- An Ontario estate trustee is entitled to a fair and reasonable allowance, but the statute sets no percentage or formula.
- Fees you take are generally taxable income to you, usually reported on a T4.
- A beneficiary can ask a court to assess compensation on a passing of accounts, so clear records protect you whichever way you decide.
Many executors are family members who are also beneficiaries. You may be doing the work out of duty, and wondering whether to take payment or let it go so that everyone stays on good terms.
There is no single right answer. This article sets out what the law says about compensation, how fees are taxed, and the practical points to weigh, so you can have an informed conversation with a lawyer or accountant.
What the law says about being paid
An estate trustee is entitled to a fair and reasonable allowance for their care, pains and trouble and time spent, as allowed by a judge of the Superior Court of Justice. No percentage or formula is set in the statute.
If the will fixes the allowance itself, the Trustee Act provision does not apply. If a beneficiary objects, a judge passing the accounts may allow a fair and reasonable allowance.
The tax side of taking fees
For someone who does not act as an executor in the course of a business, fees are income from an office or employment, reported in box 14 of a T4 slip, with CPP and income tax deducted but no EI. The estate must also file a T4 Summary and the related T4 slips.
So fees you receive are generally income in your hands. If someone acts as an executor in the course of a business, the fees are instead business income, reported on a T4A slip rather than a T4. How taking or waiving fees affects your own tax can turn on timing, how a waiver is made and your overall situation, so confirm it with an accountant before you act.
Points to weigh
| If you take fees | If you waive fees |
|---|---|
| You are paid for real work, but the amount is income to you. | You do not receive that income, and the work is unpaid. |
| Other beneficiaries may object, and a court can assess the amount. | There is less to dispute, though you still need accurate records. |
| The estate must file T4 slips and a T4 Summary. | No fee means no fee slips for the estate to issue. |
- How large and complicated the estate is, and how long the work will take.
- Whether you are the only beneficiary or share the estate with others.
- Whether you would take fees only if the other beneficiaries agree.
- How the beneficiaries get along, and whether they trust you.
Family harmony and keeping records
Estate trustees must keep accurate records of the estate's assets and transactions. Accounts filed with the court must include assets at the date of death, all money received, all liabilities, and a statement of the compensation claimed.
A beneficiary who objects to the accounts, including the compensation claimed, must serve a Notice of Objection to Accounts (Form 74.45) at least 35 days before the hearing date. Good records and early, open conversation with the other beneficiaries usually make that step far less likely.
If you decide to waive, put the decision in writing and keep a copy. If you decide to take fees, explaining the amount and the work involved before you pay yourself is usually better than surprising anyone afterwards.
If you do not want the job at all
A person named as estate trustee in a will does not have to act. If you renounce, your rights in respect of the executorship wholly cease and administration passes as if you had never been appointed. Renouncing uses Form 74G (Part A).
Once you have started acting, it is harder to step away. Executors cannot retire by deed under the Trustee Act, and an executor who wants to step down after acting must apply to court. If you are unsure, speak to a lawyer before taking any steps in the estate.
What to do next
- Read the will for any clause on compensation.
- Estimate the time the estate will take, and start a log of your work.
- Talk to the other beneficiaries before deciding.
- Ask an accountant how fees or a waiver would affect your tax.
- Ask a lawyer to confirm your options before you take any steps.
Frequently asked questions
Do I have to take executor fees?
The law gives an estate trustee an entitlement to a fair and reasonable allowance. Whether you claim it is your decision, though you should consider the tax and the other beneficiaries first.
Are executor fees taxed?
Generally yes. For an executor who is not in business as one, they are income from an office or employment reported on a T4. A professional executor reports them as business income on a T4A.
Can a beneficiary challenge my fees?
Yes. A beneficiary who objects to the accounts, including the compensation claimed, serves a Notice of Objection to Accounts (Form 74.45) at least 35 days before the hearing. A judge passing the accounts may allow a fair and reasonable allowance.
Can I quit as executor later?
A person named as executor does not have to act, and renouncing uses Form 74G (Part A). If you have started acting, you must apply to court to step down. How this applies depends on your situation, so it is worth confirming with a lawyer.
Sources
- Trustee Act, R.S.O. 1990, c. T.23 (e-Laws) — Ontario e-Laws
- CRA – Payments of fees for services — canada.ca
- CRA – T3 Trust Guide (T4013) — canada.ca
- Ontario.ca – Administering estates — ontario.ca
- Estates Act, R.S.O. 1990, c. E.21 (e-Laws) — Ontario e-Laws
- Rules of Civil Procedure, R.R.O. 1990, Reg. 194 (e-Laws) — Ontario e-Laws
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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