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Determining Proper Executor Compensation

The following factors are used to determine Executor compensation:

  • Whether the Will says anything about compensation. Some Wills deal with this issue expressly.
  • The time and effort expended by the Executor. Detailed time logs and records should be maintained.
  • The care and responsibility involved; the complexity of the Estate. Some Estates are simple, and some are complex.
  • The skill and ability of the Executor
  • The results achieved
  • The size of the Estate. Generally, larger Estates warrant more compensation, but keep in mind that large Estates are not necessarily complex.

The currently accepted calculation for Executor fees is:

• 2.5% of capital receipts
• 2.5% of capital disbursements
• 2.5% of income receipts
• 2.5% of income disbursements
• 0.4% per annum for ‘care and maintenance’ (often expressed as 2/5 of 1%).

A proper set of Estate accounts should show all transactions, broken into the four receipts and disbursement categories noted above.
Even this ‘proper’ % calculation is still an approximation. Courts usually assess the final amount on a combination of the subjective factors listed above and the % above.
One other point. If an Estate has a very expensive house in it that is sold easily, do not expect the actual formula above to work. Similarly, a complex, lower value Estate may result in a larger Executor fee.

 

 

 

Read our Executor No-No List

Justice Ontario Pre-formatted-fillable – Estate Forms

 

Want more information?

Are you interested in a consultation with Peter R. Welsh?
Contact me at Peter@SmartWills.ca
By telephone 416-526-3121
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This material is for general information and educational purposes only. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions.

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