Executor Compensation - The Real Story

No one envies an Executor because settling an estate is a thankless job. I want you to think about how many people you have encountered in your lifetime who said to you “I was an Executor on an estate and it was a fantastic experience!” If you have heard this from someone, let me know because their sightings are rarer than Sasquatch.

However, those in the know will always point to the fact that Executors can always apply fees to the estate and at least get some measure of compensation for their efforts. This is good in theory but not always in practice.

Let’s look at Denise. Denise comes from a large family. She has five brothers and sisters and is the eldest daughter. She took care of mom when she started to demonstrate the first signs of dementia. She did this for a few years in her own home and then when her mom went into the nursing home for 5 years. Denise’s siblings were always appreciative of the work she did for mom.

When mom passed away it was to no one’s surprise that Denise was named Executor for mom’s estate. It was also to no one’s surprise that Denise stated at the outset that she didn’t want any compensation or recognition for the work she would do in settling the estate. She figured she was doing it for mom and she was getting a share just like her brothers and sisters. Although she took good care of mom and her finances, Denise did not fully comprehend the amount of work it would take to settle the estate given some of the assets mom still held and the recreational properties that were in the family. Compounding the issue was the fact that her youngest brother and his wife were very opinionated on how the finances should be managed and the properties sold on the market. The demands on her time and the stress she felt was considerable.

After 8 months, Denise was getting much closer to finalizing all of the estate administration and dealing with all of the beneficiaries. Unfortunately, for Denise the demands of the role meant that she had to use up her 3 week vacation entitlement at work and to also ask for an additional 3 weeks unpaid leave to administer the estate. Moreover, with a cottage 200 kilometres from her home, Denise spent a lot of her own money on travel to and from the cottage to deal with the real estate agent. It really wasn’t she expected and to complicate matters, her husband, Derrick was not pleased that she had already stated she did not want to be compensated for fulfilling these duties.

Denise is in an emotional bind. She has given her word to her siblings that she wanted nothing more than what the other beneficiaries would receive from mom’s estate. However, she realizes the sacrifices that she and her family have made to ensure that mom’s affairs are all in order and that there is a legacy to pass on. What will Denise do? In most cases, Denise and her family will suffer in silence or wait until a family member advocates on her behalf. Or she may speak up and demand some recognition for her efforts and face some backlash or resentment from her brothers and sisters. And the real tragedy is that these resentments never go away.

It doesn’t have to be like this. Talk to me today about how we can tax-effectively pre-arrange Executor compensation and keep families in harmony.