Can an Executor Pay Themselves Before the Estate Accounts Are Approved in Ontario?

You may be a beneficiary who has noticed that the executor has already moved money from the estate into their own account. Or you may be the executor, wondering whether you can simply take your fee now rather than waiting until the end. Either way, the timing matters as much as the amount.

In Ontario, an executor is also called an estate trustee. The rules about when they can be paid are stricter than many people expect. This article explains the general rule, the limited cases where early payment is allowed, and the steps open to a beneficiary who thinks it was done without permission.

How an estate trustee's pay is meant to work

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 one that a judge of the Superior Court of Justice allows. The judge may fix it when the accounts are passed.

In plain words, the executor does not simply decide their own fee. The court is the check on it, and the usual moment for that check is the passing of accounts, which is a court review of how the estate was handled.

When the will or the work changes the picture

Section 61 of the Trustee Act does not apply where the document creating the trust fixes the allowance. So if the will sets a specific fee for the executor, that term is what matters, not the general test.

There is also a rule for lawyer-trustees. Where a trustee who is a barrister or solicitor provides necessary professional services to the estate, the allowance may be increased accordingly. Whether work really was necessary professional work, and how much extra it justifies, depends on the facts.

The three cases where early payment is allowed

Taking compensation before the accounts are passed is often called pre-taking. The Court of Appeal for Ontario has said an estate trustee may pre-take compensation in only three cases.

• All persons with a vested or contingent interest agree, if they are legally able to consent (the court's term is sui juris).
• The court approves the payment.
• The will allows it.

If none of those three applies, the payment was not permitted at that stage. Note that agreement must come from everyone with an interest, not just the main beneficiaries. A beneficiary who is a minor, or who cannot legally consent, cannot give valid agreement on their own. Whether a particular payment fits one of the three cases is worth confirming with a lawyer.

What a beneficiary can do

A person with a financial interest in the estate, such as a beneficiary, may move for orders for assistance under rule 74.15 of the Rules of Civil Procedure. These include orders requiring the estate trustee to file a statement of estate assets, give further particulars, or pass accounts.

When the trustee applies to pass accounts, they must file the verified estate accounts on Form 74.43, a copy of the certificate of appointment, and a copy of the latest judgment, if any. The judge may then fix the allowance when the accounts are passed.

If the executor's conduct is more serious, the Superior Court of Justice may remove a personal representative on any ground on which it may remove any other trustee, and may appoint another proper person. Whether removal is appropriate depends on the facts of the case. The Court of Appeal for Ontario has said that removing trustees the deceased specifically chose is a serious matter, because it intrudes on the deceased's intention.

What to do next

The right first steps differ depending on whether you are the executor or the beneficiary.

• Beneficiary: write down what you have seen, with dates and amounts, and keep any bank or estate records you have been given.
• Beneficiary: check the will to see whether it sets or allows compensation.
• Beneficiary: ask the executor in writing for an explanation and for a statement of the estate's assets.
• Executor: do not take payment unless all persons with a vested or contingent interest agree (if they are sui juris), the court approves, or the will allows it.
• Executor: keep a record of your time and the work you do, since the court looks at your care, pains and trouble and your time.
• Either side: speak with a lawyer early, before positions harden or money is spent.

Frequently asked questions