Estate Trustee Compensation in Ontario: What Is Reasonable

If you are an executor, you may be wondering what you can fairly be paid for the work. If you are a beneficiary, you may be wondering whether the amount an executor wants is reasonable. Many people have heard about a percentage guideline, and it is a common starting point for the conversation.

This article explains the legal test Ontario uses, who decides, when the will changes the picture, and when an estate trustee can pay themselves. It explains how things generally work. Because the details depend on the estate, a lawyer or accountant can confirm how this applies to yours.

The legal test: a fair and reasonable allowance

Under the Trustee Act, a trustee or personal representative is entitled to a fair and reasonable allowance for their care, pains and trouble and the time spent on the estate. That allowance is as allowed by a judge of the Superior Court of Justice, and the judge may fix it when the accounts are passed.

The words matter. The law does not set a flat rate. It points to the effort and time involved and asks whether the amount is fair and reasonable. Two estates of similar size can lead to different results if one needed far more work, time or care.

Where the percentage guideline fits

You may hear people talk about percentage rules of thumb for executor pay. What the statute itself asks for is a fair and reasonable allowance for care, pains, trouble and time, as allowed by a judge. How any percentage figure would apply to a particular estate depends on the facts, so it is worth confirming with a lawyer or accountant before you rely on one.

A different setting does have a set scale. For an attorney under a continuing power of attorney, a regulation sets out 3 per cent on capital and income receipts, 3 per cent on capital and income disbursements, and three-fifths of 1 per cent of the annual average value of the assets as a care and management fee. These amounts can be adjusted when accounts are passed. Do not assume that scale applies to an estate trustee.

When the will or someone else changes the rules

A lawyer-trustee exception does not mean any trustee can bill for ordinary executor tasks at professional rates. It is limited to necessary professional services provided to the estate.

Taking pay before accounts are passed

Executors sometimes want to pay themselves along the way. The Court of Appeal for Ontario has said an estate trustee may take, or pre-take, compensation before accounts are passed only in three cases.

• All persons with a vested or contingent interest agree, if they are sui juris.
• The court approves.
• The will allows it.

Taking money outside those cases can create real problems for a trustee. Beneficiaries who see unexplained withdrawals can ask for accounts and, where appropriate, ask the court for orders.

What to do next

On an application to pass accounts, the estate trustee files the verified estate accounts (Form 74.43), a copy of the certificate of appointment and a copy of the latest judgment, if any. A person with a financial interest, such as a beneficiary, may also move for orders requiring the trustee to file a statement of estate assets, give further particulars or pass accounts.

If you are an executor:

• Keep a running record of dates, tasks and hours.
• Check what the will says about pay before taking anything.
• Before pre-taking, confirm that all persons with a vested or contingent interest agree (if they are sui juris), the court approves, or the will allows it.
• Keep estate money separate and documented.
• Ask a lawyer or accountant how pay is treated for tax.

If you are a beneficiary, ask for a written breakdown of the work and the amount proposed, compare it to the will, and get advice before you sign anything that agrees to it.

Frequently asked questions