Styling Nuptial Dreams with Helen G
If I had to list the topics about which I receive the most questions, issues related to executor's commission would rank among the top five. Only this week, a reader called to enquire about an article that was published more than eight years ago in which I stated that "an executor forfeits his commission if he is a beneficiary under the estate". In a later article, published on August 16, 2010, I elaborated on that point to say that, whether the gift to the executor under the will would disqualify him from claiming a commission depends on the circumstances of the case and the manner in which the gift may be interpreted.
Below, I will highlight an aspect of the relevant legislation and some of the cases that help to clarify the position.
There is literature in which the words, "an executor forfeits his commission if he is a beneficiary under the estate", appear as an absolute statement, but there are decided cases suggest that the answer as to the effect of the gift vis-·-vis the executor's commission ultimately depends on the exercise of the judge's discretion.
The basic principle is that an executor is entitled to receive a commission for work done in administering an estate. This is stated in The Trustees, Attorneys and Executors (Accounts and General) Act, which makes no distinction between executors who are beneficiaries and those who are not, and there is no indication in the act that there is a barrier to naming one person as both executor and beneficiary under a will.
However, in the 1885 case of Re Appleton, it was stated that the general presumption is that "a gift to an executor is annexed to the office" and was only to be given to him on condition that he acted as executor. Therefore, if the executor fails to take steps in his role as executor to administer the estate, his legacy or gift will be forfeited. (He would receive neither the gift nor a commission.) This general presumption may be rebutted by showing that the gift was made to the executor in another character; that is to say, the gift was purely intended to be a gift and not remuneration for services rendered to the estate.
Evidence, such as the fact that the executor is designated as a friend or a relative in the clause of the will which creates the gift, may be sufficient to rebut the presumption. Further, if the gift, is given to the executor in the residuary clause of the will, that is to say, that the gift is not specifically identified and defined, the presumption may be rebutted.
The question is whether, if the presumption referred to in Re Appleton is rebutted, the executor should receive both the gift and a commission. A New Zealand case, Re Proctor (1963), answered that question in the affirmative. The court ruled that the executor should receive a commission even where a gift was given to him for his trouble, unless the intention of the testator to deprive him of his commission is clear from the will. In another New Zealand case, the court suggested that this may not always be so, and ruled that an executor who receives a gift under the will has the burden of proving that the gift does not amount to adequate remuneration for his services (Re McLean (1911)).
What is clear is that, where a gift under the will is said to be intended for the executor in that capacity, if he takes no step to administer the deceased's estate, he will not be entitled to receive the gift. Therefore, he will not receive a commission. If, however, the executor is intended to have an outright gift, whether he fulfills his role as executor or not, he will be entitled to receive the gift even if he fails to carry out his duties.
A word of caution
It is important for the drafters of wills to note that these issues may arise and ensure that the clear intention of the testator is stated; so that if the gift is intended to be the commission or is separate from the commission, that is made clear in the will.