Can a Trust Company Act as Executor in Ontario?

Some wills name a trust company or a bank's trust arm as executor, either alone or alongside a family member. If you are the person who made that choice, or a beneficiary who finds a company in charge of the estate, it helps to know how that works.

This article explains in general terms how a corporate executor fits into Ontario's estate rules, how its fees are set, and what limits apply.

What a corporate executor is

A corporate executor is a company, rather than a person, named in a will to carry out the estate administration. It works through its own staff, so the day-to-day contact for the family is usually an estate officer.

Whether a particular company agrees to act, and on what terms, is up to the company. If a named executor renounces, their rights in respect of the executorship wholly cease.

The same duties apply

How the rules apply to a corporation named as executor depends on your situation, so it is worth confirming with a lawyer. The duties set out for estate trustees generally apply.

• Keep accurate records of the estate's assets and transactions.
• File all required tax returns for the deceased and make sure any balance owing is paid before distributing the estate.
• Exercise the care, skill, diligence and judgment of a prudent investor when investing estate property.
• Account to beneficiaries when required: an executor cannot be required by a court to account other than by an inventory unless at the instance of an interested person or a creditor, and a beneficiary is an interested person.

How fees are set

An estate trustee is entitled to a fair and reasonable allowance for their care, pains and trouble and time spent, as allowed by a judge of the Superior Court of Justice. The statute sets no percentage or formula.

There is an important exception. The Trustee Act allowance rules do not apply where the will or other trust instrument itself fixes the allowance. If a will names a trust company, read it for a fee clause, and ask the company for its written fee information.

If a beneficiary objects to the compensation claimed, a judge passing the accounts may allow a fair and reasonable allowance. Accounts filed with the court must include a statement of the compensation the estate trustee claims.

Tax treatment of fees depends on who is acting. Fees earned by someone acting as an executor or administrator in the course of a business are business income, not employment income, and are reported on a T4A slip rather than a T4. If the estate pays executor, liquidator or trustee fees, it must file a T4 Summary and the related T4 slips. How these rules apply to a specific company is worth confirming with an accountant.

Limits and oversight

A corporate executor is answerable to the court and the beneficiaries. The Superior Court of Justice may remove a personal representative on any ground on which it may remove any other trustee, and any person interested in the estate may apply.

On a passing of accounts, a judge may make full inquiry into the deceased's property and may order an executor, administrator or trustee to pay such sum by way of damages or otherwise as is just. The court may relieve a trustee of personal liability for a breach of trust if they acted honestly and reasonably and ought fairly to be excused.

A beneficiary who objects to the accounts, including the compensation claimed, must serve a Notice of Objection to Accounts (Form 74.45) at least 35 days before the hearing date.

What to do next

• Read the will for any clause that fixes fees or names more than one executor.
• Ask the company for its fee information and a plan for the estate in writing.
• If you are a beneficiary, ask for a statement of the estate's assets and keep your own notes.
• Raise concerns early, and speak with a lawyer before filing any objection, because the deadlines are short.

Frequently asked questions