Estate Trustee Compensation

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Acting as an estate trustee is a time-demanding and important job for an individual to take on. In general, estate trustees have the right to be paid for their work, unless otherwise stated by the will.  A will might indicate the testator’s (person writing the will) own wishes as to how they would like for an estate trustee to be, or not be, compensated (to be paid).

Usual Percentage Approach

A “usual percentages” approach has been widely adapted (used). It is a yardstick – not implemented in legislation (not actually written into law) and can be increased/decreased/disregarded for another approach, such as fees based on docketed time (amount of time spent documented).

In Ontario, the general rule is to categorize:

  • Capital receipts (e.g., savings bank account) at 2.5%
  • Capital disbursements (e.g.,  payout to beneficiary) at 2.5% 
  • Revenue receipts (e.g., income from deceased’s investments) at 2.5%
  • Revenue disbursements (e.g., Cheque charges) at 2.5%

which is roughly 5% of the estate’s value. There is also an estate management fee as 2/5 of 1% (0.004%) per annum of the average annual value of the assets.

The court is increasingly looking for evidence to substantiate (justify) the amount of compensation estate trustees are seeking. This evidence includes time dockets, length of administration (how long it took to give out the estate), complexity of estate, skill needed, and results obtained.

Other compensation

For a complex estate, the estate trustee may consider requesting a “special fee” which are usually asked for if there were business interests among the estate assets or the estate has been involved in litigious matters (matters requiring arguing in court) and the estate trustee has had to make decisions on behalf of the estate.

For an estate trustee to receive compensation, it is must be either agree upon by all beneficiaries or approved by the court through a passing of accounts application brought  by the estate trustee.

Pre-taking of compensation is considered to be subject to judicial sanction (legal punishment), unless there is testator (will writer) authorization in the will or a compensation agreement made with the executor prior to death (Re Knoch). Generally, an estate trustee who pre-takes compensation that is more than the amount the court ultimately approves will be ordered to repay the estate with interest.




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