To Charge Or Not?
A recent Court of Appeal ruling has provided clarity to Executors and Trustees in respect of their ability to charge their time for acting in these roles during estate administration. As many people Will have experienced, the role of Executor can be an incredibly involved one and some estates can take many months, and in some cases many years, to administrate in full. Elaine Lightfoot looks at the issue of expenses.
Executors and Trustees are entitled to be reimbursed for their legitimate expenses incurred in dealing with an estate. The issue debated in the case Da Silva v Heselton (the estate of Gladys Dulcie Townsend) is whether an Executor, whose profession was not one relating to estate administration, is able to charge their time for acting as an Executor/Trustee given Mrs Townsend’s Will contained a standard charging clause. One of Mrs Townsend’s Executors, Mrs Heselton, had charged the estate a total of £43,350 to cover administration charges of £300 per month for renting out a property that formed part of the estate. The charges were raised over a period of 13 years.
Mrs Heselton, along with another original Executor, were both eventually replaced as representatives of the estate and the payment to Mrs Heselton of her fee was disputed. Mrs Heselton argued she was entitled to charge under the charging clause included in Mrs Townsend’s original Will. The clause included in the Will was very much a standard clause included in many Wills completed professionally.
The clause in question stated:
“My Trustees shall have the following powers in addition to their powers under the general law or under any other provision of this Will or any Codicil hereto….for any of my Trustees who shall be engaged in any profession or business to charge and be paid (in priority to all other dispositions herein) all usual professional and other fees and to retain any brokerage or commission for work or business introduced transacted or done or time spent by him [or] his firm in connection with the administration of my estate or the Trusts powers or provisions of this Will or any Codicil hereto including work done or business outside the ordinary course of his profession and work or business which he could or should have done personally had he not been in any profession or business.”
The Court’s key concern was whether a Trustee engaged in a profession/business could charge for all work done/time spent in the estate administration regardless of whether their work had any connection with their profession or business (the wider view) or whether such a person could only charge for services in the course of their profession or business (the narrower view).
The Court’s decision was a unanimous one confirming the narrower view that “a Trustee or Executor can rely upon the charging clause in the Will to charge for work done or time spent in the administration of the estate only if that work falls within the scope of their profession or business in question; that is to say if it is work of a type which would attract or incur their usual professional fees.” For example, a surveyor may charge for carrying out a valuation and a builder could charge for building work on an estate property but not for other work on the estate including time spent on locating assets, attending meetings etc. There can be no charge for work done or time spent on administration if it had nothing to do with the Executor’s respective profession or business.
I am happy that there has been clarity on this issue as it is a question raised frequently but I believe the decision may deter individuals from taking up their role as Executor and is an issue clients should consider carefully when making their Wills.
Where Executors and Beneficiaries are the same people, the inability of non-professional Executors to charge their time is less likely to be a contentious issue as any work carried out by such Executors will save money for themselves as beneficiaries in the long run. That said, the role of Executor can be incredibly involved and in cases where the Executors are not Beneficiaries, they may be reluctant to undertake a great deal of administration work themselves given the time involved.
Careful consideration must be given when making a Will and it is often advisable for testators to discuss with their proposed Executors whether it will be a role they are willing to take up in the future. Ultimately, such Executors can instruct professionals to assist them with all aspects of estate administration.