Executor Commissions (NT)
A will-maker (testator) selects an executor to act on their behalf after their death. Sometimes an executor is a paid professional, but more, often the testator asks a family member or friend to take on the role. The executor is not obligated to accept this duty, and unless the testator makes explicit provision, the role is an unpaid position. However, the Supreme Court of the Northern Territory can order that the executor receive remuneration for their contributions to the estate. This article explains the nature of executor commissions in the Northern Territory.
Executor Responsibilities NT
The role of executor can be challenging and stressful. There is typically a lot of administrative work, responsibility, and the potential for personal liability in this role. An executor in the Northern Territory may be responsible for any (or all) of the following duties:
• Arranging the funeral and burial;
• Obtaining probate from the Supreme Court of the Northern Territory;
• Locating and notifying beneficiaries and other people named in the will;
• Securing and protecting assets of the estate;
• Collecting (and perhaps investing) income;
• Determining and discharging liabilities and debts;
• Preparing tax returns and obtaining tax clearances;
• Transferring and selling assets;
• Preparing financial statements and accounts;
• Representing the estate in litigation; and
• Distributing the estate property to the rightful beneficiaries.
Executor Bequest NT
A testator often makes the chief beneficiary of their estate their executor. For many couples, their spouse is their main beneficiary and their sole executor. This means that the person in charge of administering the estate is the person with the most vested interest. There is little cause for this type of executor to receive a commission, as they benefit directly through their own inheritance, and any payment to them from the estate would reduce their own bequest.
At other times, the executor is a beneficiary of the will, though there are other beneficiaries who receive an equal if not greater share of the estate. For instance, a parent may leave their estate equally to their several children but nominate only one child to act as executor. In that case, the testator might stipulate in their will that if the executor accepts the responsibility, they should receive a further gift on successfully completing their duties.
Executor Commission Northern Territory
Under the Administration and Probate Act 1969, the Supreme Court can grant a commission from the deceased estate not exceeding 5% of the total value of the estate. This commission is in addition to any reasonable expenses that the executor incurred during the executorship, which are automatically recoverable from the estate. Rather, the 5% is granted for the executor’s “pain and trouble” in administering the estate.
The Act makes it clear that it is up to the court to determine a just and reasonable rate of commission up to the statutory maximum of 5%. The court makes an assessment of the appropriate commission based on the following factors:
• The size and total value of the estate;
• The degree of “pains” (responsibility and attendant anxiety) and “trouble” (the required workload) the executor experienced while administering the estate;
• Whether the executor received assistance from solicitors, accountants and other professionals;
• The skill, care and diligence shown by the executor while undertaking the role;
• The length of time the executor took to administer the estate; and
• The relative success of the executor in administering the estate.
This commission is only payable upon the executor passing his or her accounts to the court. The executor keeps accounts showing all the money he or she has collected and paid out on behalf of the estate. Under the Administration and Probate Act and the Supreme Court Rules 1987, there are certain circumstances (such as when an executor applies for a commission) when the executor must file estate accounts with the court. Estate accounts document everything from the payment of funeral expenses and the deceased’s debts, lists of the deceased’s assets, the payment of legal fees, and the distribution of the estate. The executor typically files accounts within the first year after the testator’s death, called the “executor’s year”. The Registrar checks over the accounts to make sure that they align with the terms of the will and legal provisions, and correspond with how the executor claimed to have managed the estate. No allowance will be made to an executor who neglects to pass in accounts without special permission from the court.
The executor must inform the beneficiaries of their intention to apply for an executor’s commission. At that stage, the beneficiaries can privately agree that the executor is entitled to a commission without the matter proceeding to a court hearing. This approach is a more cost-effective and timely method of dealing with a claim for commission.
An executor’s commission compensates the personal representative for their effort, time and trouble taken when administering the estate. At Go To Court Lawyers, our experienced solicitors are ready to assist you with all aspects of estate administration. Please contact the team on 1300 636 846 if you need assistance with applying for an executor’s commission or advice on any administrative or probate matter.
