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Will I be paid?

A liquidator’s right to be paid (or lack of such right) is established under the Civil Code. In general, a liquidator is entitled to be paid for his work unless the Civil Code or the will state otherwise.

The Civil Code notes two situations where a liquidator does not have such a right: 

Firstly, when the liquidator is an heir of the estate he has no right to be paid.  This is true whether there is a will or not.^[1] The testator can, however, establish an heir’s right to be paid as a liquidator in the will.^[2]  If the testator has not done so, the heirs can permit him to take payment from the estate but the agreement of the heirs must be unanimous.^[3] Nothing, of course, stops one or several heirs from paying the liquidator from their own pockets.

Secondly, if a notary is named liquidator in a will that he has received in his minutes, he may act as such but only if he does not charge for the service.^[4] The Chamber des Notaries has disciplined notaries who have charged an estate for their services as liquidator when the notary was named in the will that he signed.^[5]

In short, if the liquidator is not an heir and is not the notary who signed the will, he is entitled to be paid. If the testator did not fix the rate or amount in the will, it must be agreed to by the heirs^[6] or, failing agreement it can be established by the court.^[7]  It should be noted that a particular legatee, that is someone who is bequeathed a specific item or sum of money and not a share in the remainder of the estate, is not considered an heir.^[8] A particular legatee is therefore entitled to be paid if he is named as liquidator in the will or becomes a liquidator by court appointment.

If I can be paid - How much can I expect?

Once it has been established that the liquidator has a right to be paid, the Civil Code stipulates that he is entitled to “the remuneration fixed in the act, by usage or by law, or to the remuneration determined according to the value of the services rendered.”[9]

No special difficulty is encountered when the payment to a liquidator is fixed in the will on a basis which is easily calculated.[10] The testator could also pay a liquidator by awarding him a “remunerative legacy” such as:  “I leave $10 000 to X for acting as liquidator”. In this case, if the liquidator quits or cannot continue he is entitled only to a portion of this legacy.[11] It should be noted that any remuneration that the liquidator receives for acting must be declared as income when he files his taxes.  In addition, if the income the liquidator receives is greater than $30 000 in a calendar year then he must charge GST and PST to the estate and remit the amount to the federal and provincial taxing authorities in a timely fashion. 

The Civil Code states that for liquidators who are entitled to be paid, if the amount or rate was not fixed in the will, it is fixed by the heirs (or the creditors for an insolvent estate). In the case of disagreement, it is set by the court.[12] If the liquidator has a right to be paid and it is not provided for in the will and there is no agreement between the heirs - what is a reasonable fee for the services?

If there is no agreement between the heirs as to the fees, the liquidator must be willing to defend his fee in court.  The court will look to any proof that the liquidator can make of “usage”;  that is to say, the commonly acceptable billing method for the liquidation of an estate of similar complexity and size.[13]  Alternately, if the court does not accept the proof of usage, or it does not make sense in the circumstances, then the court will determine the value of the services rendered. Doctrinal author Madeleine Cantyn-Cumin believes that the value of the services rendered should not be based on the amount that the property of the estate generated in revenue.^[14] 

The office of liquidator is complex.  It requires a considerable amount of work and diligence in order for the liquidator to not inadvertently accept the debts of the estate onto his own shoulders.  For example, payments cannot be made from the estate until an inventory has been produced and permission to disperse (such as paying bills and paying legacies) has been requested and received from Revenue Quebec. This is poorly understood by impatient heirs.  Consequently, there is no shortage of cases where the heirs of an estate contest the fees of the liquidator finding them too high.  The courts will look to several factors to determine what is a reasonable payment for a liquidator – these factors were summarized in Thibault-Zamojski (Succession of) in 2016 as follows: (1) the identity of the liquidator (2) the number of heirs (3) the relationships amongst the heirs and (4) whether the liquidator has divulged the cost of his services to the heirs in advance of beginning to act as liquidator.^[15] Invariably, if the liquidator is a professional, if there are several heirs and if the heirs do not get along a court may find that the total fees of the liquidator are justifiably higher.

