Sunday, November 16, 2014

Uniform Trustee Act Provisions for Remuneration

The British Columbia Government appears to be considering passing new legislation modeled on the Uniform Conference of Canada, Uniform Trustee Act. As I wrote before, the Ministry of Justice was requesting comments on the Uniform Trustee Act.

Among the changes that may be brought by new legislations are changes relating to remuneration for personal representatives of estate, and trustees.

Currently, under section 88 of the Trustee Act, there is a statutory ceiling for the fees that personal representatives (executors of wills and administrators of estates) and trustees may charge of 5 per cent of the aggregate value of an estate or trust, including income and capital and a care and management fee of 0.4% of the average market value of the assets. This is a ceiling and in many cases the courts awards lower percentage based on the Judge’s or Registrar’s assessment of what amount is reasonable in all of the circumstances. It should also be noted that you can allow your personal representative or trustee to charge a higher percentage by sayings so in your will or trust or in a separate contract.

In contrast, the Uniform Trustee Act would not set a statutory ceiling on remuneration that a court may award. Instead, the Uniform Trustee Act sets out the factors that the Judge or Registrar may consider. The Uniform Trustee Act would preserve the right of a will-maker or settlor of a trust to determine the amount of compensation by will, by the trust agreement, or by contract.

The Uniform Trustee Act would permit a personal representative or trustee who is a profession to charge fees for professional services in addition to remuneration for acting as the personal representative or trustee. This would change the law in British Columbia. Currently unless expressly permitted in the will or trust, a lawyer or other professional acting as a personal representative or trustee may not charge professional fees in addition to remuneration for acting as a personal represent or trustee unless the will or trust expressly authorizes professional fees.

Section 64 of the Uniform Trustee Act reads as follows:

64 (1) A person is entitled to fair and reasonable compensation to be paid out of the trust property for services rendered as trustee of the trust.
(2) As part of the compensation to which a trustee is entitled under subsection (1), a trustee who
(a) has professional skills, and
(b) has rendered services to the trust, apart from those generally associated
with the office of trustee, that required the exercise of those professional
is entitled to charge fees at reasonable rates for those services that are reasonably necessary for the purpose of carrying out the trust.
(3) The trustees of a trust are not presumed to be entitled to equal compensation under subsection (1).
(4) On application by a trustee during the administration of the trust or on the passing of accounts, the court may determine the amount of compensation to which the trustee is entitled under subsection (1).
(5) In determining a trustee’s compensation, the court may consider the following:
(a) the gross value of the trust property at the time compensation is claimed;
(b) any change in the gross value of the trust property since compensation was last claimed or the trust was created and the portion of that change attributable to decisions of the trustee;
(c) the amount of revenue received and expenditures incurred in administering the trust;
(d) the complexity of the work involved in administering the trust, including whether or not any difficult or unusual questions were raised;
(e) any unusual difficulties or situations encountered in administering the trust;
(f) whether or not the trustee had to instruct on litigation relating to the trust;
(g) whether or not the trustee was required to manage a business, be the director of a corporation or perform other additional roles in administering the trust;
(h) the amount of skill, labour, responsibility, technological support and specialized knowledge required in administering the trust;
(i) the number and complexity of tasks relating to the administration of the trust that were delegated to others;
(j) the time expended in administering the trust;
(k) the number of trustees.
 (6) A trustee may make an application under subsection (4) even if the trust instrument provides for the determination of the amount of compensation.
(7) Subsection (4) does not authorize the variation of a contract, with respect to compensation between a settlor and a trustee, that is not part of the trust instrument, whether or not the contract is incorporated by reference in the trust instrument.

Section 65 would allow a personal representative or trustee to receive interim remuneration before the amount is approved by the beneficiaries or the court provided that at least one beneficiary is a capacitated adult. The personal representative or trustee must give notice to “qualified beneficiaries,” which means beneficiaries with a vested interest in the estate and trust, and any contingent beneficiaries who have given notice that they wish to be included as qualified beneficiaries. If the Court ultimately approves a lower amount of remuneration, then the personal representative or trustee must repay the difference (section 68).

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