How would you briefly describe the current state of play of estate administration in Victoria?
We are seeing greater instances of executors and administrators being scrutinised or held to account for their actions, by beneficiaries, practitioners and the courts. In the case of executor’s commission, the obligations on executors and administrators have significantly expanded following amendments to the Administration and Probate Act 1958 in 2017. The effect of these provisions are not always fully appreciated and can have severe results.
Are there any roles of solicitors or executor’s that you think are sometimes misunderstood or overlooked by the individuals in these roles?
It is still common to hear of executors who assume a right to claim whatever commission they see fit, and deduct it from the estate without a court order or the beneficiaries’ consent. In the case of lay executors, this is a breach of trust and can lead to a loss of the right to apply for commission. For solicitor-executors, this can constitute professional misconduct.
What’s a common mistake you have seen executor’s make in their management of remuneration and commission?
When making an executor’s commission application, the accuracy of the Administration Account is of great importance yet it is often prepared in a poor manner. If the Court cannot understand the account, how is it to decide what commission should be awarded? In addition, the Court might conclude that the executor hasn’t actually administered the estate as well as they ought to have done, and refuse to award commission on that basis.
What are some of the most crucial aspects of the fiduciary obligations of solicitors and executors?
The requirement of executors to obtain the informed consent of the beneficiaries before taking commission cannot be reduced to a checklist, or a one-size-fits-all approach. Practitioners need to understand the extent of the fiduciary duty in the context of the will, the estate, and the type of commission being sought and ensure they disclose all relevant information.
What are the best ways executors can obtain informed consent from beneficiaries?
Informed consent must always be obtained in writing, after full disclosure of all relevant factors, and with the recommendation that beneficiaries seek their own independent legal advice.
What are some key issues you see ahead in the realm of executor’s commission and remuneration management?
Solicitors are familiar with the need to provide disclosure under Rule 12 of the Australian Solicitors’ Conduct Rules where the solicitor drafting the Will may obtain a benefit under a remuneration clause, but fewer understand the potential broad application of s 49A of the Wills Act 1997, which applies to all commission or remuneration clauses and in respect of professional and non-professional executors. A failure to obtain the relevant informed consent is likely to result in professional negligence claims against solicitors in the years ahead.
Jack Conway assists clients in the areas of estate planning, estate administration, trust and estate litigation, and administration and guardianship of disabled persons. Jack has a special interest in navigating complex estate and trust issues, and is focused on giving clear, practical advice and offering sensible solutions for his clients. His clients include lay and professional executors and trustees, high net worth individuals, trustee companies, charities, lawyers and law firms, and everyday Australians. Jack has been recognised by Doyles Guide and has been featured in industry publications, and presents often for clients, industry bodies and the legal profession. Connect with Jack via LinkedIn