The Trustee Act requires that an executor or administrator of an estate (also known as the “personal representative” of an estate) must provide an accounting of the estate to the beneficiaries (and any unsatisfied creditors) within two years from the date the Grant of Probate or Administration (the “Grant”) was issued.
Before distributing estate assets, it is generally advisable for a personal representative to provide a full accounting of the estate’s financial activities to the beneficiaries, and to obtain a consent and release from each of them. Such releases generally specify that the beneficiaries release and discharge the personal representative from all claims with respect to the estate, its assets, and the personal representative’s management and disposition of the estate for the period covered by the accounts.
In the accounting, a personal representative can set out a claim for reimbursement of reasonable expenses incurred in the course of the personal representative’s duties – if the personal representative wishes to charge a fee it can also be included. Compensation of a personal representative is discussed further in the next section.
Note that if there is a minor beneficiary, obtaining releases and approvals of the personal representative’s administration and compensation requires a formal passing of accounts before the court. A personal representative may also apply for a court order discharging the personal representative from their role.
If there is a mentally incapable beneficiary, a court-appointed committee or an individual named as the incapacitated beneficiary’s attorney under an enduring power of attorney may accept distributions on the beneficiary’s behalf and provide a release. If there is no committee or enduring power of attorney in place, it may be necessary to pay the incapacitated beneficiary’s interest to the Public Guardian and Trustee or the court.
Compensation of Personal Representative
A personal representative may charge a percentage of the gross value of the estate by way of a personal representative’s fee. The fee is meant to reflect the time spent on estate business and an acceptable percentage usually ranges between 1.5% and 3% for uncomplicated estates. The amount must be reasonable in relation to the quantity and nature of the personal representative’s work. In addition, a personal representative may claim an annual care and management fee not exceeding 0.4% of the average market value of the assets. These fees are taxable and must be claimed on the personal representative’s tax return.
A personal representative is also generally entitled to reimbursement of out-of-pocket expenses reasonably incurred on estate business. Note however, that if a personal representative hires a professional such as a lawyer or accountant to deal with administrative work other than legal or accounting issues, the fees for such work may be borne by the personal representative and not the estate. If a beneficiary takes issue with the estate bearing the cost of third-party professional fees for work that could have been done by the personal representative personally, the personal representative may not be reimbursed for such fees from the estate.
Also note that, if a personal representative becomes a director of a corporation because they have accepted the role of personal representative of the estate, they may not be entitled to the fee that would otherwise be due to a director of that corporation. This fee may instead be payable to the estate.
A personal representative should keep detailed records of all time spent, activities undertaken, and all expenses incurred in relation to all matters regarding the administration of the estate.
Any fee or reimbursement taken by a personal representative must be approved in advance by the beneficiaries in writing, or if it is not possible obtain their approval, approved in advance by the Court. Any fee claimed is usually claimed at the conclusion of the estate.
This post concludes our recent series of posts on estate administration. If you have any questions about anything discussed in this or any of our previous posts, please get in touch.
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