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Wednesday, September 2, 2009

Executor compensation - how do we know how much he/she can have?

It's fairly common knowledge that someone who acts as the executor of an estate can charge a fee for doing that job. What is less well known is how we can tell how much the person can charge.

When the deceased person has stated in the Will how much his or her executor is to receive for being the executor, the situation is clear. The amount stated in the Will is the appropriate amount. It can be expressed as a dollar amount or as a percentage of the estate. Unless something very unfortunate happens to the estate, such as being caught up in a lawsuit, the executor will be entitled only to the amount stated in the Will.

Executor's fees are over and above the reimbursement of out-of-pocket expenses incurred by the executor (I will post again on executor's expenses later, as there is often confusion about what expenses should be reimbursed).

If the executor is a trust company, the person making the Will will agree on a fee schedule with the trust company at the time the Will is made. The Will should state that an agreement was signed. That way, it is clear to all parties involved how much the person making the Will wanted the trust company to receive in fees.

Most Wills don't say how much an executor can charge. That being the case, the executor will have to claim his compensation near the end of his work as executor, as he is preparing to send the beneficiaries their shares of the estate. The executor will prepare financial statements showing all transactions in and out of the estate, along with a statement that sets out how he proposes to distribute the assets to finish the estate. Part of that proposal is his request for fees for himself. The residuary beneficiaries (that is, the beneficiaries who share in the residue of the estate) are asked to agree to the amount he has requested.

Most provinces and territories don't use a specific formula that tells executors how much they can charge. Most rely on statutes that use phrases such as "fair and reasonable compensation". This leaves the concepts of "fair"and "reasonable"open to interpretation. Quite often, the executor and the beneficiaries don't see eye to eye on the amounts.

In Alberta, the accepted range of compensation is between 1% and 5% of the deceased's estate. Where an given executor falls within that range will depend on how complicated the estate is, whether there were any unique legal situations, the value of the assets, the amount of responsibility handled by the executor, how much time he or she put in, and other factors.

If the residuary beneficiaries think the claim is reasonable, they will agree in writing and the executor will take the proposed fee. If even one residuary beneficiary disputes the amount and it can't be negotiated to everyone's satisfaction, the amount may have to be set by a judge. If that happens, the estate pays for the lawyers to go to court and ask the judge to set the fee.

I encourage people making their Wills to think about including a clause stating how much your executor is to be paid. Talk to your lawyer about it if you want to discuss what is fair in your particular case. Remember that an experienced Wills lawyer will be able to give you ideas about how to handle pretty much any situation arising from an estate.

68 comments:

  1. Hi Lynne. You write in good clear non technical English. Your info has helped 4 Bennies in the Uk to get to grips with Alberta procedures. There are 6 legatees and 12 Bennies, all in 70,80 & 90 year range. Several could well have welcomed a partial distribution to help them in their later years. Our cousin died as lon ago as Nov 2010. The Exec declined to make any Interim Distribution saying it was unheard of. It has taken a year after Probate to get the Clearance Certificate -we understood it is usually up to 6 months in Alberta and 3 months in BC.

    We now await the Exec's 64 page report -omg - and we have to agree the requested fees! I really think Canada should start again and simplify the whole system. It is so important to specify in the Will the basis for fees. The 'Executors Year' has no bearing in this case !

    Regards

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  2. Hi,

    I'm glad you find the site useful. Given the number of questions I get here and by way of email and phone, I know people are looking for information.

    I always wonder about executors who refuse to make interim distributions. It is certainly not "unheard of". In fact, it is more the rule than the exception that executors try to get the estate out to the beneficiaries as quickly as possible. An interim distribution allows them to get the bulk of the estate out the door while holding onto enough to pay taxes and final expenses.

    The executors who hang onto every cent of the estate until the Clearance Certificate is received are within their rights to do so, but often there is no practical reason to refuse to make an interim distribution. And that just annoys people.

    Part of the problem, and I hate to say this as I'm a lawyer myself, is that lawyers will take on estate work when they are not familiar enough with it. When I did estate litigation I hated getting a "dabbler" on the other side who didn't have a deep enough understanding of the law. I should mention here that I have no idea who the lawyer was in charge of this estate so I don't know that it was a "dabbler". I throw my comment out there as a general observation.

    Clearance Certificates do take forever to receive, and as they are generated federally, the wait time should be the same everywhere in Canada. Six months seems about average to me.

    A 64-page report is going to be a pain to digest, but it beats the heck out of getting absolutely no information at all.

