A staggering two thirds of adults in the UK are thought to
have not prepared a will, meaning that their possessions, money and property
could be left with someone they have not chosen.
Of those people who have made a will, many may have
overlooked entitlements which may arise upon their death. One of those is the
entitlement of an agent upon death to compensation or an indemnity under
Regulation 17 of the Commercial Agents Regulations.
In the same way that an agent is entitled to compensation or
an indemnity upon the termination of the agency during his lifetime, he is
entitled to the same benefit upon death as if the principal had terminated the
This right of the agent to claim compensation or an
indemnity, in addition to other post-termination payments, is one of many
protections afforded to agents by the Commercial Agents Regulations. Such a
claim passes to the agent’s estate upon death, but can only be pursued if the
executor of the estate is aware of the entitlement in the first place.
The difficulty arises when the person dealing with the
estate has no knowledge of the agency, or more fundamentally, the right to post
termination payments upon the death of the agent, or how to go about claiming
Such lack of knowledge and awareness is easily remedied by
the agent at very little or no cost, and is a step which all agents can and
should take regardless of their age, health or otherwise.
To ensure the estate benefits from the agent’s entitlement
on death, reference to the entitlement should be included within the agent’s
will, or within a letter of wishes accompanying the agent’s will. Of even
greater assistance would be detailed instructions to an executor regarding the
estate’s entitlement to compensation.
It is also advisable for the agent to highlight in his
instructions that notification of a claim under Regulation 17 must be made to
the principal within 12 months of the date of death, otherwise the entitlement
will lapse. The agent could also, if he so wished, specify a law firm with
expertise in administering complex estates and commercial agency law to act as
executor. The more detail an agent can provide at this stage, the easier the
process will be for the person who ultimately deals with the estate upon the
Whether an agent is entitled to compensation or an indemnity
depends on whether the parties have specifically agreed that an indemnity shall
apply. If the agreement is silent then the compensation alternative will apply.
This benefit can certainly be substantial, particularly in the case of
compensation where there is no cap on the value of the payment. It is certainly
not a benefit to be overlooked when calculating the assets of an estate.
The value of an agent’s entitlement to compensation can vary
enormously and is dependent on a variety of factors. Ensuring that up to date
records of sales, commissions and agency expenses throughout the term of the
agency agreement are readily and easily accessible will be invaluable to the executor
as this is central to the valuation process. The executor will also need a clear understanding of the terms of the
agency. Those terms may be embodied in a written agreement which should also be
readily accessible. If there is no written agreement it would be advisable for
the terms to be detailed in a letter accompanying the will.
This important and often substantial entitlement should be
viewed as a “death in service” type benefit. A termination payment on death
will increase the size of an agent’s estate and will assist dependants
financially upon the agent’s death.
Nobody likes talking about preparing for death, but if you
want your loved ones to benefit from the years of efforts you have put into
your agencies, you need to act now. Preferably you need to instruct a firm that
understands the Regulations and that has a specialist private client
At Myerson Solicitors LLP we have a team of specialists who
can advise on all aspects of commercial agency law. We also have a team of
lawyers who are experts in the drafting of wills and administration of estates.
We recommend all agents be proactive and take steps to
protect their post termination agency claims upon death. For more information,
please email us at firstname.lastname@example.org or call us today on 0161 941 4000 to
speak to a member of one of our specialist teams.