Estate Trustee Compensation Disputes in Ontario: Is the Fee Fair?

You have seen the executor's numbers, or heard how much they plan to take, and it feels like too much. Perhaps you have heard of a percentage guideline and want to know whether it is a rule, a ceiling or just a starting point.

This article explains the legal standard Ontario uses for estate trustee compensation and how a beneficiary can test a fee. It is general information only, and the outcome in any real case depends on the work actually done.

The legal standard: fair and reasonable

Under the Trustee Act, an estate trustee's compensation is a fair and reasonable allowance for their care, effort and time, as allowed by a judge of the Superior Court of Justice. That wording is the test. It focuses on what the trustee actually did, not simply on the size of the estate.

You may hear that a percentage of the estate is a normal guideline. Practitioners do use percentage figures as a rough reference, but the statute itself speaks of a fair and reasonable allowance. A lawyer can explain how courts treat any percentage reference and how it fits the facts of your estate.

• What the trustee did: gathering assets, paying debts, dealing with property, filing tax returns, keeping records.
• How much time and effort it took, and whether it was reasonable.
• How complicated the estate was and whether the trustee used paid professionals for tasks they could have done themselves.
• How well the trustee carried out the job, including whether there were delays or mistakes.

These points are general ways of thinking about the standard. The decision is for the judge, who looks at all the circumstances.

How a fee gets challenged

The most common route is a passing of accounts. Under the Estates Act, a court will not require an executor or administrator to account unless a person interested in the estate or a creditor asks for it, so a beneficiary can apply to compel accounts. No Ontario law requires a trustee to pass accounts at fixed intervals, and trustees may choose not to pass them unless the court compels them.

On a passing, the judge may inquire into any complaint or claim by any person interested in the accounts. Compensation is something a beneficiary can raise. If the trustee applies to pass accounts and you object, that objection does not start a proceeding, so the two-year period in s. 4 of the Limitations Act, 2002 does not apply to it.

In the Toronto Region, an applicant on a passing gets a hearing date by submitting a Request Form through the Ontario Courts Public Portal. For motions and applications, parties must file a costs outline through the Portal before the hearing. Other regions have their own practice directions.

Fee disputes are often about more than the fee

A complaint about pay is frequently tied to other concerns: slow administration, poor record keeping, or payments the trustee made to themselves before the accounts were reviewed. These can be looked at together on a passing of accounts.

If the accounts reveal a breach of trust, the Estates Act lets the judge order the executor, administrator or trustee to pay damages or other sums to the estate. A trustee may ask to be excused from personal liability. The court may relieve a trustee wholly or partly from liability for a breach of trust if they acted honestly and reasonably and ought fairly to be excused. That relief does not cover a loss arising from investing trust property.

Removal and mediation

Where the problems go beyond the fee, the Superior Court of Justice may remove a personal representative and appoint another suitable person. Courts treat removing trustees a deceased specifically chose as a serious matter, so removal is not a routine response to a pay disagreement.

Mediation can also be part of the picture. Rule 75.1.02(1) makes mediation mandatory in certain estates proceedings, including contested passings of accounts. The Ontario government says the program operates in Toronto, Ottawa and Windsor. The court's directions order sets the cost of mediation and how it is shared. Since the exact areas covered should be confirmed against the current rule, ask a lawyer where your matter falls.

What to do next

Before you decide to fight, understand the work that was done. A fee that looks large on paper may reflect real effort, and a fee that looks modest may still be unjustified if the work was poor. Good information makes any discussion, or any court application, more focused.

• Ask the trustee in writing for a breakdown of the compensation they plan to take and the work behind it.
• Ask for the estate accounts and supporting records.
• Note whether the trustee has already paid themselves, and when.
• Make a short timeline of delays, mistakes or missing information.
• Raise a time-limit question with a lawyer early, since some claims have their own periods.
• Consider whether a negotiated outcome or mediation might save cost and time.

Frequently asked questions