(This is an edited version of our Client Guide that provides general information and is made available to our clients to assist them to understand the process for compensation of executors in Ontario. This is not intended to constitute legal advice, which by its nature is situation specific. If you have questions about a specific legal problem involving executor compensation, you should consult a lawyer who will provide legal advice only after reviewing all the facts relevant to your situation before providing that advice, rather than relying on the general information provided in this Guide.)
Although many family members perform the services of an executor or estate trustee without compensation, the courts have traditionally allowed such persons and trust companies to charge for their services. In fact, most trust companies who agree to act as an executor or estate trustee request that the testator execute a fee agreement and incorporate the agreement by reference into the will.
In a world where traditionally the courts have looked to legislatures to establish tariffs, the courts in estate matters have themselves developed a scale of charges so that executors can determine with some precision the amount of compensation they are likely to receive. This scale, based on the value of property in the estate, has been in use since 1975.
It allows the executor a fee of :
2.5% on capital receipts (i.e. where an executor gathers in capital assets of the estate, such as real property, the compensation on a $100,000 property would be $2,500.)
2.5% on capital disbursements (i.e. where the executor distributes capital property to beneficiaries; the compensation on the transfer of a $100,000 property would be $2,500.)
2.5% on revenue receipts (i.e. where the executor receives income, such as bank interest)
Where the estate is not distributed immediately, an annual care and management fee of 2/5 of 1% on the gross value of the estate (i.e. where the gross value of the estate is $100,000, the annual compensation would be $400).
This guideline is generally followed but after the mathematics are done, the court must establish what is a fair and reasonable figure by looking at the following five factors:
1) the size of the estate
2) the actual care and responsibility involved
3) the time occupied in performing the duties
4) the skill and ability shown; and
5) the success resulting from the administration.
Where the Public Guardian and Trustee acts as an estate trustee, it charges on the same bases but the percentage is 3% for receipts and disbursements and 3/5 of 1% for care and management. This schedule is set by statute.
A similar schedule has been enacted by regulation for attorneys who act under a power of attorney. The rates are the same as allowed to the Public Guardian and Trustee when acting as an estate trustee which is higher than the executor compensation the courts have allowed to other executors. It may be that the courts will increase their schedule to coincide with the higher amounts permitted to the Public Guardian and Trustee (authorized by statute) and attorneys under a power of attorney (authorized by regulation) but they have not yet done so.
Any questions? If you have any questions about executor compensation, please contact us at:
W. Bruce Drake Hooey · Remus Telephone: (416) 362-2051 Facsimile: (416) 362-3646 Suite 1410, 120 Adelaide Street West Toronto, Ontario M5H 1T1 eMail: email@example.com Website: www.hooeyremus.com
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