Professional Executors: Limited Options In Absence Of Charging Clause

When drafting wills appointing your firm as a professional executor, don’t forget the charging clause; or potentially cost the firm substantial sums in legal fees.

One aggrieved beneficiary successfully brought a legal challenge concerning the amount of legal costs that a solicitor’s firm – an executor - had built up over several years. At issue1 was whether the firm was entitled to bill the estate for work done by the partner in his capacity as executor, as opposed to work he and the firm had carried out in the estate administration.

It was a significant issue of contention given that around 70% of the fees claimed (£153,507.38) related to fees charged by the partner as executor.

The general rule

Executors are not generally entitled to payment for time spent on dealing with the estate in their role as executor. This reflects the general rule that a PR is not entitled to profit from their position, unless the position is clear and approved in writing.

The key exception is where the executor is a professional (such as a solicitor) and using their professional services in connection with the administration of the estate. Even then, the will should include a charging clause to that effect; and if there is no charging clause – the beneficiaries can give their consent.

So in the absence of both a charging clause and the beneficiaries’ consent – what options do professional executors have? The firm can either:

  • Rely on section 29(2) of the Trustee Act 2000. This entitles an executor/trustee to reasonable remuneration out of trust funds for services provided to or on behalf of the trust if each other trustee has agreed in writing to such remuneration; or
  • Ask the court to exercise its Boardman jurisdiction to allow the executor to charge for work done. However, this will only be exercised sparingly and in exceptional circumstances.

In this recent decision, the judge made clear that it is for the professional executor to demonstrate why fees should be paid; and not for the beneficiaries to prove they should not.

The ruling

Robin Shepherd (RS), a partner at Shepherd & Co, drafted the testator’s (T’s) will appointing T’s brother and the firm’s partners as executors. At the time of the will, there were two partners at the firm but one retired three months after T’s death.

Unfortunately, and presumably by oversight, no charging clause was written into the will. The firm’s fees built up and the beneficiary challenged the amount.

The senior costs judge said the lack of a charging clause was “significant” because it could have been that RS may have been prepared to work as an executor for free, in return for ensuring the work would be given to his firm. Further, the costs judge had been entitled to take the view that T did not expect her executors to charge for their services.

Nor had the firm’s other partners given express written approval for payment to be made to RS for work done in his capacity as executor under ss 28 and 29 Trustee Act 2000. This was fatal to the firm’s s29 claim.

Finally, the court was unwilling to exercise its inherent jurisdiction because the firm had not provided sufficient and proper evidence justifying an authorisation of charges.

The judge expressed considerable sympathy for RS (now retired) and the firm, who had put in significant amounts of work in the role of executor. He remitted the case for a detailed costs assessment to determine how much of the costs charged by the firm reflected the services provided by RS as executor.

Key takeaway

When drafting wills appointing your firm – or any other professional – as an executor, always remember to include a charging clause. In the absence of one, the firm’s charges could be limited to the work done in relation to the administration of the estate, but not for acting in the role as an executor.

This decision provides useful clarity for any firm finding itself in a similar position. It may, for example, be possible to reach an agreement with the other executors and/or the estate beneficiaries – but sensitive discussions will be needed.

Shepherd v Brearley [2022] EWHC 3229 (KB)


Posted on 10.02.23