How Much Are Executors Paid in Ontario?
When someone passes away, the executor (also called the “estate trustee” in Ontario) is responsible for managing their estate. This includes paying debts, filing taxes, and distributing assets according to the will. It is an important role, and in Ontario, executors are entitled to be compensated for their work.
If you are planning your estate or serving as an executor, understanding executor compensation can help prevent misunderstandings, reduce family tension, and make the process smoother for everyone.
What Is Executor Compensation?
Executor compensation is a payment to the person managing the estate. It recognizes the time, effort and responsibility involved. Executors can be family members, friends, or professionals such as lawyers or accountants.
Even if your executor is a loved one serving in the role voluntarily, Ontario law allows them to be fairly compensated for their work, unless your will says otherwise.
How Are Executors Paid in Ontario?
Ontario law does not set a fixed fee for executors. Instead, the Trustee Act allows executors to receive a fair and reasonable allowance for the time and effort spent managing the estate.
In practice, many estates follow a guideline commonly called the “five percent rule”, which is based on:
About 2.5% of the estate’s assets received
About 2.5% of the estate’s assets distributed
Some adjustments may be made depending on the complexity of the estate or how long it takes to administer. For example, estates that include real estate, investments, or multiple beneficiaries may justify a higher fee. Very simple estates may result in a lower fee.
Factors That Affect Executor Compensation
The fair and reasonable fee depends on several factors:
Size of the estate - larger estates generally require more work.
Complexity - estates with multiple properties, investments, debts, or multiple beneficiaries take more time and skill.
Time and effort - executors who spend months or years managing an estate may receive higher compensation.
Challenges - legal disputes, tax issues, or difficult beneficiaries can increase the workload.
What If the Will Mentions Executor Fees?
Sometimes a will specifies how much the executor should be paid. Courts generally honour the testator’s wishes as long as the amount is considered reasonable. If the will is silent or unclear, Ontario courts use the guidelines mentioned above to determine a fair fee.
When and How Executors Are Paid
Executors usually receive payment after the estate is mostly settled, including debts paid, taxes filed, and assets distributed
If there are multiple executors, the fee is shared among them, usually based on their contributions
Executors can also choose to decline compensation. This sometimes happens in families where the executor is also a beneficiary.
Tax Considerations
Executor fees are considered taxable income. If a professional executor such as a lawyer manages the estate, the fee may also include HST. Executors should keep detailed records of hours worked, tasks completed, and expenses incurred. This helps justify the fee and ensures proper tax reporting.
Practical Tips
If you are planning your estate - consider whether to specify executor compensation in your will. Clear instructions reduce confusion and conflict.
If you are serving as an executor - keep detailed records of your time and expenses. Be transparent with beneficiaries about any compensation you expect.
For families with multiple executors - agree in advance how compensation will be split.
Why It Matters
Executor compensation is not just about money. It recognizes the time, effort and responsibility involved in managing an estate. Planning ahead and being transparent helps to:
Avoid family disputes
Ensure assets are managed efficiently
Give peace of mind to everyone involved
Understanding executor compensation in Ontario allows you to make informed decisions for your estate and your loved ones. Clear planning today makes the estate process easier tomorrow.
If you have any questions about executor compensation or would like to talk about an estate, contact us to schedule a consultation.
This blog post is for informational purposes only and is not intended to provide legal advice. If you require legal assistance, before taking any action you should contact us or another qualified lawyer to discuss your situation.
