Executor compensation: what the job pays

Being an executor is a job, and the law pays it — from the estate, before distribution. The rules are provincial, and the numbers below are the working conventions courts apply when nobody has agreed otherwise.

Ontario

The Trustee Act (s 61) entitles a trustee to “fair and reasonable” compensation. Decades of case law have settled a tariff the courts use as a starting point:

• 2.5% of capital receipts, plus 2.5% of capital disbursements
• 2.5% of revenue receipts, plus 2.5% of revenue disbursements
• Sometimes a management fee of 2/5 of 1% per year on assets under administration

On a typical estate that lands near 5% of estate value for a complete administration. Courts adjust down for simple estates and professional help the estate paid for separately, and occasionally up for genuinely difficult ones.

British Columbia

BC’s Trustee Act (s 88) caps compensation at a maximum of 5% of the gross aggregate value of the estate — capital and income — plus an optional care-and-management fee of up to 0.4% per year of average assets. The court fixes the amount within the cap based on effort, skill, and results.

Alberta

Alberta has no statutory percentage. The Surrogate Rules direct that a personal representative may receive fair compensation, and the accompanying suggested guidelines work from bands of estate value plus factors like complexity and time — commonly landing in the 1% to 5% range overall. Beneficiary agreement or a court order settles the number.

The tax catch

Executor compensation is taxable income to the executor — employment income, potentially requiring the estate to issue a T4 and withhold. An inheritance, by contrast, is not taxed in the beneficiary’s hands.

If you are writing your will

You can address compensation in the will itself — set an amount, set a formula, or say the executor named also receiving a legacy takes it in lieu of compensation. Silence is fine too: the provincial defaults above then apply. What matters more is the conversation: tell your executor what the job pays and what you expect, before they discover both from a statute.