COMMENCED 1 NOVEMBER 2017
On 1 November 2017, the Administration and Probate and Other Acts Amendments (Succession and Related Matters) Act 2017 came into force. This amended the Administration and Probate Act 1958 (Vic) (the Act) in relation to executors’ commissions and fees.
REDUCTION OF EXCESSIVE COMMISSION OR FEES
Pursuant to section 65A of the Act the Court will now have the power to review and vary the fees, charges and commissions charged by executors and administrators of estates. This includes any fee, cost, expense or disbursement for which an executor or administrator has been reimbursed or claims to be reimbursed out of an estate.
If the Court is satisfied that the fees, charges and commissions charged by the executor or administrator is excessive, the Court can make an order that it must be reduced or repaid to the estate.
The court will be able to exercise this power either on its own motion or on the application of any interested party, including beneficiaries, under a Will
BENEFITS TO EXECUTOR UNDER REMUNERATION CLAUSE
Pursuant to section 65B of the Act a personal representative who is an executor of a Will is not entitled to receive payment under a remuneration clause in the Will unless the testator gave written informed consent to the inclusion of the remuneration clause and that written informed consent was given by the testator before the Will was executed.
CONSENT TO EXECUTOR’S REMUNERATION BY INTERESTED BENEFICIARIES
If the Will does not contain a remuneration clause and an executor wishes to receive commission, pursuant to section 65C of the Act an executor must obtain the “fully informed consent” of each interested beneficiary before they can receive fees or commission from the assets of the estate of the deceased person.
Who is an Interested Beneficiary?
Section 3 of the Act defines an “interested beneficiary” as a beneficiary of an estate whose entitlement to part of the residuary estate may be affected by the deduction of executor’s remuneration from the estate.
What is Fully Informed Consent?
Section 65D of the Act provides that to obtain “fully informed consent” an executor seeking to be paid must inform each interested beneficiary of:
- the basis on which the executor is to be paid
(either in accordance with the Will; or the consent of the interested beneficiaries; or by court order);
- the method of calculation of the payment to be made to the executor
(either a commission or percentage of the assets of the estate; or by charging fees);
- the estimated value of the payment to be made to the executor; and
- the right of any interested beneficiary to have the payment claimed or charged by the executor reviewed by the court.
If there is any substantial change to the amount the executor is seeking, an executor must notify each interested beneficiary as soon as reasonably practicable.
The information provided to each interested beneficiary must be in plain
In circumstances where a beneficiary is a minor or an adult who does not have legal capacity, an executor must make reasonable efforts to provide the information to the parent or guardian of a minor or to the administrator or attorney of an adult who lacks capacity.
If an executor contravenes section 65D they are not entitled to a commission or percentage of the assets of the estate or fees.
EXECUTOR MAY ELECT TO CHARGE FEES INSTEAD OF COMMISSION
If a Will provides for an executor to charge commission, the executor may now elect to charge fees instead of commission pursuant to section 65E of the Act.
The executor can elect to charge fees instead of commission provided those fees are less than any entitlement to commission under the Will, that any specialist professional skills of the executor are not taken into account, and they are distinguished from fees charged for professional services.
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