Two recent cases have changed the landscape for beneficiaries to challenge executors’ costs in connection with the administration of an estate. Laura Abbott (Principal Associate) and Phoebe Zair (Paralegal) at Rothley Law examine the cases of Brealey v Shepherd & Co and Kenig v Thomson Snell & Passmore LLP.

Can executors charge fees for administering an estate?

Lay executors are entitled to recover their out-of-pocket expenses from an estate, for example death certificate fees, house valuation or clearance fees and travel expenses, as long as valid receipts and records are kept, but they are not entitled to charge for their time. However, lay executors are entitled to take professional or legal advice and for those fees to be paid from the estate.

Professional executors can charge for their time provided that they are professionals who specialise in estate administration and provided there is a charging clause in the will and/or any/all co-executors agree the charges in advance (sections 28 and 29 Trustee Act 2000):

"a trustee or executor can rely upon the charging clause in the Will to charge for work done or time spent in the administration of the estate only if that work falls within the scope of their profession or business in question; that is to say if it is work of a type which would attract or incur their usual professional fees” (Da Silva v Heselton (2022))

S31 of the Trustee Act 2000 provides an indemnity for the executors to recover these charges and expenses from the estate. Executors have a duty to provide estate accounts which will show beneficiaries what charges and expenses have been incurred.

But what can beneficiaries do if they are not happy? This has been considered in two recent cases. 

Brealey v Shepherd & Co (2) [2022] WTLR 27

The facts

Ann Brealey died in 2014 with an estate value of circa £900,000. Her brother and her solicitor, Robin Shepherd, and the other partners of his firm (of which there was only one, Mr Smyth) were appointed her executors. Her will left 30% of her estate to her son, the claimant, and the remainder to her daughter in law and her grandchildren. The estate administration fees were circa £153,000. There was no executor charging clause in the will. There was a retainer with the brother but not with Mr Smyth.

The arguments

The son brought third part assessment proceedings pursuant to S71(3) of the Solicitors Act 1974 which provides that:

Where a trustee, executor or administrator has become liable to pay a bill of a solicitor, then, on the application of any person interested in any property out of which the trustee, executor or administrator has paid, or is entitled to pay, the bill, the court may order—

(a) that the bill be taxed on such terms, if any, as it thinks fit; and

(b) that such payments, in respect of the amount found to be due to or by the solicitor and in respect of the costs of the taxation, be made to or by the applicant, to or by the solicitor, or to or by the executor, administrator or trustee, as it thinks fit.

The claimant argued that in the absence of a charging clause or express agreement from the co-executors, Mr Shepherd was not entitled to remuneration for the services provided as an executor.

The outcome

Judge Rowley found in the outcome at first instance in favour of the claimant and disallowed the costs as: “It seems to me that I have to conclude that this was the intention of Ms Brealey on the basis that she should be taken to have put her name to a deed which accurately reflected her intentions. As a starting point, therefore, it would seem that Ms Brealey did not expect her executors to charge for their services.”

The court does have an inherent jurisdiction to authorise remuneration, but it was said in this case that jurisdiction should be exercised only sparingly and in exceptional circumstances, of which this case was not one.

Mr Shepherd appealed initially to the High Court unsuccessfully and then again to the Court of Appeal in 2024 and the decision was upheld.

For professional executors this is an important reminder that absence an express right to charge the executor will not be entitled to claim for their services, unless they are able to persuade the court that either all the executors agreed to the charges or the court should exercise its inherent jurisdiction to authorise remuneration, which is rare.  

Kenig v Thomson Snell & Passmore LLP [2024] EWCA Civ 15

The facts

Philippa Cunnick died in 2019, and Thomson Snelll & Passmore were retained to administer her estate by her executors. The estate value was circa £2.4M, the fee quote was £10-15K and the actual fees were £54,410. 

The arguments

Again, one of her beneficiaries brought third party assessment proceedings pursuant to S71(3) of the Solicitors Act 1974. 

Here there was a proper charging clause in the will and a proper retainer in place between the firm and the executors. The question in Brealey was whether the firm could charge at all.  The question here was different and was related to the level of charging. Initially the question before the court was whether the beneficiaries were entitled to an assessment on this basis, as S71(3) is generally considered to be an assessment as between solicitor and client.

The outcome

It was held the beneficiary was entitled to seek assessment of the costs. The judge said: “it seems to me clear that where there is a substantial discrepancy between an estimate provided to a client by a solicitor and the costs billed, that discrepancy generally calls for an explanation, and if no adequate explanation is provided the costs over and above the estimate may be disallowed in whole or in part.”

Again, this decision was upheld on appeal.

Going further than Brealey, this case established that not only was a beneficiary entitled to challenge the estate’s liability for fees, but that, it is also possible for a beneficiary to challenge the level of fees.

Summary

Estate administration charges often exceed initial estimates for various reasons. This decision might leave professional executors or solicitors, even those with satisfied executor clients, vulnerable to complaints from disgruntled or ill-informed beneficiaries.

As a result of both decisions, beneficiaries are now in a stronger position to challenge fees. Brealey and Kenig demonstrate a major shift and gives the green light for beneficiaries where previously advice may have been more cautious.

Going forward, the best practice would be to provide accurate and detailed (and not overly conservative) estimates at the outset, keep costs estimates under review charge reasonably and proportionately and keep beneficiaries well informed throughout.

If beneficiaries successfully take matters into their own hands, they could then pursue action against the executors for negligence or unfitness for office, seeking their removal or to try to recover costs or losses through maladministration claims. In turn this could lead to more professional negligence actions against the solicitors involved too. 

About the author

Laura Abbott is a Principal Associate at Rothley Law and is a member of the Society of Trust and Estate Practitioners (STEP).

Phoebe Zair is based in the Disputed Wills and Trusts at Rothley Law. She provides paralegal support by assisting solicitors in the team.

See also

Place a deceased estates notice

The duties of an executor: what to do when someone dies

Can executors charge fees for administering an estate?

What is the difference between an executor and an administrator?

Find out more

Trustee Act 2000 (Legislation)

Solicitors Act 1974 (Legislation)

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Publication date

29 August 2024

Any opinion expressed in this article is that of the author and the author alone, and does not necessarily represent that of The Gazette.