How Much Can a Trustee Charge for Managing a Trust in Ontario?

If you are managing a trust or an estate, you may be putting in months of work: dealing with banks, filing returns, selling property and answering beneficiaries. It is natural to ask whether you can be paid, and how much.

Beneficiaries ask the same question from the other side. They want to know whether a fee is fair and what they can do if it is not. This article explains the general approach in Ontario and how to avoid a fee turning into a dispute.

Why trustee pay is not a simple percentage

Many people have heard a rule of thumb that trustees take a set percentage of the estate or trust. Whether a particular figure is reasonable in your case is something a lawyer can confirm.

Some trust documents set out how a trustee is to be paid, or say that no compensation is payable. Always read that wording first. If the document is silent, or the arrangement is unclear, that is the time to get advice rather than simply paying yourself and hoping no one objects.

The work that compensation is meant to reflect

Ontario describes the estate trustee's role as collecting assets, paying taxes and debts and distributing the remainder in line with the will and the law. Trusts that continue over time add yearly responsibilities, including tax filing. A resident express trust that is not a listed trust must file a T3 every year, even with no income, and the return and any balance owing are due no later than 90 days after year-end.

• Locating, securing and insuring property.
• Dealing with financial institutions, tax authorities and creditors.
• Filing returns and keeping beneficiaries informed.
• Arranging professional help where it is needed, such as an accountant.

A trustee who hired and paid professionals for tasks they could not do themselves may find it harder to justify charging for the same work twice.

Records that support a fee

The best protection is documentation made at the time. A trustee who can show what was done, when and why is better placed than one reconstructing a fee years later.

Penalties for missed filings can reduce a trust's value. For example, a late T3 with no unpaid tax at the deadline attracts $25 a day, with a minimum of $100 and a maximum of $2,500. A beneficiary who sees that kind of loss may reasonably question a large fee.

How fee disputes are resolved

Most disagreements are settled by talking. If a fee is agreed, a written record of the agreement is better than an assumption. Where agreement is not possible, the accounts are the usual battleground.

Estate accounts can be put before the court on an application to pass accounts. Where a minor or an unborn or unascertained person has an interest, the Office of the Children's Lawyer must be served on that application. The Office can also ask an estate trustee for accounts and supporting records, and may ask the court for an order requiring an application to pass accounts if there is no response or the accounts raise concerns.

The outcome of a fee dispute depends on the facts, so it is worth getting legal advice before either defending or challenging a fee.

Points for trustees and beneficiaries

If you are a trustee, avoid taking payments in advance without clear authority or agreement. If you are a beneficiary, ask for accounts in writing and be specific about what concerns you. Both sides benefit from keeping the conversation factual.

Also remember that compensation can have tax consequences for the person receiving it. Ask an accountant how it should be reported.

What to do next

• Read the trust document or will for any wording on compensation.
• Start a dated log of tasks and time if you have not already.
• Keep trust money in a separate account and keep every receipt.
• Confirm that T3 returns are filed and paid on time.
• Share a proposed fee in writing with beneficiaries and ask for their written agreement.
• If there is disagreement, speak to an Ontario estates lawyer before taking payment.

Frequently asked questions