executor's fee

Say, if one appoints a friend or cousin to be an executor of a will, is there any obligation to pay this person a % of the estate? Some people say 2% (and put it in the will). Others say around 50% of the fee scale imposed by the public trustees. Also, should an executor receive a fee, if they are also a beneficiary in the will? Thanks for any view.

 

no obligation. But it is a heavy burden and risky for them.
They will be taxed on this as income though so if they are a beneficiary they might receive more gifts instead.

 

Many deceased estate avoid paying executors but allow the executor to relinquish their role to a paid professional adviser. Paying them may limit them exercising this choice perhaps ?

Weigh up love and affection v money as a motivator.

 

Thanks, Terry_w.

 

Thanks, Paul@PAS. There is a clause in the wills which allows the executor to relinquish their role and employ a lawyer - and the fees will come out of the estate.

 

Why would you want a friend or cousin to be an executor?
Unless the beneficiaries are underaged, the beneficiaries should be the executors. Unless I am missing something?

 

The majority of beneficiaries live overseas. One lives in Australia will be a joint executor / trustee.

 

Need a resident executor and trustee otherwise foreign resident for tax

 

Yes, both joint executors / trustees are Australian residents / citizens.

 

2 extra things to note

a) citizenship or immigration status doesn't matter, it is the tax residency that matters, and

b) tax residency can change. They may be residents now, but when you die they could be working overseas.

 

If the executor has already started and could not relinquish their role, how can they get paid (not specifically stipulated in the will)?

Their role as executor has been ongoing for more than a year now and they are not a beneficiary (unless beneficiary dies).

 

They would need to go to court to ask.

 

Of all the beneficiaries could agree - but only if none are under 18

 

If a fee is being paid why not consider a professional trustee service who will also take a fee but also be expert in their dealings and also arms length. This could include the public trustee or a ASIC licensed trustee company eg Perpetual and others.

The (state) public trustee used to write free wills if they are appointed but I believe this service is now subject to concessional fees for the drafting and advice.

 

Its generally too late if they have started administering the estate

 

Exactly, estate has already been administered and executor has not been able to get out of it and is become a real headache with the beneficiary and no compensation at all for 1 year of work and headache.

 

That’s why I would never do it except for some ver close relos