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Saturday, March 13, 2010

Hiring a trust company as agent

In my last few seminars, I have seen an increase in the number of questions I'm being asked about hiring a trust company to help an executor administer an estate. I also noticed a discussion about this today on LinkedIn. So I thought I'd talk about it a bit here to give people a better idea of what the idea actually entails.

The basic idea is that when someone passes away, and their executor feels overwhelmed by the work or the responsibility or the time commitment, they hire a trust company. At Scotia Trust, we call the arrangement "Estate Assist". The executor is still the executor throughout the entire transaction.

When the executor first approaches the trust company, there is a detailed discussion about how much of the work the executor wants the trust company to do. Quite often, the executor wants to hand off the whole thing. For example, a person in Ontario who is the executor for an estate in Alberta might find it impossible to deal with from that distance and might want the trust company to take care of everything.

Other executors need less work done. Sometimes they get part way through the estate themselves and realize they just can't manage it. They hire the trust company to take over from where they left off. The arrangement is flexible and is designed to address the needs of the executor. The fee is also less when the trust company does less work.

As mentioned above, the executor remains the executor. This leads many people to ask "how it works". As an example, the trust company will compile all of the information needed for a grant of probate and arrange for it to be prepared and filed, but it is the executor who still has to sign the paperwork. If the deceased's home has to be sold, the trust company will find a realtor, get appraisals etc but it's up to the executor which offer is accepted.It's an interactive, co-operative arrangement.

Trust officers have a very unusual job, but the ones I know love the challenge of combining legal knowledge with practical solutions.

Remember that it costs nothing to call a trust company to ask what arrangements could be made in your case and to find out the fees. Feel free to call me or any of my fellow Scotiabankers to talk about it.


  1. What kind of costs are involved, and does it make sense on a million dollar plus estate as it sounds like a lot of money is involved.?

  2. The cost of hiring a trust company as executor is cheaper than people think. I'm going to give you some actual numbers here, but please remember they only apply to Scotiatrust. You'd have to call around to get numbers from other trust companies as I can't speak for them.

    Any executor in Alberta can charge between 1% and 5% of an estate to administer the estate. Scotia fees start at 3.5 % on the first $500,000 and decrease as the estate gets larger. So you can see that we start right in the middle of the usual range, and go down from there. We also apply a 20% discount on assets already held anywhere within the Scotiabank group.

    Our trust manager is pretty flexible on the fees. Some estates are tougher to administer because there are businesses to wind up and properties overseas to be sold, etc. Others are easier because they are mostly liquid. We are not averse to customizing fees depending on customer need. We've been doing this kind of work for about 100 years but wouldn't have been around that long if we were gouging people!

    As for hiring the trust company as agent while the customer continues to be the executor, the fees vary widely due to the fact that our involvement varies so widely. As I mentioned in my post above, sometimes we handle the whole estate and sometimes just part.

    I often hear people ask why they'd pay a trust company when their executor can do it for free. If you think your executor is free, think again. Compare the speed and quality of work done by professional executors who do this every day to the work done by someone who's reinventing the wheel. And your executor will still have to pay a lawyer, an accountant, a realtor and possibly other people. Plus there is the executor's time. Many executors who start off intending to do the work for free ending up charging a fee because they've taken so much time off work and been through such a hassle.

    As I've said before, it costs nothing to sit down with someone from a trust company and ask what it would cost you on any particular estate.

  3. Then why is it costing my family upwards of $16,000 on a $1M estate when a lawyer could have been hired for $4,000?

    1. I doubt that you would have been able to hire a lawyer for $4,000 to do the probate on a $!M estate. The normal rate for that would be more like $5,000 to $10,000 plus disbursements.

      Also, a trust company does something completely different than a lawyer. When you hire a lawyer to get the probate, the lawyer will do just that - get the probate. That's what the $10,000 is for.

      After that, you have a choice. Either you take care of the estate yourself (selling the house, getting appraisals, settling disputes, paying bills, filing paperwork, doing taxes etc) or you pay the lawyer by the hour OVER AND ABOVE WHAT YOU PAID TO GET THE PROBATE to do this work for you. Believe me, that will add up to a lot more than $16,000.

      A trust company quotes a fee then does everything on the estate for that fee. There is no hourly rate.


  4. I am not an Ontario resident and I am administering my mother's estate with no problems. Getting probate was relatively easy although it took longer than expected.

  5. It's possible to be the executor of an estate in another province. Usually, an out of province executor will be required to post a bond in the amount of the estate. Hiring a trust company would satisfy requirements so that bonding would not be required. Also, depending on the facts of the case, the bond may be waived if the beneficiaries agree in writing.



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