As a starting point, all executors and trustees are entitled to be reimbursed from the estate for their out-of-pocket expenses.
Professional executors, and by that we mean someone who specialises in estate administration (such as a solicitor or accountant) can charge for their time spent administering the estate.
Generally, in the absence of a charging clause in the will that provides otherwise, if a lay person (i.e. a non-professional) is appointed as an executor in a will, they are not entitled to be paid for their time spent administering the estate - though they can recover their reasonable expenses as set out above, and they can instruct a solicitor or other professional to act on their behalf.
A charging clause is a clause in the will which authorises the executors to charge for their time spent performing their duties as executor. Most charging clauses make provision for a professional executor to charge fees, though in some instances the deceased may include provision for a lay executor to charge for their time.
Charging clauses are construed strictly and it is therefore important to carefully consider the wording of a charging clause to identify the services for which the executor may charge. The interpretation of a charging clause can often be a cause of dispute, as can be seen in the recent case of Da Silva v Heselton [2022].
In this case the Will contained a charging clause which said:
"MY TRUSTEES shall have the following powers in addition to their powers under the general law or under any other provisions of this Will or any Codicil hereto:-
…
(g) 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."
A dispute arose surrounding the interpretation of this charging clause.
The former executrix, Mrs Heselton (she was later replaced by Mr Brunton), had worked in various professions and businesses (including debt collection, practice management for a law firm, and running an art gallery) and wanted to rely on this clause in order to be able to charge for her time spent administering the estate. Her claimed fees reached over £40,000.
On replacing Mrs Heselton as executor, Mr Peter Brunton, challenged her right to charge the estate. Court proceedings were issued and the Court was invited to rule on whether the charging clause entitled Mrs Heselton to charge for her time spent administering the estate.
This issue originally came before Mr Stephen Lloyd sitting as a Deputy Master.
Mrs Heselton gave evidence before the Master that the deceased had tailor-made the clause specifically for her and wanted her to be able to charge for her time.
However the Deputy Master held that the clause was standard and ‘of the type to be found in precedent books’. He went on to say:
“I accept entirely that it is not restricted to a Trustee who is pursuing a profession such as a solicitor or accountant but extends to a person who is engaged in business. But it does seem to me that the business has to have some relevance to the matter of administering estates and, more to the point, that the administration time spent, for which it is sought to charge, should have been part and parcel of that business. It is trite law that a charging clause will be strictly construed.”
He ruled that Mrs Heselton had not satisfied him that her activities in administering the estate were done in the course of any business that she was conducting. Mrs Heselton appealed.
The appeal was heard by Mr David Rees QC, sitting as a Deputy High Court Judge. However, he also concluded that an executor could only charge for work done or time spent in the administration of the estate if that work fell within the scope of their profession or business in question. He dismissed the appeal. Mrs Heselton appealed again.
The Court of Appeal agreed with both the Deputy Master and the Deputy High Court Judge and held that Mrs Heselton was not entitled to charge the estate for her time, stating ‘it makes no obvious sense for the estate to pay an executor for work that they carry out in which they have no relevant professional skill or business experience’.
The Court of Appeal used an example of a surveyor. A surveyor would not be entitled to charge for their time spent in the estate administration generally, because this would not be part of their usual course of business, but they could charge for providing a relevant service in connection to the estate administration e.g. providing a valuation of the estate property. The Court of Appeal stated that section 28(5) of the Trustee Act 2000 supports this conclusion as it provides that a professional trustee/executor must be acting ‘in the course of a profession or business’ in connection to the administration of the estate, when charging for their time.
The Deputy High Court Judge on first instance provided a useful conclusion in his judgment and this was endorsed by the Court of Appeal:
"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."
In the absence of a charging clause in the will, a lay executor will normally only be able to recover out of pocket expenses.
Charging clauses are strictly construed and if a charging clause in a will refers to professional fees, this will mean in the course of the executor’s usual profession or business – as distinct to any person with a profession being able to charge for their time spent administering the estate. There needs to be a link between the executor’s profession and the entitlement to charge for their time spent in advancing the estate administration.
If there is no charging clause, or if its interpretation is in doubt, to avoid a future dispute and potentially unpaid bills, it would be sensible of an executor expecting to charge to invite the beneficiaries to agree to their fee (if the beneficiaries all have capacity and are of age in order to be able to give consent). If they do not do so the executor may find themself before the Court being challenged on their claim for payment, as did Mrs Heselton.
A copy of the judgment can be found here.
For more information on this article, please contact Rebecca Milton or Barny Croft.
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