Jurisprudence bears out that the courts prefer to focus on the hourly rate of the liquidator (to factor out the complexity of the estate) and often cap the amount that a liquidator can charge as a percentage of the estate (see below).  The hourly rate deemed to be reasonable depends on whether the liquidator is a professional (notary, lawyer, or accountant) or not.  If the liquidator is not a professional the courts have determined rates of between $45 and $65 per hour as reasonable.^[16]  It is interesting to note that these rates do not seem to have increased over the last twenty years despite a cost of living increase of 39% over this period in Quebec.^[17]  If the liquidator is an experienced professional, no distinction is made as to whether he is a lawyer, notary or accountant. In the last ten years the courts have determined rates of between $175 to $350 per hour as reasonable.^[18]  If the liquidator is a professional but is also a family member his fee may be reduced if the court finds that his appointment is due to the relationship he had with the deceased and not simply his profession.[19]

The court has also ruled that it is reasonable for a liquidator to charge based on the value of the assets or sometimes on the net value of the assets.  Jurisprudence bears out that the charge can be between 3 and 5%.^[20] It is to be noted that trust companies charge on this basis with a minimum fee.  There is a general belief that they charge more than individuals (professionals) but they require that the testator approve their fees at the time of the drafting of the will and so these charges are rarely contested in court.  Under certain circumstances a court has approved much higher rates. In one very litigious situation a charge of 10% was allowed.[21]

When can I be paid?

A liquidator may not pay himself (without the approval of the heirs) until the end of the liquidation.[22]  In Belley v. Belley (2000) the liquidator was authorized by the will to receive 7% of the net estate as remuneration for acting.  He paid himself (partially) before knowing the exact net estate value which is only determined at the final rendering of account.^[23] The court determined that he had therefore illegally appropriated funds of the estate and that he needed to return the funds until the final rendering of account.^[24]

Discussion

It should be noted that accepting the office of liquidator in not to be taken lightly.  The liquidator should inform himself of all of the obligations towards all of the beneficiaries and towards the tax authorities as well as the duties of the office. If he is risk averse and still wishes to act, he should surround himself with reasonably priced professionals.

He should be aware that it would be best for the testator to stipulate the amount of his remuneration as liquidator in the will.  His fee as a liquidator can only be paid at the end of the liquidation (after the acceptance of the rendering of account).  This may not sound important but an estate can easily take more than a year to settle depending on its complexity.

Should the testator fail to stipulate the amount the liquidator can be paid or how it can be calculated in the will, and he is not a notary, lawyer or accountant, he can likely expect to be paid between $45 and $65 per hour. To avoid litigation the liquidator should settle this rate with the heirs before he begins to act as liquidator. Hiring a professional (or a legal firm such as Spiegel Sohmer Inc.) to act as his mandatary in fulfilling his role as liquidator is a prudent course of action to mitigate his potential liability although the responsibility remains his own. 

Although it might be an honour to act as liquidator and he may earn some (taxable!) income from so acting, he should understand and weigh the risk of office against this potential income before making any final decision.

Endnotes

[1] Article 798 CCQ.  Recall that an heir is someone who has accepted his right to a share of what is left of the estate after the particular legacies have all been paid out and the debts have been satisfied.

[2] Articles 743,754 and 760 CCQ.

[3] Article 789 CCQ.

[4] Article 724 CCQ.

[5] Notaires (Ordre professionnel des) c Haltrecht, 2014 CanLII 72611 (QC CDNQ) and Notaires (Ordre professionnel des) c Dagenais, 2012 CanLII 86190 (QC CDNQ).

[6] In Trudeau c. Désautels Bonin (Succession de), 2015 QCCQ 254 (CanLII) it was made clear that all and not simply the majority of the heirs must approve the remuneration of the liquidator.

[7] Article 789 CCQ.

[8] Article 619 CCQ holds that only a person to whom an intestate succession devolves, one who receives a universal legacy or a legacy by universal title is considered an heir (provided he accepts the legacy).

[9] Article 1300 CCQ.

[10] Only a notary that has received the will could not receive a remuneration stipulated in the will – and this by Article 724 CCQ as previously mentioned.

[11] Article 754 CCQ.

[12] Article 789 CCQ.

[13] Madeleine CANTIN-CUMYN and Michelle CUMYN, « L’administration du bien d’autrui », Cowansville, Éditions Yvon Blais inc., 2014, par. 185, p. 174.  For trustees see for example Rajesky c. Orenstein Little, 2015 QCCS 5268 (CanLII) where the proof of usage is heavily criticized by the court.

[14] Madeleine CANTIN-CUMYN and Michelle CUMYN, « L’administration du bien d’autrui », Cowansville, Éditions Yvon Blais inc., 2014,  par.186, p. 177.

[15] Thibault-Zamojski (Succession de), 2016 QCCS 4219 (CanLII), par. 77.

