An executor is a person named in someone’s Will who is legally responsible for handling their estate on death. A person can name one or more people to be executor(s) of their Will. The executor is responsible for:

• Ensuring the ‘living farm business’ can continue
• Gathering details of all assets
• Calculating the value of the estate
• Working out whether any inheritance tax is payable and paying it
• Obtaining probate
• Selling any property
• Paying off any debts due by the deceased
• Distributing the estate to the beneficiaries in accordance with the wishes in the Will

Being an executor comes with a great deal of responsibility, as managing someone’s estate can be very time consuming depending on the size and the complexity, as well as how much time the executor is able to commit to carrying out their duties. In many cases, it could take over a year to complete. If the job is not carried out properly, the executor can also become financially liable for any mistakes they may make, such as failure to identify and pay off any debts or failure to pay any inheritance tax (IHT) that fell due.

Executors and administrators are generally not entitled to charge for anything other than out of pocket expenses. As with LPAs, the Will might provide that the executor can charge for their time however. Where the Will appoints trustees of a Will trust, the lack of a charging clause may not prohibit the trustee for charging for their time. If the trustee who is appointed acts in a professional capacity (i.e. he is a professional trustee), he can charge reasonable remuneration for any services provided if all co-trustees agree (he cannot charge if he is a sole trustee). Executors and administrators may, however, of course instruct solicitors (and other professionals) to provide advice on the administration of an estate and may pay for that advice out of the estate.

The basic starting position is that, like trustees, executors must act for free. They can be reimbursed for reasonable expense such as mileage incurred when carrying out their duties, but they cannot charge for their time. There are some exceptions to this. Beneficiaries can authorise executor charging but they must be unanimous in that decision and they must all be adults with full mental capacity. Executors commonly appoint lawyers to deal with the estate on their behalf, which brings with it professional adviser fees, but what about the lay executor charging in their own right?

If the farmer’s Will creates a trust, you will also need to decide who to appoint as the trustees. For example, the farmer may wish to make a flexible Will in which your net estate, once administered, is held upon a wide discretionary trust from which your chosen beneficiaries can benefit. It is then the job of the trustees to decide which of the beneficiaries should receive assets from the trust, how much they each receive, and when, taking into account guidance given by you in your lifetime. The same people are often appointed as both executors and trustees. The farmer may appoint relatives, friends or professionals, or a combination of all three.

In many cases, this will be an easy decision – in most cases, the farmer would expect a professional to charge reasonable fees for their time spent in these roles, whereas you may not expect family and friends to do so. The law reflects this: as a default position, individual executors and trustees are not entitled to payment unless (broadly speaking) they are acting in the course of a profession or business which includes the management or administration of trusts and estates. Even then, they must obtain the written agreement of their co-executors or co-trustees. This is based on the fundamental legal principle that a trustee cannot make a profit from their trust nor put themselves in a position where their own personal interests and their trustee duties may conflict.

Only executors who act in the course of a profession or business which includes providing services in connection with the management or administration of trusts can charge (with the consent of their co-executors). This may not necessarily cover lawyers or accountants whose day-to-day expertise is in a different area of law, or other professionals such as land agents – even though they are often appointed as executors on the basis of their individual trust experience.

An executor who cannot charge may well be unwilling to act without remuneration, so your estate may lose the benefit of that experience. So it is important to think about this when making your Will, so that specific wording can be included to achieve your desired outcome. Including an express charging clause can authorise certain executors to charge for their time when they would not otherwise be able to provides clarity and avoids disputes.

The High Court considered charges by professional executors in the case of Shepherd & Co Solicitors v Brealey. In this case, a solicitor acting as executor lost his appeal to claim professional costs of around £153,000 charged for his work administering an estate. The crux of this case was the absence of a charging clause in the deceased person’s Will. Without that, and crucially without the beneficiaries’ consent, he was in fact not allowed a fee at all. The court ruled that the absence of a charging clause showed the deceased’s expectation that the executor would not charge for their services. Remember, unless exceptions apply, an executor’s role is gratuitous (for free), time-intensive though it often is, and the executor is not obliged to take up the role if they decide they would prefer not to. The appeal judge confirmed that, without the charging clause, the only other routes that entitlement to fees could be claimed through were:

1. section 29 Trustee Act 2000 which can authorise payment if prior written consents are given; or
2. under the ‘Boardman jurisdiction’ (from a 1996 case, Boardman v Phipps, that says executors must account for profits but can in some circumstances be entitled to an allowance for work and skill that has been of benefit).

