allowed any additional compensation if they agree to act unless ordered by the court.
If a Will does not deal with executor fees or there is no Will, the beneficiaries and the executor or administrator can agree on a fee. If no agreement can be reached, a court may be asked to determine fees.
Executors or administrators must receive fair and reasonable compensation for their services. Although there is no hard and fast rule to determine fair and reasonable compensation, over time our courts have established some factors that need to be considered such as:
Fair and reasonable compensation is sometimes based on a percentage of the money that passes through the estate. In very general terms, it is unusual for this percentage to be less than 1% or more than 5%. However, courts have said that a fixed percentage cannot just be applied to every case. It can only be used if it provides fair and reasonable compensation.
A percentage of the money that passes through the estate may not be a fair fee based on the actual time and effort used in managing the estate. For example, a small, complicated estate may place more demands on an executor's time and skill. Whereas a large, but simple, estate may take less time. For this reason, it is important to remember that a percentage-based formula is only one measure and is not to be the determining factor.
A fee can also be paid as a lump sum or a mixture of a percentage and a lump sum. Executors or administrators can also be paid a certain amount per year either on its own or along with a percentage-based fee. It may be necessary to treat parts of the estate differently. One part of the estate may involve more time and effort than another. However the fee is determined, the amount must ultimately be fair and reasonable.
Lawyers can also act as an executor or administrator for an estate. If they provide professional services to the estate, it may result in the fee being increased to arrive at a fair and reasonable fee.
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