Can an Executor Be Reimbursed for Estate Expenses in Ontario?

If you are an executor, you may be paying for things before the estate has any money available: a locksmith, a utility bill, a storage fee, a property tax instalment. Many executors ask whether they can simply be repaid, and whether that counts as being paid for their work.

If you are a beneficiary, you may be looking at a list of expenses and wondering whether it is fair. This article explains how reimbursement generally works in Ontario, how it differs from compensation, and what protections exist for everyone involved.

What the Trustee Act says about expenses

Under section 23.1 of the Trustee Act, if an estate trustee is of the opinion that an expense would be properly incurred in carrying out the trust, the trustee may pay it directly from the trust property, or pay it personally and then recover it from the trust property.

In plain words, an executor does not have to fund the estate's costs out of their own pocket permanently. The key phrase is "properly incurred". The expense has to be connected to administering the estate, not to something personal to the executor.

• Paying directly from estate funds is usually the cleaner route, because no repayment step is needed.
• Paying personally and recovering later is allowed, but it makes your records more important.
• Whether a particular cost was proper depends on the facts, and it can be questioned by beneficiaries.

Reimbursement is not the same as compensation

Reimbursement repays money an executor spent on the estate. Compensation is payment for the executor's own effort. Under section 61(1) of the Trustee Act, an estate trustee is entitled to a fair and reasonable allowance for their care, pains, trouble and time spent on the estate, as allowed by a judge of the Superior Court of Justice.

Compensation can be settled even when the estate is not before the court in an action, and a judge passing the estate trustee's accounts may allow a fair and reasonable allowance.

There is an exception when the executor is a lawyer. Where a solicitor-trustee has provided necessary professional services to the estate, the allowance is increased by an amount considered fair and reasonable for those services.

Why records matter

Estate trustees must keep accurate records of the estate's assets and transactions. Accounts filed with the court must include, on a first passing, a statement of assets at the date of death, together with accounts of all money received and disbursed.

That means every expense you claim should be traceable. A receipt, an invoice and a bank record showing who paid are the usual building blocks.

• Keep every receipt and invoice, and note what estate purpose each one served.
• Record whether the estate account or you personally paid.
• Keep estate money separate from your own.
• Write down the date and the reason for each payment as you go.
• Keep a running list of any reimbursement you take, and when.

How beneficiaries can question expenses and compensation

On a passing of accounts, notice goes to beneficiaries and other interested persons, and the estate trustee swears an affidavit verifying the accounts. Judgment can be given unopposed once the objection period has expired and no notice of objection to the accounts or to the compensation claimed has been received.

So a beneficiary who has concerns should pay attention to the notice and its deadline. If no objection comes in, the accounts can be approved without a contest.

Where a beneficiary is a minor, the Office of the Children's Lawyer must be served with an application to pass estate accounts under rule 74.18(3). It should also be served where the estate has an unborn or unascertained interest.

Before the estate is finally distributed

Ontario guidance says that under a will, the estate is distributed once the assets have been liquidated and the funeral and burial expenses and any debts have been paid. How an executor's own reimbursement fits into that timing depends on the estate, so it is worth confirming with a lawyer.

Before distributing any property, the legal representative of a deceased taxpayer must obtain a clearance certificate from the Minister confirming that all tax amounts have been paid or that security for them has been accepted. A representative who distributes without the certificate is personally liable for the unpaid tax, up to the value of the property distributed. The certificate is requested on Form TX19. An estate with a GST/HST number also needs Form GST352.

If an executor makes a mistake, the court may relieve a trustee who is personally liable for a breach of trust, wholly or partly, if the trustee acted honestly and reasonably and ought fairly to be excused. That is a discretion, not a guarantee, and good records help show what you did and why.

What to do next

• Executors: gather your receipts, list what you paid personally, and decide whether to be repaid now or at the end.
• Beneficiaries: ask for a summary of expenses and the supporting records, and watch for any passing of accounts notice.
• Everyone: if the amount is large, or someone disputes it, speak with a lawyer before payments or distributions are made.
• Ask an accountant or lawyer about the clearance certificate before distributing any property, including interim distributions.

Frequently asked questions