Q. My father-in-law passed away three years ago. In his will, he left everything to his two kids. The will also made his best friend the executor. This legal document clearly stated that the friend shall only be paid fees for charges he incurs. We just learned the executor changed his mind and wrote himself a check for $15,000. Can this be legal?
— Married to a beneficiary
A. Executors can be paid for their duties, but in this case, you could have a fight on your hands.
Pursuant to statute, commissions in the amount of 6 percent may be taken on all income, such as interest and dividends, received by an executor, said Catherine Romania, estate planning attorney with Witman Stadtmauer in Florham Park. In addition, the executor may take commissions on all “corpus” — translated, that’s all the assets controlled by the executor — equal to 5 percent on the first $200,000, 3.5 percent on the excess over $200,000 up to $1 million, and 2 percent over $1 million.
“The executor and the decedent may agree on additional or lesser amounts,” Romania said. “The court may also increase commissions upon application by the executor or decrease the commissions upon application by a beneficiary.”
Romania said a will is generally signed by the testator and two witnesses to the testator’s signing. It is not required to be signed nor is it usual for the will to be signed by the executor.
“It is possible that the executor signed a fee agreement where he waived the fee and in that case such an agreement may be binding against the executor and enforceable by the beneficiaries of the estate,” she said. “However, the beneficiaries would need to pursue that claim on their own or through counsel of their choosing.”
The attorney representing the executor would have a conflict representing the executor in his capacity as executor of the estate and the beneficiaries in their claim against the executor, she said.
So, if as a beneficiary, you believe the executor had no right to the commissions either based on a contract the executor signed with the testator or because the services the executor rendered were “materially deficient” or that the actual pain, trouble and risk in settling the estate were substantially less than generally required for an estate of a similar size, then you can proceed in court and request the commissions be reduced or eliminated, she said.
But note it is unlikely that the executor will have to reimburse you or the estate the attorney fees incurred in bringing the action, she said.
“There is also the possibility that the executor may be allowed to pay his attorney fees in defending such a suit from the estate, thereby reducing the share payable to the beneficiaries,” she said.
Finally, she said, a court will enforce a testator’s intent as set forth in a will, if such intent is clear. Unfortunately, the intent isn’t always clear.
“On the other hand, sometimes circumstances or the law change and it is in the best interest of the beneficiaries for the executor/beneficiaries to ask the court to enforce what the testator would have wanted if he or she had anticipated the change, notwithstanding it is different than what is written in the will,” she said.
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