    Hopefully the estate will wind up soon and you can all move on.

    Lynne

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  3. When can an executor be reimbursed for expenses.

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  4. Thanks for your question about when an executor can be reimbursed. I'm going to answer this in a new blog post dated Feb. 18, 2012.

    Lynne

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    1. Lynne
      Thank you for your response. This estate has gone on since 2009 (due to a pending civil action with a contractor) and I have not taken anything for reimburement to this point. I have flights, hotel, car rental, mileage etc. and it is becoming a stain financially on me.

      Delete
  5. Informative site-thank you. My father was and executor of his cousins will. My father completed most of the work up til probate when he got ill and had to hand it over to the alternate executor. His out of pocket expenses (and mine as I had to drive him to Sask and back to Calgary to do some estate clean up etc) have not been paid. When we sent the receipts to the alternate she said that she has to clear payment with the benefactors (my father was not a benefactor). His costs have run up to several thousand dollars due to the estate being out of province. Is it me....or is there something wrong here?

    Thank you!

    RP

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    1. The general rule is that executors are to be indemnified for their expenses incurred in administering an estate, so long as those expenses are reasonable. This does not require the consent of the beneficiaries.

      Lynne

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    2. I am named in father's will as executor with my sister as a standby. My Dad moved up to live in my area as he didn't have a care giver after his wife passed away, I looked after my Dad' financial and medical for 2 years.When Dad passed away I carried his ashes on a flight to his hometown for burial. Can my flight, and hotel expenses be reimbursed from the estate? We had to move the date of the burial due to a family emergency and cancel the formal memorial but the burial did occur. My sister (lives in another town) wants the estate to pay for the tickets her and her husband didn't use as they refused to attend the funeral on the new date because the memorial was cancelled but not the burial.

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    3. Nobody's expenses to attend a funeral or burial or memorial service is supposed to be paid out of the estate, and that includes the executor.

      If the deceased asked the executor to carry out specific funeral or burial wishes, you would have an argument that those costs should be covered, but even then you're on shaky ground. At the end of the day, the executor is responsible for controlling the cost of funeral-related expenses, and for absorbing those costs if they are not reasonable. My guess is that your sister won't agree to these costs unless you agree to hers, even though that is not a reasonable position for her to take.

      Now, having said all of that, if you and your sister are the ONLY residuary beneficiaries, and you agree that the estate should cover each other's costs, you can do that. After all, taking something out of "the estate" means taking it from the residuary beneficiaries. It would be safer to have that in writing than verbally.

      Lynne

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  6. I just learned that if a "Tax Free Savings account" is in the estate, the "Tax Free" part of it is indeed Taxable from the time of death.
    My advice to all executors is get the deceased investments into a non interest bearing checking account within the first year or you will have the estate tied up for many extra months waiting for your final clearance due to filing costly "Estate Returns" on any interest being generated after the final income tax return is filed.
    In Alberta the tax rate on interest earned in these cases is 25 percent!

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    1. People often forget or don't understand that once an asset goes from the deceased to his or her estate, it has legally changed hands. This is why RRSPs and RRIFs are taxable even if they fall into the estate. An estate is a trust, which is a separate taxpayer than an individual.

      Lynne

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  7. Hi Lynne, My father passed away in June of 2010 and my sister and I are now going to appear in court in front of a "master". My older brother is the executor of my dad's estate and he is being a total jerk and asking unreasonable payment for his services , which by the way we were totally kept in the dark about until we received a document from the lawyer last week. The reason we are going to court is because we had a younger brother who passed away 10 years ago and his fourth of the estate is left to his two underage children. My father requested that they not recieve anything until age 25.My older brother wants nothing to do with being a trustee so we were told we need to go to court to have the Master appoint a trustee and also to approve all the bills incurred by my brother. He is asking for over 10% of the total estate net worth. I am so frustrated as we were so shut out of anything that went on until this upcoming date. There was a farm property which sold last July 1st so of course there was a wait for final taxes to be paid, claimed etc. Please give me some advice.

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  8. Hi Lynne,

    This is an amazing blog. The information is very insightful.

    As this posts contains executor compensation I would like to ask two question as a executor/trustee. The question pertains to care and management fee (2/5 of 1%).

