Executor Compensation and Fees (AB)Show Table of Contents
If the will does not specify how executor compensation should be calculated, AB estates must follow provincial compensation rules (see AB calculator below).
How Much Should an Executor be Paid in AB?
In Alberta, estate executors are called "personal representatives".
Fair and Reasonable: The Alberta Trustee Act states that estate executors are entitled to fair and reasonable allowances for their services. Alberta Surrogate Court Rules interpret this to mean that compensation should be based on the following factors:
- Gross value of the estate
- Amount of revenue receipts and disbursements
- Time expended
- Number and complexity of tasks delegated to others
- Complexity of work involved and whether any difficult or unusual questions were raised
- Amount of skill, labour, responsibility, technological support, and specialized knowledge required
Assets Handled: In 1995 the Surrogate Rules Committee published the following suggested fee guidelines on capital receipts and disbursements:
- 3-5% of the first $250K
- 2-4% of the next $250K
- 0.5-3% of any remainder
- Plus 4-6% of any revenue receipts
Annual Management Fee: Finally, the guidelines suggest an annual fee based on value of assets managed if the estate settlement takes a significant amount of time:
- 0.3-0.6% of the first $250K
- 0.2-0.5% of the next $250K
- 0.1-0.4% of any remainder
Example: So for example, a standard estate with $600K in gross assets would typically generate $19,250 in executor fees. If the estate took 2 years to settle with an average valuation of $600K, an additional management fee of $3,625 would be considered reasonable.
Compensation Adjustments: In terms of official court rules, extra compensation may be allowed when personal representatives perform extraordinary duties, such as running a business, instructing on litigation, dealing with unusual difficulties, and so on. Conversely, if a lawyer or other agent performs tasks that are normally considered the responsibility of the personal representative, the amount payable to the personal representative must be reduced commensurately. Retaining a lawyer to advise on the administration of the estate, to apply for a grant from the court, or to bring any matter before the court, is standard and does not trigger such a reduction.
Exclusions: Note that assets which pass directly to named beneficiaries, such as life insurance policies, are generally not included in any of the above calculations.
Approval: Before paying him-or-herself, the personal representative must obtain approval from all estate beneficiaries, or from the court. Normally, the personal representative submits a proposed fee as part of the accounting to the beneficiaries, which the beneficiaries approve as part of the release process.
Insolvency: In the case of an insolvent estate, executor fees take priority over all other claims against the estate except for reasonable funeral and testamentary expenses.
See Trustee Act, SA 2022, c T-8.1, § 69 and Surrogate Court: Alta Reg 130 Schedule 1/1995. In addition, the LESA Estates Practice Manual: Part II, Chapter 12, 1.12 goes over this in detail, but is generally only available to lawyers with a subscription.
AB Compensation Calculator
EstateExec provides the following executor compensation estimator for AB estates, but please keep in mind that circumstances may vary, and that there may be special situations addressed by local custom or law. By using this estimator, you acknowledge that EstateExec provides any results as informational input only, not as legal advice, and cannot be held responsible for any inaccuracies for, or misunderstandings about, any given estate.
You can use this calculator now, but if you use EstateExec to help you track the settlement process, it will automatically analyze your estate and suggest values for the Gross Assets and Revenue fields below (you can create an estate for free).
See also Compensation for general remarks on executor compensation.
Executor Compensation Considerations
Timing: Generally, any executor compensation is paid during the final stages of estate distribution, as one of the last things the executor does. Be careful in situations in which there is not enough to pay yourself and all other outstanding debts, as this may expose you to legal issues. However, in most provinces, executor compensation has precedence over almost all other debts.
Communication: You may wish to discuss your compensation with the other heirs early during the process, so they don't end up surprised and unhappy when they notice their shares are somewhat less than expected. You may also want to leave the door open to modify your planned compensation as the process unfolds and you determine how much or how little work will actually be required on your part.
Optional: Keep in mind that collecting executor fees is optional. Even if the will specifies compensation, or if province laws support specific fees, the executor can choose to forego that compensation, and many do. That being said, serving as an executor is A LOT of work, and there's a reason that province laws support such compensation.
Tax Optimization: Executor compensation is considered income to the executor, so acting for the estate, you must deduct CPP and income taxes from any compensation payment, submit those deducted funds to the CRA, and issue a T4-slip to yourself by February 28 of the year following the payment. (see Employer's Guide (Publication T4001)). Keep in mind that there may be some situations in which it is financially beneficial to the executor to forgo any fees. Since executor compensation is taxable, and inheritances are generally not taxable, if the entire estate (or a large portion of it) is going to be inherited by the executor, you may end up with more after-tax value if you forgo explicit executor compensation. On the other hand, if the will does not explicitly address compensation and you forgo executor fees, the CRA may decide that some bequest in the will was in lieu of such compensation, and tax you on that bequest.
Trusts: Note that trustee compensation for managing a trust is handled differently than that of executor compensation for settling an estate (see Trustee Compensation).
Reimbursement: An executor is also entitled to reimbursement from estate proceeds for legitimate and reasonable estate administration costs, such as death certificate copies, notarization of documents, the EstateExec licensing fee, and even travel costs strictly associated with managing the estate. Once you have established an estate banking account, you can often pay for these costs directly from that account, so that no reimbursement is necessary, but you should keep good records in case you later have to justify your expenditures to the CRA or to estate heirs. Executor expenses can be reimbursed when desired, although certain probate or court-supervised proceedings may require prior approval. While executor expenses are generally not considered when calculating executor compensation (i.e., executor fees), if the executor incurs substantial costs paying for services that would normally be directly handled by an executor, a probate judge may sometimes require that the default executor fee be reduced accordingly.