Executor Compensation in Ontario

Acting as an executor can involve significant time, responsibility, and work. In Ontario, an executor may be entitled to receive fair and reasonable compensation for properly administering an estate.

The formal Ontario term for an executor is estate trustee. Executor compensation is therefore also commonly referred to as estate trustee compensation.

Nobari Law Professional Corporation provides legal assistance with executor compensation, estate accounts, beneficiary releases, and related estate administration matters.

Ontario’s Trustee Act permits an estate trustee to receive a fair and reasonable allowance for the care, effort, responsibility, and time devoted to administering the estate.

The amount is not automatically fixed. It may depend on:

• the terms of the Will; 
• the work completed by the estate trustee; 
• the nature and complexity of the estate; 
• the records and accounts maintained; 
• whether the beneficiaries approve the proposed compensation; and 
• where necessary, approval from the Ontario Superior Court of Justice.  

An estate trustee may choose not to claim compensation. Being a beneficiary of the estate does not, by itself, prevent the person from also receiving reasonable compensation for work performed as estate trustee.

No. Ontario law does not provide a fixed rule stating that every executor receives five per cent of the estate.

Ontario courts have traditionally referred to percentage-based guidelines as a starting point when assessing estate trustee compensation.

• 2.5% of capital received; 
• 2.5% of capital paid or distributed; 
• 2.5% of income received; 
• 2.5% of income paid or distributed; and 
• where appropriate, an annual care and management fee of up to two-fifths of 1% of the average value of assets under ongoing management. 

These percentages are guidelines rather than a guaranteed tariff. The resulting amount must still be reviewed to determine whether it is fair and reasonable in light of the work actually performed. Ontario courts use the percentage calculation as a starting point and then compare the result with the circumstances of the particular administration. 

For this reason, executor compensation should not simply be assumed to equal five per cent of the gross value of an estate.

When assessing whether the proposed compensation is fair and reasonable, relevant considerations include:

• the size and value of the estate; 
• the care and responsibility involved; 
• the time required to administer the estate; 
• the skill and ability demonstrated by the estate trustee; and 
• the results achieved during the administration. 

A large estate consisting mainly of one straightforward asset may require less work than a smaller estate containing numerous accounts, real estate, business interests, tax matters, or difficult-to-locate beneficiaries.

Detailed records of the work performed are therefore important.

Yes. A Will may contain a provision fixing or otherwise addressing the estate trustee’s compensation.

Where the Will fixes or otherwise addresses compensation, its terms should be reviewed before relying on the usual compensation guidelines. Ontario’s Trustee Act recognizes that different considerations apply where compensation has already been fixed by the governing instrument.

The Will may also state that the estate trustee is to act without compensation or may provide a particular gift in recognition of the person’s services. 

Beneficiaries may be provided with estate accounts showing:

• the estate assets received; 
• income earned by the estate; 
• debts and expenses paid; 
• interim distributions; 
• the proposed executor compensation; and 
• the amount available for final distribution. 

Adult beneficiaries who are capable of managing their property may be asked to review and approve the estate accounts and proposed compensation, often as part of a release.

Where approval cannot be obtained or court approval is otherwise required, the estate trustee may apply to formally pass the estate accounts. Ontario’s court forms for a passing of accounts include documents addressing the accounts, notices, objections, and the judgment requested. 

An estate trustee should be cautious about paying compensation before the amount has been properly determined and approved.

Interim compensation may sometimes be appropriate, particularly during a lengthy administration. However, paying compensation prematurely may result in the amount being challenged, reduced, or required to be repaid.

Before taking compensation, the estate trustee should consider:

• the wording of the Will; 
• the work completed to date; 
• whether sufficient funds remain for debts and taxes; 
• the quality of the estate accounts; 
• whether the beneficiaries approve; and 
• whether court approval may be required. 

Where two or more estate trustees act together, the compensation is not ordinarily multiplied simply because more than one person was appointed.

The total compensation should be allocated among the estate trustees based on factors such as:

• the work performed by each person; 
• the time devoted to the administration; 
• the responsibilities assumed; 
• the skills contributed; and 
• any reasonable agreement among the estate trustees concerning allocation.

Estate trustees should discuss the proposed allocation before finalizing the estate accounts or requesting beneficiary approval.

Yes. Compensation is payment for the estate trustee’s time, effort, responsibility, and work.

Reimbursement relates to reasonable and properly incurred expenses personally paid by the estate trustee in connection with the administration of the estate.

Ontario’s Trustee Act permits a trustee to pay a properly incurred expense from trust property or personally pay the expense and seek reimbursement. A court may later disallow an expense that was not properly incurred.

Receipts and supporting records should be kept for all reimbursement claims. 

Executor compensation is generally taxable to the recipient. The tax treatment, withholding requirements, and reporting obligations may depend on the circumstances, including whether the person provides executor or estate-administration services as part of a business.

Tax advice should be obtained before compensation is paid or reported.

Reimbursement of properly documented estate expenses is treated differently from payment for the estate trustee’s services.

An estate trustee should maintain clear records throughout the administration, including:

• a list of assets and date-of-death values; 
• bank and investment statements; 
• records of money received and paid; 
• invoices and receipts; 
• property-sale or transfer documents; 
• tax returns and assessments; 
• correspondence with beneficiaries and professionals; 
• details of distributions; and 
• a record of the time spent and work performed. 

Good record-keeping helps explain the administration to beneficiaries and supports the amount of compensation being requested.

Learn more about our estate administration services.

Estate trustees who are beginning an estate administration may also use our Probate Document Checklist to organize commonly requested estate information and documents.

Nobari Law Professional Corporation provides legal assistance with executor compensation and related Ontario estate matters.

Our services may include:

• explaining how executor compensation is determined; 
• reviewing the Will for compensation provisions; 
• reviewing the estate trustee’s records and proposed calculation; 
• preparing estate-related documents, including beneficiary releases and receipts where appropriate; 
• assisting with estate accounts and proposed distributions; and 
• providing legal guidance during the administration of the estate, where requested.  

Every estate is different. The appropriate compensation will depend on the Will, the estate assets, the work completed, the records maintained, and the circumstances of the administration.

Executor compensation should be reasonable, properly documented, and considered before the estate is fully distributed.

Contact Nobari Law Professional Corporation to discuss executor compensation, beneficiary releases, estate accounts, or other legal matters arising during the administration of an Ontario estate.