Executors are those chosen people who have been named in a Will as being in charge of looking after a deceased estate. Those duties can be considerable and will often include retaining a lawyer for estate legal advice and to apply for Probate, paying bills, communicating with beneficiaries, securing estate assets, compiling and collating estate paperwork for accountability and legal paper trail. You may be thinking “that’s a lot of work and responsibility”. And you’d be right. So what costs are executors entitled to and who pays for the costs in a deceased estate?
Who pays for liabilities in a deceased estate?
Estate liabilities are debts of the deceased person that are outstanding as at the date of their passing or costs that are incurred during the process of looking after the estate.
Executors are in charge of making sure that any estate liabilities that need to be paid are in fact paid. This is not to say that executors pay liabilities out of their own pockets; unless there is a provision in the Will that says otherwise, executors need to use estate funds to pay liabilities before there is any distribution to beneficiaries.
Sometimes there aren’t enough monies available – or monies don’t become available until after Probate is granted – and the executor is responsible for making sure each creditor is aware of the delay in making payment, or in some rare cases, if there is no money to pay for debts the executor may be responsible for servicing the debt from their own pocket until the estate is in a position to reimburse the executor and pay off the debt.
Who pays for out of pocket estate expenses?
Out of pockets estate expenses are those which an executor incurs as part of completing their role as executor. These can be small expenses like postage costs, photocopy expenses, parking fees or more substantial like travel costs, insurance premiums, funeral expenses and cleaning costs.
In most cases, if it’s not possible for the estate to pay for out of pockets expenses directly, or simply impractical to do so, an executor may pay for estate expenses and seek reimbursement from the estate once there are funds available.
The law (and lawyers) loves a good paper trail and deceased estate legals are no different; it is very important for executors to keep documentation of any tax invoices, receipts and payment confirmations when seeking reimbursement from an estate.
Who pays for estate legal fees and accounting fees?
The legal fees of an executor seeking legal advice and assistance, applying for Probate and looking after administration and distribution of an estate are payable out of the estate. Likewise, accounting fees are payable from the estate as long as they are reasonable. Legal fees that may be incurred by beneficiaries are not recoverable from an estate unless there is a provision in the Will to say so, an agreement between the executor and beneficiaries or there is a Court Order.
Do executors get paid?
Given the amount of time, effort and responsibility of taking on an executor role, it’s not unusual for us to be asked whether executors get paid. As a default, executors don’t receive payment for their time and efforts. In fact, if the executor is also a beneficiary under a Will their entitlement or inheritance under the Will is deemed to also cover payment for their efforts of being executor. The only other circumstances where an executor can get paid is where the Will says so, where there is an agreement with the beneficiaries for the executor to be paid or where the executor applies for a Court Order for executor’s commission.
As with any legal matter, it’s always a good idea to get some legal advice when you’re not sure. In the case of deceased estates, legal fees of an executor seeking advice are covered by the estate and most times it is best to get legal advice as early as possible for the benefit of protecting yourself if you are an executor as well as for the benefit of beneficiaries that all legal requirements are being completed.
If you’re not sure and you just want a quick chat initially, book in for a free 10 minute chat with a lawyer here and we can help guide you.
We’ll look after you.