As neither of these routes applied in this case, the judge ruled that the solicitor could not claim for his professional costs. The judge ordered that a separate review be made into how much of that £153,000 represented the executor’s own fees claimed and how much were the professional fees of his firm acting in the matter.

The law relating to the payment of executors and trustees is complex and, in late 2021, was examined in a High Court case relating to the estate of Gladys Townsend. In that case, one of the executors sought to charge the estate £43,350 for her work in that capacity.

Mrs Townsend’s Will included a commonly used charging clause overriding the default position, and giving her executors/trustees power to charge as follows:

“…[power] for any of my Trustees who shall be engaged in any profession or business ‘to’ charge and be paid…all usual professional and other fees…for work or business…done or time spent by him [or] his firm in connection with the administration of my estate or the trusts powers or provisions of this Will or any codicil hereto including work 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.”

The executor argued that she should be paid because she had been engaged in a number of businesses during the period of her executorship, albeit that the businesses had no relevance to the matter of administering deceased’s estates. However, the judge found that the words used in the Will required there to be a link between (1) the scope of the profession or business of the executor and (2) the work that the executor carried out in relation to the estate for which she was seeking to charge. In other words, if that work would not arise in the usual scope of that profession or business, the executor could not charge for it. He therefore concluded that the executor was not able to claim payment of her fees from the late Mrs Townsend’s estate.

The view of the judge in the recent Townsend case was that if a person’s job 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 that they can do so. If, however, the Will includes a charging clause similar to that in Mrs Townsend’s Will and an executor is involved in a business where it would not be out of the ordinary to (a) act as an executor and trustee and (b) to charge for time spent in that role on matters not directly related to their business or professional skills then, although this particular case didn’t address this, we are of the view that they can charge for their time. This will be relevant to accountants and other similar professionals acting as executors and trustees.

An obvious exception is if the Will says the executor can charge. The majority of charging clauses allow professional executors (such as lawyers and accountants) to charge for their services but there have been instances where provision is made for non-professional executors to charge a fee. However, care must be taken in the interpretation of charging clauses, as it is not always clear cut. Express charging clauses in Wills have said, for instance, that executors who are “engaged in any business or profession” can be paid – but what is the correct interpretation of this? For example, can a person who acts as executor and is in a completely unrelated business charge their usual hourly rate for time spent administering an estate? The issue came before the Court of Appeal in the case of Da Silva v Heselton [2022]. Here it was decided that executors engaged in a business/profession can charge, as long as their usual work done relates to the estate administration. For instance, an executor’s own house clearance and cleaning business charging for time in preparing an estate property for marketing. The executor in this case was a professional property manager and had billed the estate £300 per month for her time, adding up to £43,350 throughout the entire administration period. The court dismissed the executor’s appeal to be allowed for this charge. The court made it clear that there must be a link between the scope of the executor’s profession and the services provided in progressing the estate administration. The purpose of the charging clause was not, the court said, to make up for fees the executor might have made elsewhere in their profession, but to recompense for work done to progress the estate administration.

Wills should ideally always contain a charging clause if the intention is that executors can be remunerated for their time. Professionally drafted Wills almost invariably contain provision for executors’ fees where professionals are appointed. Whilst the court ordered a separate review into the executor’s costs in the Shepherd case, the costs incurred by litigation are clearly not desirable whatever the eventual outcome.

In the absence of a charging clause in the Will, an executor will normally only be able to recover ‘out of pocket expenses’ (although of course this does not mean that the executor may not instruct a solicitor or other professional to act on his or her behalf).

There are exceptions. The beneficiaries can agree the executor may charge on a particular basis (the beneficiaries must be of age and have the capacity to agree). The court may authorise fees in certain circumstances and it is possible for the court to retrospectively authorise ‘in exceptional circumstances’, in particular, where it would be inequitable for the beneficiaries to take advantage of the work the executor has done (i.e. the beneficiaries should not be unjustly enriched at the executor’s expense).

Transparency about charging and keeping a record of beneficiary agreement will save considerable pain in the future.

Supplied by Julie Butler FCA, Founding Director of Butler & Co Alresford Limited, Bennett House, The Dean, Alresford, Hampshire, SO24 9BH. Tel: 01962 735544. Email: julie.butler@butler-co.co.uk. Website: www.butler-co.co.uk.

Julie Butler FCA is the author of Tax Planning for Farm and Land Diversification (Bloomsbury Professional), Equine Tax Planning ISBN: 0406966540, Butler’s Equine Tax Planning (3rd Edition) (Law Brief Publishing) and Stanley: Taxation of Farmers and Landowners (LexisNexis), and editor of Farm Tax Brief.