Is a Trustee Entitled to Be Paid for Their Work in Alberta?

Acting as a trustee takes time and care, whether you are managing a family trust or an estate trust. It is natural to ask whether you can be paid, and whether you can recover what you spend out of your own pocket.

In Alberta the rules come mainly from the Trustee Act. This article explains the general approach to compensation and expenses, how interim payments work, and when the court becomes involved.

This article covers the law of Alberta.

The basic right to compensation

Under the Trustee Act, a trustee is entitled to fair and reasonable compensation from trust property. Trustees are not presumed to be entitled to equal compensation, so co-trustees do not automatically split payment evenly.

The trust document, such as a will, generally prevails over a contrary provision of the Trustee Act unless the Act provides otherwise. If the document says something about pay, read it first, and ask a lawyer how it fits with the Act.

Payment comes with responsibilities. A trustee must act in good faith and in accordance with the terms of the trust, the best interests of the objects of the trust, and the Act. A trustee must also use the care, diligence and skill that a person of ordinary prudence would use in dealing with another person's property. A trustee with specialized or professional skill is held to a higher standard that reflects that skill.

Expenses are treated differently from compensation

Compensation is payment for your time and skill. Expenses are the costs of running the trust. A trustee may reimburse administration expenses from trust property without prior court authorization.

Keep receipts and a clear record of every expense. Beneficiaries may later ask to see the source documents, so good records protect you.

If you also benefit from the trust, take extra care. A trustee who is also a beneficiary must not use the office to gain a personal benefit beyond what the law or the trust instrument expressly permits. A will or trust deed that expressly allows a named trustee to also take as a beneficiary is permitted by the wording of the Act.

Taking interim compensation

A trustee may take interim compensation without court approval if at least one beneficiary of full capacity has a vested interest, but must first give written notice. The objection period is at least 2 months.

• Check that a beneficiary of full capacity has a vested interest.
• Give written notice before taking anything.
• Allow at least 2 months for objections.
• Remember that the amount can still be reviewed later by the court.

When the court decides

On application, the court may fix a trustee's compensation, using factors listed in the Act. The court can also order that a trustee's accounts be passed, once or at set intervals.

A trustee who took more than the court later allows must restore the difference. A trustee can also apply to the court for directions, and following those directions discharges the duty unless they were obtained by fraud, wilful concealment or misrepresentation.

A trustee or beneficiary may also apply to the court to determine whether a trustee has failed to perform a duty, and the court may order performance or remove the trustee. How any of this applies to your trust depends on the facts, so it is worth confirming with a lawyer.

What to do next

• Read the will or trust document for any clause on pay.
• Keep a log of your time and tasks, and keep every receipt.
• Give written notice before taking interim compensation.
• Deliver reports to qualified beneficiaries within 2 months after the end of each fiscal period.
• Speak with a lawyer before paying yourself if beneficiaries are unhappy or the amounts are large.

Frequently asked questions