Hourly Billing vs Percentage: How Ontario Executors Justify Fees

Executors and beneficiaries often argue about the same question: should pay follow the hours worked, or a customary percentage of the estate? The answer is not a simple choice between the two, and people on both sides can be surprised.

This article explains what the statute actually says, how a judge gets involved, and what good records look like. It does not give a formula, because the sources of the law on this point should be checked against current case law with a lawyer.

What the statute says

Section 61(1) of the Trustee Act says a trustee, guardian or personal representative is entitled to a fair and reasonable allowance for care, pains and trouble and the time expended in and about the estate, as allowed by a judge of the Superior Court of Justice. Notice the words. Care, pains, trouble and time are all named. Time is one part of the picture, not the whole of it.

The statute does not state an hourly rate or a percentage of the estate. Courts have developed approaches over the years, and those are found in case law that should be checked with a lawyer before you rely on any figure you have heard.

The amount can be settled even if the estate is not before the court in an action. That allows a judge to deal with compensation separately when needed.

Who has the final say

• The will. If it fixes the allowance or says the executor acts without pay, the statutory allowance does not apply.
• The judge. Where compensation has not been fixed by the trust instrument or otherwise, the judge on the passing of accounts has power to fix it, and the trustee may then retain that amount out of money held.

A trustee who wants to pass accounts can file them in the Superior Court of Justice, with the same practice and effect as the passing of executors' or administrators' accounts.

Time records and percentages compared

Both tools are used in practice. The question is what each one shows, and why neither is a complete answer.

A sensible way to think of it: records tell the story of the work, and a percentage can be a reality check on the result. A judge decides whether the final number is fair. For a straightforward estate with an executor who did little, a large claim may be hard to justify. For a complicated estate with years of work, hours may support more.

Why records matter on a passing of accounts

An executor does not have to render an account other than by inventory unless requested by or for a person interested in the property or by a creditor. So there is no automatic court review. But a beneficiary can ask for accounts, and if the accounts are passed, the judge may make full inquiry into and accounting of the whole property of the deceased and its administration.

On a passing of accounts the judge may also inquire into complaints of misconduct, neglect or default by an executor causing loss to the estate, and may order payment of damages or other relief, subject to appeal. Compensation is often discussed in that setting, alongside the question of whether the executor did the job properly.

Two other rules affect how an executor is treated. A trustee investing trust property must exercise the care, skill, diligence and judgment a prudent investor would exercise. And a court may excuse a trustee who committed a breach of trust if the trustee acted honestly and reasonably and ought fairly to be excused, though that relief does not apply to a loss arising from investment of trust property.

If the executor is a lawyer and has rendered necessary professional services to the estate, the allowance may be increased by an amount considered fair and reasonable for those services.

What to do next

• Check the will first for any clause on compensation.
• Start a log from the first day: date, task, time spent and who you dealt with.
• Keep receipts and statements for every expense paid from the estate.
• Before paying yourself anything, check whether the will fixes your compensation; if it does not, a judge can fix it on a passing of accounts, and you may then retain that amount.
• As a beneficiary, you can ask for accounts and keep your own notes of any concerns.
• Speak with a lawyer about what current case law says before you propose a percentage.

Early, open discussion usually costs less than a contested passing of accounts. If there is a dispute, get legal advice before taking or refusing any payment.

Frequently asked questions