    1) This is a Ontario Estate. To make it simpler the question uses a rough amount. I have invested $100,000 with an adviser. The beneficiary will receive the funds when they are of age as outlined in the will. The mutual funds purchased through the adviser have a MER (Management Expense Ratio). Thus the capital invested is charged a management fee via the MER. This is the only fee. As the funds are managed and a MER is charged does this mean I do not collect a care and management fee as the funds are managed by the mutual fund managers? If I charge a C&M fee the capital is charged twice, so I am unsure if I can charge this. I am trying to do everything correctly.

    2) If I open a direct investing account and purchase individual stocks and the stocks eventually become de-listed and/or become worthless (0) is the amount invested deducted from my compensation? The will states I am indemnified from loses so I may not have to pay out-of-pocket but could the loss be deducted from my compensation? So if I invested $5,000 and the shares eventually have a value of zero, does this amount get deducted from my compensation?

    Thanks! Your blog has answered alot of my questions. It is a great resource.

    Chris

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  9. do neighbours and friends have the right to call the police to gain access to my friends property after she died? does the will have to be shown to these people because they feel they are entitled? they are not in the will or previous will. they are pushy I am executor and not sure what to do. No family and no children just greedy friends of 20 years. Who knew this would happen

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    1. So, these people call the police and say, "hello, I want to go into my deceased's neighbour's property but the executor won't let me. Will you please let me in?" Why in the name of God would the police go along with that? Don't tell me this has actually happened? Or are they just threatening you?

      Why do they want to go in? They must have given a reason. The only one that has any hope of being logical is that your friend was in possession of something they owned. Even then, the police surely wouldn't make you hand something over without the people providing proof that it was theirs.

      This just sounds so ridiculous.

      As an executor, you are supposed to protect that estate, so do what you need to do. Change the locks, take out ALL paperwork, take small items like jewelry and trinkets away and put them in a safe deposit box. Make sure the house and contents are insured. Install an alarm system or hire a security guard if you need to. Get that house emptied and on the market as soon as you can.

      If these people are not beneficiaries named in the will, they have no business with that house or its contents.

      People are disappointingly greedy, aren't they?

      Lynne

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    2. I am a "greedy friend". Not in the will, drove seniors around for 18 years so far, took them everywhere, baked and cooked. When senior 1) goes into palliative care, sat there for 4 weeks and paid the hospital parking. Paid for the flowers as husband is too cheap. Now senior 2) broke his hip. I have to buy him clothes out of my money, visit him every day in the hospital and pay for the parking, take the mail, clean out the fridge, mail the bills, bring checkbook.

      The estate, close to 2 million, goes to charity although I was named the POA for personal care which senior 2) thinks means daily visiting and paying for all his personal expenses out of my pocket. So yeah I would shut up before you talk about greedy 20 year friends.

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    3. I have no intention of "shutting up" about greedy friends, as they come out of the woodwork when someone is vulnerable. Apparently I struck a nerve with you on this, and that's too bad, but I speak from lengthy experience.

      You really do seem to be proving my point. You are bitter and angry because you feel entitled to money for looking after someone. Were you doing this for pay? If your motivation was that you were hoping to be included in their wills, I feel no sympathy for you. If you had given selflessly for 18 years and did so out of the goodness of your heart, that might be different. Obviously you were hoping for material gain, and you feel entitled to that.

      If you considered it a job and expected to be paid, you should have negotiated a wage, not sat around hoping to cash in at the end.

      POA for personal care is not a paid position. It's one that people take on out of moral obligation, or again, out of the goodness of their hearts. It's nobody's fault but yours if you expected to be paid for a non-paying job.

      You can have your expenses, such as parking, paid from the senior's assets if you are acting under a document that legally appoints you. Why don't you just do that instead of paying it yourself and playing the victim? Again, it's nobody's fault but yours if you do a job for 18 years without even asking about how it works.

      Lynne

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    4. Reading the post from the "greedy friend" above makes my blood boil! Thankfully Lynne, you restored my faith in humans with your honest and blunt reply, I love your blog and have found much information here in dealing with the 2 estates that I am currently the Administrator of. Thank you for all of your information and insight! :) KH

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  10. Can an estate trustee (executor) who is a also a lawyer take their compensation BEFORE the CRA has issued a Certificate of Clearance and before a Final Distribution is paid to beneficiaries? Can a beneficiary dispute this before a Superior Court of Justice (in Ontario)? What fees are involved? Is 2 1/2 years an unreasonable amount of time to wait for a simple estate with will to be executed? Must interest be paid for funds held in trust long periods of time (>6 months after a sale of property has taken place)?

