15 September 2022 by

Can a trustee charge for administering the estate?

On 30 June 2022, the Court of Appeal handed down a landmark judgment in relation to the ability of executors and trustees to charge for the time they spend administering an estate.

The question before the court was: can any professional or businessperson charge for administering an estate where the Will contains a clause authorising such a person to charge even if their profession or business has nothing (or little) to do with estate administration?

The answer: there must be a link between the scope of the profession or business in question and the work that the executor/trustee has carried out in connection with the administration of the estate and in respect of which he is seeking to charge.

The decision will have an impact on trustees and executors for whom estate administration is not their main occupation.

Background

Gladys Dulcie Townsend made a Will dated 28 June 2001, which appointed Mrs Sandra Heselton and Mr Ronald Armour as her trustees and executors.

The residuary estate was left to Ms Jacqueline Da Silva.

The relevant clause of the Will stated that: “any of my Trustees … engaged in any profession or business” may “charge … all usual professional and other fees” including “for work … done … or business outside the ordinary course of his profession and work or business which he could or should have done personally had he not been in any profession or business.”

Mrs Townsend died on 1 July 2003. Several disputes arose following her death and, in 2015, Ms Da Silvaissued a claim under s.50 of the Administration of Justice Act 1985 to remove Mrs Heselton and Mr Armour as executors. On 2 June 2016, the application was granted, and a solicitor, Mr Brunton, was appointed to replace them.

When Mrs Heselton’s solicitors finally produced an estate account, it became clear that, during the years 2003 to 2016, Mrs Heselton had charged the estate a monthly administration fee of £300, totalling £43,350 which she had deducted from rental income received from Ms Townsend’s former residence. In 2019, Mr Brunton challenged Mrs Heselton’s deduction on the basis that, as a non-professional executor, she was not entitled to charge.

Mrs Heselton’s position was that she was engaged in business (e.g. she was involved in a debt collection company, acted as practice manager for her husband’s law firm, and ran an art gallery) and so should be allowed to charge. The court disagreed. Mrs Heselton appealed to the High Court.

The High Court stated that the case “raise[d] the question of whether an executor who is engaged in a profession or business unrelated to the administration of trusts or estates [could] rely upon a common form of professional charging clause contained in a Will to charge for time spent on the administration of the estate.

The appeal was dismissed. Mrs Heselton then appealed to the Court of Appeal.

Lord Justice Nugee used the example of a dentist to illustrate the point in dispute, stating: “suppose one of the executors were a dentist. It is difficult to envisage the circumstances in which they might provide any dentistry services to the estate. Can they nevertheless charge for their time spent on estate administration? On the wider view they can as they are engaged in a profession, but on the narrower view they cannot as the work done is not in the course of that profession.

Throughout the litigation, the narrower view prevailed. Each court held that there needs to be some link between the administrator’s profession and the entitlement to charge.

Mrs Heselton had failed to demonstrate that she was involved in a profession relevant to administration of the estate, or at least management of the property for which she had charged her management fee.

Conclusions

  • If a person’s profession or trade does not involve dealing with trusts or estates, then they cannot charge for their time unless there is a specific clause in the Will saying they can do so.
  • A trustee or executor can only rely on a charging clause in the Will to charge for work done or time spent in the administration of the estate if that work falls within the scope of their profession or business.
  • In the absence of a charging clause, the general expectation is that the executor acts for free (although can employ others such as a solicitor).
  • Individuals should be mindful of the risks of pursuing litigation that will incur significant costs. The general rule is that the loser pays the winner’s costs (as well as their own). Mrs Heselton pursued the case all the way to the Court of Appeal at considerable cost despite the value of the claim being just £43,350.

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