Are you an executor of a Will? Before you administer the estate, understand that this role carries risks, including personal liability for estate expenses.
You should also know that you may receive commission for your work in administering the deceased’s estate. Understanding how commission is determined ensures you are paid a fair amount.
Can an executor of a Will receive commission?
An executor can charge a reasonable commission for managing the deceased’s estate. However, they do not automatically receive commission and must apply to the Supreme Court under relevant jurisdictional provisions.
If all residual beneficiaries are adults, they can agree unanimously on the commission amount. This agreement should be in writing and signed by all beneficiaries.
How is commission determined?
The Supreme Court considers factors such as:
- the size of the deceased’s estate;
- the responsibilities and care required of the executor;
- the time the executor invests in their duties;
- the diligence and care shown by the executor.
Commission typically ranges from 1–3% of all assets minus liabilities. For example, if an estate is worth $1.5 million, and $1 million remains after paying the mortgage, funeral, and other expenses, the executor may receive $10,000 to $30,000.
If the executor is also a beneficiary, they can still claim commission. The Court will consider their inheritance and adjust the commission if necessary.
To ensure you receive the correct commission, speak with one of our experienced lawyers.
Personal liability
Executors must comply with the Will and relevant laws when administering the estate.
Finalising the deceased’s tax affairs is often overlooked. If an executor fails in this duty, they risk personal liability for the deceased’s taxes. We recommend obtaining legal and accounting advice early.
What is usually involved in finalising a deceased’s individual tax affairs?
The executor must notify the Australian Taxation Office (ATO) of the death and ensure any outstanding tax returns are prepared and lodged. They must also prepare the final tax return and pay any taxes owed.
Tax obligations increase if the deceased had involvement with companies, trusts, a business, or a self-managed superannuation fund.
Executors should understand that estate tax affairs differ from individual tax affairs. Estates are treated as trusts for tax purposes, so an executor should:
- obtain a tax file number for the estate;
- prepare and lodge tax returns with the ATO;
- ensure payment of any tax liabilities.
This process can take substantial time, especially if the deceased had multiple outstanding returns, no accountant, or incomplete records.
Conclusion
Executors should seek legal and accounting advice to avoid personal liability for outstanding tax debts. An experienced lawyer can help administer the estate efficiently and advise on commission entitlements.
This information is general. You should obtain professional advice for your situation. For more information or help, call (02) 4987 3344 or email [email protected].