Executor Fees in Ontario: Expenses and Compensation
Acting as the executor of an estate can take a significant amount of time and energy. It is a serious responsibility that can expose the executor to liability. In recognition of these facts, the executor of an estate is entitled to compensation.
Our Richmond Hill wills and estates lawyer may be able to help you determine the amount of executor fees to which you may be entitled. Contact us with any questions you have about estate administration in Ontario, including estate fees, expenses, or compensation.
What Compensation Does the Executor Receive?
If the amount of compensation to be paid to the executor is not set out in the will, the Trustee Act provides that the trustee “is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.” The Act, however, does not specify what is considered “reasonable.”
The Courts in Ontario have developed a practice of calculating reasonable compensation based on 2 ½% of each of the categories of:
- Capital receipts
- Capital disbursements
- Revenue receipts and
- Revenue disbursements.
In addition, a management fee on the gross value of the estate is typically granted.
However this practice is not always considered appropriate. The amount of work required to administer an estate is not constant, and so a court will not always find it reasonable to calculate trustee compensation based on these percentages.
The five factors that a court will consider to determine whether an executor’s proposed compensation is appropriate are:
- The size of the trust or estate
- The care and responsibility involved
- The time spent performing the duties
- The skill and ability shown
- The success resulting from the administration.
Does the Court Have to Approve the Amount of Compensation?
Seeking compensation for performing the duties of an executor does not necessarily involve estate litigation. Sometimes the will itself will set out either an amount to be paid to the executor as compensation, or a mechanism for calculating the executor’s compensation.
Even if no amount is specified in the will, the executor is still entitled to receive compensation. Generally, the executor will propose an amount of compensation and seek the agreement of the beneficiaries of the estate. Only if the executor and the beneficiaries are unable to come to an agreement will the matter of compensation be brought before a judge to determine.
By keeping thorough records that show the amount of time and effort that the executor spent in administering the estate, the executor can generally avoid the need to go to court.
What Expenses Are Paid By the Estate?
If the executor hires a professional to help in administering the estate, the professional’s fees are paid by the estate. If the executor pays the professional’s fees, they can be reimbursed by the estate. It should be noted, however, that it will likely be considered reasonable to reduce the executor’s compensation where a professional has been hired to perform some of the executor’s duties.
Contact Our Richmond Hill Wills and Estates Lawyers Today
It is important for an executor to be organized and aware of their rights and duties from the beginning of the estate administration process. Contact us today for more information relating to executor fees in Ontario, expenses and compensation, and to see how our team of Richmond Hill wills and estates lawyers may be of service to you.
* Please be advised that the information in this article does not constitute legal advice, but is intended as a general overview on a legal topic. For legal advice, please consult with a lawyer.