Increasing an Executor’s Compensation in Ontario

While the basics of estate trustee compensation in Ontario can be found here, the standard or “rule of thumb” rate for executor (or estate trustee), compensation in Ontario is:

Commission Compensation

• 2.5% on capital receipts;
• 2.5% on capital disbursements;
• 2.5% on revenue receipts; and
• 2.5% on revenue disbursements.

Care and Management Fee

• 0.4% of the average annual value of the assets under administration excluding the first year.

In essence, this means 2.5% compensation for funds or assets that enter or leave an estate, including distributions to beneficiaries, plus the care and management fee.  While standard rates for commission compensation are discretionary and can be adjusted either up or down by the Court, the court is even more willing to adjust the care and management fee downward or deny it completely.

How an Executor Can Receive More Compensation

There are several ways an executor might receive more than the standard compensation rates:

1. Compensation set by the Will:

A person who has drafted a Will (the testator) can set the compensation for their executor in the Will that appoints them. This may be a fixed amount of money, the receipt of a specific asset, or a mathematical formula. Courts will generally not interfere with such a provision if it is part of a valid Will. If the formula is not clear, this may be a problem.  Before acting as an executor, beware that the Will might prohibit compensation, which means that the executor would be working for free subject to an agreement with the residual beneficiaries.  

• The beneficiaries and the executor may come to an agreement on executor’s compensation:

If all residual beneficiaries under the Will are capable adults, they can come to an agreement with an executor for how they will be compensated. Courts will generally not interfere with such an agreement. The agreement may designate a fixed sum of money, a specific asset, or a mathematical formula to be used for compensation. It is strongly recommended that this agreement be in writing and that it be negotiated before the executor begins acting.  Still, there is nothing stopping capable adult residual beneficiaries from fixing executor’s compensation well into the administration process, or even at its end. 

• Executor’s compensation set by Court order:

Court can determine the compensation to be received by an executor based on a specific amount or a formula, often in the same Order that appoints the executor.  This is often the case when a neutral third party agrees to act, including a trust company. While an agreement between the executor and all residual beneficiaries would be preferable, an Order will be required when at least one residual beneficiary does not agree, is incapable, or is a minor. The Court order should be obtained before the executor agrees to act.    

• The Estate Trustee may seek an additional special fee:

In exceptional circumstances where the estate is unusual in that it requires the executor to work beyond the “average” responsibilities of a Trustee, such as resolving complex tax burdens or cleaning up pollution on estate land, the Court may award a special fee in addition to the customary rates. The award of a special fee is highly discretionary and rather rare. There is no formula for a Court to calculate what an appropriate special fee should be. Special fees can also be used by the Court to compensate Trustees when standard compensation and a care and management fee both result in an unreasonably low compensation award.

Will the Court increase the standard compensation rates for an executor?

Probably not. In the last three decades, the Court has exercised restraint in calculating Estate Trustee compensation. While the Court may reduce or eliminate an executor’s compensation when they have disregarded their duties, the Court rarely if ever increases the standard compensation rates. In the absence of an alternate means of Estate Trustee compensation by agreement, Will, or prior court Order, the standard rates are likely to apply.

When seeking extra Estate Trustee compensation, it can be beneficial to work with an estate lawyer, well versed in the various matters regarding probate and estate law. We provide free consultation calls to all new clients and can help you decide if it’s worthwhile to work with a lawyer in pursuing extra compensation for your executor duties.

Work with an Estate Lawyer Well-Versed in Executor Compensation in Ontario