When someone dies, the person appointed to look after the Estate is a Personal Representative (“PR”).
Sometimes known as an Executor or where there is no Will the person appointed by the Court becomes the Administrator(s) of an Estate.
There can be a lot of work in looking after Estate matters, how do those persons getpaid (if they wish to receive compensation for their services) and be reimbursed for reasonable expenses that they incur:
1. If there is a Will sometimes the amount of compensation is fixed and specified in the Will;
2. Where the Will does not designate fees which is not unusual, this leaves the decision for fees up to the PR or the Administrator where no Will. The amount of compensation is usually based on:
a. the size and complexity of the Estate;
b. the amount of time expended that is reasonable and necessary;
c. whether or not there were joint PRs or Administrators and whether or not they had the assistance of an Estate Solicitor.
The General Rule in Canada stipulates that the fees must be “fair” and reasonable given the nature of the Estate.
In Alberta it is generally expected that the fees are to be allocated between those persons acting jointly and are calculated from a low of 1% to a high of 5% of the total net value of the Estate.
It should be noted that any PR/Executor or Administrator’s fees claimed can be disputed if not reasonable. These fees are fully taxable, similar to any other person earning an income at a job.
Reimbursement for a PR/Executor or Administrator’s expenses – A PR/Executor or Administrator may feel that they need to increase their fees because they had to pay a lot of out-of-pocket expenses while working on behalf of the Estate, i.e. photocopies, travel expenses, postage, legitimate loss of income, fortunately reimbursement from the
Estate to cover appropriate expenses is in addition to the compensation that they may receive for their fees, and paid to them from the Estate funds.