[16] In Succession de Langevin , 2003 CanLII 12697 (QC CS) the liquidator was an accountant who normally charged 150$ per hour but he was also the son-in-law of the deceased.  The court considered the following factors: he right to a remuneration, he was more experienced than someone who had never done any such work and was doing it on the corner of the dining room table, there were 11 heirs who couldn’t agree and this complicated the estate, he was the nephew of the deceased, it seemed that he might have been the one stoking some of the fights.  The court ruled that he was entitled to 60$ per hour to a maximum of 5% of the value of the estate which had already been attained considering the number of hours already worked and the value of the estate.

In Succession de Cardu, 2007 QCCS 5657 (CanLII), the liquidator was not experienced (a professor of anthropology) of an uncomplicated estate with 3 heirs and the court found that an hourly rate of 45$ was appropriate. In cases where the liquidator offered less of course the court accepted it (Fecteau c. Fecteau, 2014 QCCS 3898 (CanLII) the proposed liquidator, a non-professional offered to work for 35$ per hour).

In Re, Tremblay (Succession de), 2003 CanLII 12185 (QC CS) the court approved a fee of 50$ per hour to a liquidator who was not a professional for an estate that went largely to charity and was worth approximately 100k$ and included selling a condominium but no other complications.

[17] See  inflationcalculator.ca/quebec

[18] In Succession de Filion , 2017 QCCS 2782 (CanLII) the hourly fee of 200$ per hour of a notary was determined to be reasonable. The same hourly fee of a lawyer was also declared reasonable in Marinacci c. Bartolomucci , 2004 CanLII 53271 (QC CS) and in Sofaer (Succession de) c. Mashaal , 2014 QCCS 3402 (CanLII). In Valade c. Valade, 2003 CanLII 39276 (QC CS) the court appointed a notary for 175$/hour for an estate worth approximatley 500k$.

In Arcand (Succession d’), 2012 QCCS 2937 (CanLII), par. 7 et 14. The court determined that the reasonable fee of an experienced notary would  be 225$, that of his techinician 65$ so the reasonable fee of a junior notary would be 125$ per hour. In Pagé c. Jean-Charles Garant, Notaire, 2015 QCCS 2014 (CanLII) the charged by the experienced notary of 240$ per hour was deemed reasonable.

In Nicolas (Succession de), 2007 QCCS  5512 (CanLII) the court allowed the fees of an accountant as a co-liquidator at 350$ per hour.

[19] Succession de Langevin , 2003 CanLII 12697 (QC CS)

[20]  In Succession de Belkahia, 2017 QCCS 3011 (CanLII), the court approved that the liquidator would be paid 5% of the net value of the succession. In Thibault-Zamojski (Succession de), 2016 QCCS 4219 (CanLII), par. 77, the court declared « Si la succession est relativement simple, les tribunaux considèrent que des honoraires atteignant 5 % de la valeur de la succession se situent dans la limite du raisonnable. »  In Re, Langevin (Succession de), 2003 CanLII 12697 (QC CS) at par. 32 the court declared « Quant au taux de 5% de l'actif brut de la succession qui a été discuté, il s'agit d'un taux approprié. Il est inspiré de la législation ontarienne relative aux honoraires du liquidateur d'une succession.  Comme le liquidateur en l'instance réside en Ontario, il a spontanément référé à cette norme.  Elle paraît au Tribunal adéquate et raisonnable.” In Villeneuve (Succession de) c. Villeneuve, 2008 QCCS 4468 (CanLII), it was once again determined that 5% of the net value fo the estate was a reasonable remuneration for a notary settling the estate..

[21] Thibault-Zamojski (Succession de), 2016 QCCS 4219 (CanLII), par 121.

[22] Ibid.

[23] Article 820 CCQ.

[24] Belley v. Belley, 2000 CanLII 19374 (QC CS) the following paragraphs:

[30]  Par ces retraits, l'intimé s'est payé à même la part qui doit lui revenir en héritage. Lorsqu'il a effectué ces retraits, l'intimé pouvait peut-être penser qu'il avait droit à l'application intégrale de l'article VII du testament qui lui accordait une rémunération à titre de liquidateur. La loi ne lui permettait pas d'agir ainsi.

[31]  L'article 819 du Code civil du Québec prévoit que la liquidation prend fin par la décharge du liquidateur. L'article 820 du Code civil du Québec stipule:

Le compte définitif du liquidateur a pour objet de déterminer l'actif net ou le déficit de la succession.

[32]  Le liquidateur ne peut donc se verser, unilatéralement, une rémunération avant la production du compte définitif. Le testament mentionnait d'ailleurs que la rémunération du liquidateur est égale à sept pour cent (7%) de la valeur de l'actif net. Cet actif net n'est pas connu avant le compte définitif du liquidateur. L'intimé s'est donc approprié ces montants illégalement.