Executor Fees on Assets That Pass Outside the Estate in Ontario

Not everything a person owns at death goes through the estate. Joint bank accounts and plans with a named beneficiary often pass directly to someone else. That raises a fair question for the executor: if I help with those assets, can I be paid for it? And for beneficiaries: are those assets being charged for the executor's time?

This article explains what stays outside the estate, how the Trustee Act frames compensation, and the practical steps that keep everyone out of disputes. It is general information, and your facts may change the answer.

What passes outside the estate

The estate is the property that vests in the personal representative. The Estates Administration Act says real and personal property of a deceased person, without survivorship, vests in the personal representative as trustee for those beneficially entitled. The words about survivorship matter. Property that passes by survivorship, such as a jointly held asset, does not follow the same route.

Ontario's estate administration tax page gives a helpful list. The estate value for the return covers assets owned at death, such as Ontario real estate less encumbrances, bank and investment accounts, vehicles and business interests. It excludes items such as CPP death benefits, RRSPs, RRIFs and TFSAs with beneficiary designations, and out-of-province real estate.

What the executor's compensation covers

The Trustee Act allows a fair and reasonable allowance for care, pains and trouble and the time expended in and about the estate, as allowed by a judge. The focus is the estate. Work on property that never entered the estate is harder to fit within that wording, though the answer turns on what you actually did and for whom.

If the will fixes compensation or says the executor acts without pay, that governs. A will might also say something about duties relating to non-estate assets. Read it closely.

Where no amount has been fixed, a judge on a passing of accounts has power to fix it, and the trustee may then retain that amount out of money held. That means a claim should be explained and documented, not simply deducted.

If an asset outside the estate was not the executor's to deal with, taking a fee from it directly raises a risk. The person who receives that asset did not receive it through the estate, and nothing in the statutory wording says the executor may charge them. Raise any such idea with a lawyer first.

Duties that still apply to the executor

An executor's job is winding up the deceased's affairs, paying taxes, bills and debts, collecting the assets and distributing the residue to those entitled. A person named as estate trustee is not required to act. Even when many assets pass outside the estate, the executor still has jobs to do.

• File the deceased's income tax return and inform banks and financial institutions of the death.
• Contact the Family Responsibility Office if support was paid.
• Obtain a clearance certificate before distributing, because a legal representative who distributes without one is personally liable for unpaid amounts, up to the value distributed.
• File the Estate Information Return within 180 calendar days of the certificate being issued, even if the estate's value is $0.

Assets outside the estate can still matter for these duties. For example, RRSPs, RRIFs and TFSAs with beneficiary designations are not in the estate value for the return. How other assets outside the estate affect your duties depends on the situation, so it is worth confirming with a lawyer or accountant.

Powers of attorney end at death

Some accounts were managed by an attorney under a continuing power of attorney before death. That authority ends at death, so the attorney no longer has authority over the grantor's accounts. An attorney is a fiduciary who must act diligently and keep accounts of all transactions. The attorney must retain accounts and records until certain events, including the incapable person's death and delivery of the accounts and records to the personal representative.

If you were the attorney and are now also the executor, keep the two roles and their records separate. A court can order an attorney's accounts passed on application.

What to do next

• List every asset and note beside each one how it was held and whether a beneficiary was named.
• Read the will for any compensation clause.
• Keep time records that clearly separate estate work from anything else.
• Do not charge fees against assets that passed outside the estate without legal advice.
• Get a clearance certificate before distributing.

If beneficiaries or joint owners disagree about who should bear costs, speak with a lawyer before money moves.

Frequently asked questions