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    1. An executor, regardless of what job he or she does during the rest of the time, cannot take compensation until it is agreed to by the residuary beneficiaries OR is allowed by the courts. If an executor wants to be paid before the clearance certificate has been issued, this can be done at the time the beneficiaries are paid, assuming that there is a holdback for the future taxes. When the executor presents his accounting to the beneficiaries, it should have a statement about how much compensation he is claiming. If the beneficiaries agree to all of the items in the accounting including the compensation, the executor may pay himself. If the executor has paid himself without either the beneficiaries' agreement or the permission of the court, yes a beneficiary (but only a residuary beneficiary) may dispute it.

      I believe that 2 1/2 years is too long for a simple estate. However, estates are rarely as simple as the beneficiaries think they are, simply because they don't see the behind-the-scenes stuff. Unless there was something unusual, yes, this has taken too long.

      Lynne

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    2. CRA has issued a Certificate of Clearance and before a Final Distribution.

      What is this certificate about, I have a simular issue the executor would like a part payment and has not even produced a bill.

      Delete
  11. Hi, my Mother passed away recently and I am the Executor of her will. She left me everything, except for a few hundred dollars to each of my brothers. The value of her estate is zero, because her debts (large credit card bill) exceed her assets (approx $6,000 in stocks & bonds). It has been somewhat costly to be the executor (travel etc.) and I wondered if I am entitled to any compensation and what I would have to provide the lawyer with to get it, or am I automatically entitled to it? Someone recently told me I am, as Executor, entitled to 10% of the assets. Is this correct? This will is from BC.

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    1. No, you are not entitled to 10%. The going rate is between 1% and 5%, based on a number of factors. Since the estate is small and simple, I assume that you would be at the lower end of the range. You are automatically entitled to compensation from the estate, unless the will says otherwise, and you would not need a lawyer for that. However, as you have said that the debts exceed the assets, I don't see how you are going to be paid anything. If there is nothing to pay you with, you are out of luck.

      Lynne

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  12. Hi Lynn my mom resided in Edmonton Alberta and passed away recently. Not too long before she passed she added my cousin as an executor along with me. She felt since she lived there it would be easier for us to settle her estate. I am the benefactor along with my step brother who is a ward of the province. My mom's estate total is $6000.00. This includes her death benefit and money left in a bank account which is a joint with myself. She added me to it when I was in Alberta visiting one year. I have never personally used this account accept to withdraw some funds to pay a debt she owed (from the estate). My question is my cousin is doing most of the executor work. However I have some things I am settling. I offered to do her taxes and apply for the Death Benefit however my cousin said she was going to do it. Bottom line is since it being a small amount $6000.00 and a I would say a basic estate to settle what would be fair for my cousin to charge for her services? For some reason she thought she would get half??? I feel like she is going to try to take me on this. Also this was a joint account with my mom would this come into play? I want to be fair however not taken advantage of. Thank you

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    1. No, your cousin is not entitled to half. She is entitled to claim between 1% and 5% of the estate for her executor services (unless the will says otherwise).

      The bank account that is joint with you is part of the estate. I say this because it appears that your Mom added your name to it for convenience rather than to give it you.

      Lynne

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    2. Lynn thank you very much for the information. Its very much appreciated.

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  13. Hi Lynne, Can you recommend good Estate lawyer or Mediator in Alberta? We are having serious issues with Executor fees but would rather keep it out of court. After the Executor has inherited the bulk of the Estate and hired out most aspects of his job he belives he is entitled to 4.5% in executor fees but will do us the favor of only charging 1.6%. Between the Executor and the lawyer we are already at 3% of the estate. The lawyer is recommending we take this.

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    1. Edmonton, Calgary, or neither? If neither, what are you close to?

      Lynne

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    2. Calgary would be great, thanks.

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    3. The first person who comes to mind is Jason Sweeney, who works at the firm of Underwood Gilholme. I have worked a bit with Jason and can recommend him very highly. He is knowledgeable in wills and estates, and is personally very approachable and easy to talk to.

      Lynne

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  14. Hello and thanks for your input its really appreciated. My Mom had a small estate eight thousand dollars. There are 2 Executors my cousin and myself. My cousin has done most of the work however I also have taken care of some matters. My couisin has just sent me an email stating she not only wants to be compensated for being an executor but also compensation for taking care of my Mother over the past couple of years. My Mother never asked her to handle anything for her she just took over. Also my Mother also told me every time she was taken for groceries and doctors apts. etc that she paid her $20.00 for gas etc.. Is she entitled to being paid for these things out of her estate? The only benefactors in her will were myself (daughter) and her son. There was no mention of her accept as one of the benefactors. This is in Alberta where you say it is 1% -5% of the estate. Also for any costs she incurred settling the estate. I want to be fair however I don't want to be taken advantage of neither. This was a very small estate Mom didnt have any other assets. My cousin is very aggressive and I don't want to argue about money. I had every intention of giving her abit extra. Is it not just the estate that is involved when settling an estate?

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  15. I am not sure if certain expenses that the executors are charging would be considered fair and reasonable. Two examples are: a broken car mirror sustained while parking her car in the funeral home parking lot and daycare fees while dropping off a document related to the estate ( her husband was the "daycare"). The executors will receive an executor fee which I am not opposing and they are also beneficiaries. These expenses are being charged against the estate. Are these reasonable and fair expenses?

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    1. The broken car mirror is absolutely not an estate expense. The idea of charging for daycare when the child was with a parent is just plain greedy. The law allows "reasonable" expenses incurred while on estate business. It doesn't say charge every possible cent that could in any way be connected with the estate. I'd certainly challenge those. How friggin' greedy!

      Lynne

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  16. Is there a specific executor's fee percentage that is used in the Province of Quebec?

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  17. What are the executor's fee percentage used in the province of Quebec for an estate? Is it quoted in the Quebec Civil Code?

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  18. What is the executor's fee percentage used in the Province of Quebec? Is it anywhere laid out in the Quebec civil code? Many thanks.

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  19. Hello

    My aunt is the executor of her father's will. He left a bequest to me and the other grandchildren. All of them have gotten their cheques but me.
    I live in Quebec. What are my rights

    Thank you

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    1. Hmm, those facts are pretty sparse. Why haven't you received yours? I assume you've asked. Is it lost in the mail? Are they waiting for your signed release? Is yours held in trust? Was your share set off for any reason?

      Lynne

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  20. Is there a standard executor's fee in New Brunswick? It was a fairly simple will.

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  21. Hi there, this is very useful information. I do have one quick question. In Ontario, when calculating executor compensation on disbursements do you include the money disbursed to the beneficiaries?

    Thanks!

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  22. My daughter and I were executors for my mother's will -when we first went to the lawyers we said we would take the executor's fees -but when it came to the end of the estate he wants to charge us extra now for doing up the T4'S.We sre in Ontario.
    Also my mother and I had a joint account and the bank phoned me that it was mine-the lawyer wouldn't let me have it.
    Shirley

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    1. The reason you are being charged extra for doing T4s is that doing T4s is not the lawyer's job; he did them for you even though it was your job. Therefore it would not be covered by the cost of obtaining probate. Obviously I don't know what your billing arrangement is with this particular lawyer, but doing T4s is always the executor's work. You should have received a letter from the lawyer when he or she started the work for you, setting out how the billing would be done. That's where you'll find the details.

      As for the second part of your comment - the bit about the bank account - you didn't ask me a question but I assume you want to know what I think of that. The lawyer is right. It's not yours because it is intergenerational, i.e. joint between a parent and a child. The bank, like many banks out there, is wilfully ignoring the fact that these joint accounts are supposed to be part of an estate until additional evidence is found of the parent's intention regarding the account. By the way, your mother verbally telling you that it was yours is not additional evidence. In this case, your lawyer knows the law and is advising you properly.

      Lynne

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  23. If a will states that an executor is to be compensated at 1% of the value of the estate, is that percentage calculated on the estate before taxes, debts, and estate administration costs? Or is it calculated on the final value of the estate? As well, if compensation is stated as a percentage, when can the executor take that amount? Thanks for the help.

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    1. I have the same question. Did you figure it out?

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    2. The percentage is taken from the estate inventory that is prepared at the beginning of the estate administration. It is filed along with probate or admin documents and shows a snapshot of the deceased's assets on the date of death. Therefore, the percentage is calculated before taxes, debts, and administration charges are subtracted.

      The executor can only take his or her fee when a) a court says so, or b) at the end of the estate administration when the beneficiaries sign off on the executor's accounts. The executor's accounting should contain a request for the amount he or she wants, so the approval of the accounts includes an approval of the compensation.

      The only way an executor can take compensation any earlier than this is when the will allows him to "pre-take" compensation before the estate is concluded. I have only ever seen that clause in trust company wills.

      Note that it is alright for an executor to reimburse his or her legitimate expenses at any time. It's only the wage that needs approval.

      Lynne

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  24. Hello Lynn Butler, I am currently the estate executor and administrator. I have been administering this estate for the past year and a half as they were many assets and also a huge renovation that took place on one of the assets in order to recover costs and pay off a large line of credit owed against the house. My sister ( other executor ) knew about the administration fee when we hired a lawyer and is now pretending that she knew nothing of it and figured I would do all of this work for free. I made the estate an additional $70,000 over and above what we initially had due to my hard work and diligence on taking care of the assets. The 5% fee would equaled roughly $23,000 on an estate gross value of $476,000. I am claiming $18,000 and she refuses I did anyting to be entitled to this sum. She initially offered me a $5000.00 fee which would barely cover the amount of stress and hardship I’ve lived administrating this estate. After asking her to negotiate the amount, she came up with a $9000.00 fee for all my time and effort. I am wondering what you would think is a feasible amount based on what I have explained. Ultimately she is making around $35,000 extra for doing nothing.

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    1. The $18,000 you're claiming works out to about 3.75% of the estate. I actually think that's a bit high based on what you've said about the estate. The high end of the scale for payment is usually reserved for executors who have to run the deceased's business, sell overseas residences, or deal with missing beneficiaries etc. It sounds as if you're doing a great job, but that is the level of success that is expected of an executor. The $9,000 she has agreed to is about 2% of the estate and that seems reasonable to me. She's making $35,000 because she's a beneficiary, and beneficiaries don't have to earn their inheritance.

      Lynne

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  25. Hi Lynne:
    I have a question. My mother was enduring Power of Attorney for the last 3 years for my grandmother (her mother) before she passed away almost 1 year ago. My mom lived in BC and my grandmother lived in Alberta. There was actually 2 enduring Power of Attorneys, my mom's sister, but she refused to have any part of that responsibility and wanted nothing to do with my grandmother (her mother). When my grandmother passed away, my mom's sister was also previously appointed the estate executor and administrator, in her last known will before she passed away. Once my grandmother passed, my mom's POA and her sister's estate executorship took over. Now, this is a very small estate, my grandmother lived in a care home and my mom managed to save 42,000 over the course of her POA. In the Will, my grandmother left 25% of her assets to her 5 children and named them in the Will, 50% to her grandchildren and great grandchildren per stirpes, and the remaining 25% to a charity. Quite simple and very straight forward. My mom sent her sister the accounting records, which were notarised and signed off by my her accountant etc. Now, my mom's sister, the estate executor disagrees with some incurred costs that my grandmother approved for my mom to carry out her POA duties, the sum of $4500, also my grandmother took out a small life insurance policy in 2001(6500), in which my mother is the beneficiary. Following my grandmothers death, my mom's sister demanded the life insurance policy become part of the estate and that my mom was not allowed to have incurred any expenses performing her POA duties (which were all approved by my grandmother beforehand), so my mom just received the breakdown of the Will and the estate executor (my mom's sister) did the following: Voided my mom from the will, demanded the life insurance policy and included all of her own step children and step-grand children and step-great grandchildren in the break down of the 50%. Now, I am thinking that an executor can not choose to execute the Will is a way they see fit, but must follow what the Will states. I don't believe she can just void my mom from the Will when she is specifically named as a beneficiary. Also, I don't believe she can include step-children, when the term stirpes is clearly stated in the Will. Is this correct? If so, what is the course of action? The money means nothing, the estate is small, but the principle of it all and being accountable and performing your fiduciary duty is what I am interested in knowing. Thank you very much.

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    1. You're right, an executor cannot choose who gets to be a beneficiary. She can neither leave out named beneficiaries nor add those who are not named. I agree that step-children are not included.

      I suggest that your mom hire a lawyer who will very quickly send a letter to the executor objecting to the interpretation of the will and the proposed distribution. If things go well (which isn't likely), the executor will correct her mistakes. She may not be using a lawyer and may not realize that she's doing completely wrongful acts. If she gets a letter from a lawyer, she may get one of her own and get the advice she needs, which in turn might make her do the job properly.

      If she refuses to follow the will and the matter cannot be resolved by negotiation, there is no choice left but to take her to court. You would be asking either to have her removed as executor, or to have the court impose rulings on her such as who is to be included in the distribution. I honestly hope it doesn't get that far because it's expensive and lengthy to resolve matters in the courts.

      Lynne

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  26. Hi, I am managing my Fathers Estate.. He passed near the end of 2015. I am however wondering what is a Fair amount to put down for Mileage cost.. As I have had to travel from Calgary to Golden to submit court documents, and then I also am making a trip out to Vernon to collect his personal items. and work on the transfer and sale of a vehicle. But I keep looking for rates for mileage that would well be a good match.. My Dads estate is not alot, but enough that my sister and I get something, At the same time I have mileage, and a upcoming hotel bill and I was hoping I didn't and wouldn't have to suck up the entire cost and could be reimbursed for mileage and part of the hotel cost. Yet all I find are CRA Rates for Bc and in general for mileage, and I think my sister would well have a spaz if that was the rate I charged. but I however dont feel it is fair that financially i have to take on the cost and make myself and kids suffer financially for it.

    ReplyDelete
    Replies
    1. If you are the executor of the estate, you are entitled to recover your reasonable expenses. Hotels and mileage for estate business are reasonable. Stay in a reasonably priced hotel (as opposed to the fanciest place in town) and reimburse yourself for the whole amount.

      As for mileage, I have always had my clients use a rate based either on CRA or on the amount local government employees are allowed to charge on their expenses. You can't just pull a number out of a hat, after all. It's unfortunate that your sister will be upset, but all you can do is advise that there were no cheaper alternatives. For example, if you hired a local lawyer to file your documents and couriered them to the lawyer from Calgary, that wouldn't be cheaper, and there'd still be no way to collect the personal items.

      What you're proposing to charge sounds reasonable to me.

      Lynne

      Delete
    2. Thank you so much for your help with figuring that part out.. Yea she probably will throw a fit. But I will deal with it, as I already told her I would be billing Estate for the Hotel (I found the cheapest possible) and with mileage she knows that will, just not the rate in which that will be.. till she talks to me next..

      I appreciate your help with figuring this out..

      Many Blessings
      Liz

      Delete
  27. My grandfather left 40% of his $37million dollar estate to charities .. which was left to the executor to choose the charities.. so the executor can choose beneficiaries. .. just to say...

    ReplyDelete
  28. Hi Lynn:
    I have some questions about my great aunt estate. She moved to Canada in 1970s and died in January of 2015. Left a will with 13 to share after her death as her husband passed away before and they have no children. one of the receivers is my father who passed away in 2009. the executor of the will i think is playing some games. I just want to clarify. Her estate is not a lot, all recipients live in Ukraine so have no idea how to inquire or follow the law. Anyway, her house in Toronto was sold in June 2015 and since then all the answers i get from her and the lawyer who handles the estate is that they are waiting for tax review and distributing funds permission. Is it possible for that long 1.5 years?
    My great aunt was in her 90s, never worked, everything she had was from her husband. I don't think her taxes would be so complicated and her estate is not big. Would you advise please. Thank you

    ReplyDelete
  29. I have been left some cash in my late uncles will and have been informed by the executor (my cousin) that this is subject to a 25% deduction as I am non resident in Canada, is this the law ?

    ReplyDelete
  30. Hi, in determining executor compensation, would it be correct to value at 5 % gross value or net value of 'fair market value'?

    ReplyDelete
  31. Hi, Lynne. Great blog. I am trying to get an idea of the fee an Ontario court might award to the executor of an estate worth $1.6m. No business to sell or manage, no overseas assets, no beneficiaries that are hard to find. All assets are in stocks and mutual funds and one primary residence to be sold. The one slightly more complicated area are two time shares - $0 value but I understand we can't get out of the agreements, so they have to be sold to someone else who will get the use of them and pay the ongoing fees. The executor wants to charge 5%.

    The second part to the question is what is the process for having a court decide how much the executor would get paid? The executor is immovable off 5% at the moment, so my guess is we will be heading to that eventuality. Thanks in advance for your help!

    ReplyDelete
  32. Going thru family complications right now. A grand child is looking for a advance on the inherentance
    from thier living (90 yr old) grandparent. Is this legal? I believe grandma's executor will be asked. And he may be the POA as well. Again is this legal. Thank you in advance

    ReplyDelete
    Replies
    1. Since the grandparent is alive, the executor has nothing to do with anything. He or she has NO ability to consent to anything since an executorship only starts when the grandmother dies. So no, it would not be legal for the executor to make any decisions on behalf of the grandmother and it certainly would be illegal for the executor to actually take any money to give to someone.

      Is it legal for someone to ask for an advance? Sure. Grandmother can say no if she wants to. If she feels like lending someone money, she can. It's her money.

      You mentioned the POA but you didn't say whether the POA document is actually in use. Is it like the will where someone might have authority in the future, or is it actually being used? If the POA document has not been properly activated (usually this means a doctor's certificate) then the POA has access to the grandmother's money. However, I would advise a POA not to be so foolish as to start making loans to people. The POA's job is to do what is good for the grandmother and only the grandmother. Doing anything else would be a breach of duty.

      So, unless the grandmother has full mental capacity and feels like making a loan to her grandchild, the grandchild is out of luck.

      Lynne

      Delete
  33. Fiance's bank account was joint with his father. His work pay was direct deposit into the joint account until recently. We have been putting money via etransfer for the last year. In reading your blog it sounds as if he does not have a right to that money now. Is that what you are saying?

    ReplyDelete
  34. I'm the executor of my grandmother's estate, which is worth about $30 000 net. The beneficiaries are her 5 surviving children. From the moment of her passing I have dealt with non stop bickering and squabbling over the smallest things (eg. a mirror she found in the junk yard). They argue over things I have no control over, then threaten to take legal action if I don't fix it.
    Now one is kicking up a fuss over how I sold her primary residency (through a real estate agent to the highest bidder who happened to be his sister). I am constantly having to talk to lawyers in regards to making sure I am legally right in my movements and statements.
    Long story short, I'm wondering if my fee would come from the gross assets or net assets? Also would 4% be reasonable to ask for my time and the stress they have caused? This estate has been a serious strain on me and my marriage.

    ReplyDelete
  35. When calculating an executor fee, do you base the percentage on the "Inventory of Assets"? This document was submitted to Revenue Canada as part of the requirements of obtaining a clearance certificate. Is the calculation on the "Total Value of Assets" or minus the "Total Value of Liabilities" = "Total Value of Net Assets"?

    ReplyDelete
  36. I live in Ontario and have had to travel to my deceased brothers home town for many appointments. I am the executor for his estate as he didn’t have a will and his daughter lives out of the province. Can I claim mileage and loss of days of work?

    ReplyDelete
    Replies
    1. You can claim expenses such as mileage, hotels, etc as long as they are reasonable. No, you cannot claim loss of days of work.

      Lynne

      Delete
  37. My mother recently passed away and left my brother as executor. He is in BC my mother and I lived in Edmonton Alberta. She has stated in her will the executor compensation fee is a certain amount. My brother doesn't like this and wants 10 times the amount and if we don't agree he will go to court and even ask for more. My mothers estate is worth around 1.1 million but no business no debt should be very straight forward. Would a judge grant him more compensation?

    ReplyDelete
    Replies
    1. In my experience, judges have been reluctant to give more than is stated in the will. Your brother knew the terms of the will before he started the work, and your mother made her wishes clear.

      Having said that, if the amount stated in the will was ridiculously low for the amount of work your brother had to do, he might have a chance. You said it was very straightforward, which is great, but that's not the only factor. There is always risk for an executor who must handle 1.1 million dollars.

      If the compensation given was in the amount of 1% of the estate or more, and it was not complicated, your brother is unlikely to be awarded more. Remember, his threat is to ASK for more and he has no guarantee that he'll win.

      Lynne

      Delete
    2. Hi Lynne and thank you for your reply. My mothers estate basically was a house that has now sold and investments. One bank one house? So pretty basic I would think.
      I received in the mail an affidavit for Interim Release, which states that I agree with the financial statements,and if I don't the personal representative will apply for a Court Order approving the financial statements. What I received was not bank statements but just a list of accounts and amounts. I would like to see all the bank statements before I approve, and I would think that is my right? Also the lawyer was a little sneaky and in the letter stated my brother is asking for 10 times the compensation amount that was stated in the will and if I agree to sign the affidavit.. The Document is just for Interim Release but if I sign I agree to the compensation amount he wants and if I don't sign then I don't get the distribution. Any advice on this one?
      Thanks

      Delete
    3. When a beneficiary doesn't sign a release, it is standard practice to ask the court for approval, otherwise known as applying to pass accounts. This is not a threat to you. Yes, he will ask the court to approve his accounts, but he must then also ask the court to approve his 10X compensation, so good luck to him getting that.

      The courts seem to be inconsistent in their treatment of executors who hold back distribution because of the refusal to sign a release. The law in canada right now is that they cannot hold the distribution - especially an interim distribution - ransom. Your brother is leaning hard on you right now because, IMO, he would not do as well in court as he would like to think.

      Lynne

      Delete

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