How Do Beneficiaries Challenge Executor Fees in Ontario?

You are a beneficiary, and the numbers do not look right. Perhaps the executor has already paid themselves a large amount, or has told you what they plan to charge and it feels high. You may not know whether you are allowed to question it.

In Ontario, you can. Executor compensation is not simply whatever the executor decides, and the court has tools for reviewing it. This article explains where executor pay comes from, when it can be taken early, and how a beneficiary can object.

Where executor compensation comes from

An estate trustee (the legal term for an executor) is entitled to a fair and reasonable allowance for the care, pains, trouble and time spent on the estate, as allowed by a judge of the Superior Court of Justice. The amount can be settled even if the estate is not before the court in an action. When accounts are passed, the judge may allow a fair and reasonable amount.

There are two important exceptions. If the will or other document creating the trust fixes the allowance, the general rule does not apply. And where a lawyer is the trustee and provides necessary professional services, the allowance may be increased to reflect those services.

Executor fees are also taxable income for the executor, which is a separate matter from whether the amount is fair.

Taking fees before the court approves them

Executors sometimes pay themselves along the way. The Court of Appeal for Ontario has held that an estate trustee may take compensation before passing accounts only in three situations:

• with the agreement of all persons with a vested or contingent interest who are sui juris (legally able to decide for themselves)
• with court approval
• where the will provides for it

If an executor takes fees early and the court later approves a lower amount on a passing of accounts, the court can approve the reduced amount and order the difference repaid to the estate. So an early payment is not final.

Getting the information you need first

Before objecting, you usually need facts. Apart from an inventory, an executor generally does not have to account to a court unless asked by or on behalf of a person interested in the property or a creditor. Ontario has no fixed schedule requiring executors to pass accounts, so they may choose not to unless the court compels them.

A person who appears to have a financial interest in the estate can bring a motion for an order requiring the estate trustee to pass accounts. That person can also ask for an order that the trustee file a statement of the nature and value of the estate's assets at the date of death, and then ask for further particulars.

How an objection works

When accounts are passed, the estate trustee files them with an affidavit and the court issues a notice of application. Everyone with a vested or contingent interest must be served at least 60 days before the hearing if served in Ontario, or at least 75 days if served outside Ontario.

If you object, you must serve and file a notice of objection to accounts (Form 74.45) at least 35 days before the hearing date. You cannot raise an objection at the hearing unless it was in your notice, unless the court orders otherwise. Missing this step can seriously limit your position, so note the dates as soon as you are served.

If no objections are filed, or all are withdrawn, the court may grant judgment without a hearing. The judge can also look into complaints about misconduct or neglect that caused loss and may order payment to the estate.

What the court looks at

The legal test is a fair and reasonable allowance for care, pains, trouble and time. How that applies to a particular estate depends on its facts and on the work actually done, so it is worth confirming with a lawyer. Percentages you may hear quoted are rules of thumb, not statutory amounts. The fixed scales that do exist in Ontario law apply to other roles. For comparison, the Public Guardian and Trustee charges 3% per transaction and 0.60% of the annual value of assets managed. An attorney under a continuing power of attorney for property is paid under a separate prescribed scale, which does not apply to executors.

A judge will also see the claimed compensation in the accounts, including how any value-based management fee was set. That is why the accounts matter so much.

What to do next

• Read the will to see whether it fixes the executor's pay or allows early payments.
• Ask the executor in writing for a list of assets, payments and the compensation taken so far.
• Keep any dates and documents you are served with, especially the 35-day objection deadline.
• Do not sign a consent to early compensation until you understand what you are agreeing to.
• Speak with an estates lawyer before filing an objection, since costs and deadlines are strict.

Frequently asked questions