Executor Fee Calculator (ON)
If the will does not specify how executor compensation should be calculated, ON estates must follow provincial compensation rules (see ON calculator below).
How Much Should an Executor be Paid in ON?
In Ontario, the estate executor is known as an "estate trustee".
Ontario law specifies only that compensation should be "fair and reasonable for the care, pains and trouble, and the time expended in and about the estate".
Courts have subsequently interpreted this to equate to an amount based on:
-
2.5% of receipts and disbursements
(i.e., everything flowing in and out of the estate) -
0.4% of average estate value per year
(if not quickly distributable)
So, for example, an estate that took in $100,000 and disbursed $120,000 (for example due to capital gains) would normally generate $5,500 in trustee fees.
Courts have further ruled that the normal tariff amount should then be adjusted (up or down) as necessary to make it "reasonable and fair", considering:
- Size of the estate
- Care and responsibility involved
- Time required
- Skill and ability demonstrated by the trustee
- How successful the trustee was
All else being equal, the larger the estate, the smaller the percentage fee, and the more effort and results, the greater the percentage.
Note that assets which pass directly to named beneficiaries, such as life insurance policies, are generally not included in these calculations.
Additionally, "special fees" may be awarded to compensate extra or specialized work performed by the estate trustee. Common interpretations of "extraordinary" include overseeing the sale or lease of real estate, running a business, conducting litigation, preparing tax returns yourself, unusual amounts of required travel, handling tax audits, and so on.
Reference Trustee Act, R.S.O. 1990, c. T.23 § 61 and Denton's Review of Estate Trustee Compensation.
ON Compensation Calculator
EstateExec provides the following executor compensation estimator for ON 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. See estimation methodology for calculation details.
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 Receipts and Disbursements fields below (you can create an estate for free).
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.
EstateExec™ Makes It Easy!
Think of EstateExec as something like TurboTax®, but for estate executors.
With $$ coupons.
EstateExec includes province-specific guidance with AI software, easy financial accounting,
and even the option to work together online with your lawyer or other interested parties.
You can get started using EstateExec for free,
and if you find it useful, pay a one-time $199 licensing fee (per estate).
Plus, EstateExec provides coupons for discounts on helpful third-party services,
such as junk removal, which will more than pay for the license price!
Additional Information
See also the EstateExec Complete Executor Guide.
In case you're interested, see also Compensation for general remarks on executor compensation, and note that authoritative details about executor fees in other provinces can be found here: