Executor Fees in Canada: What Executors Get Paid, by Province

On a $500,000 estate in Ontario, the courts’ usual guideline puts the executor’s fee at about $25,000. In Canada, executor fees are set by the will first. If it sets an amount, that’s normally what the executor gets. If it doesn’t, provincial law decides: four provinces cap the fee at 5% of the estate, Ontario’s courts start from about 5%, and the rest of the country sets no percentage at all.

The fee is taxed as income, and an inheritance isn’t. So an executor who is also an heir can end up paying tax on money they would have received tax-free, and it’s worth doing the math before taking the fee.

How much does an executor get paid in Canada?

An executor gets what the will sets, if it sets anything. When the will is silent, the executor is entitled to fair and reasonable pay for the work, and the province’s law sets the limits. The fee is normally paid at the end, once the beneficiaries or a court approve the estate’s accounts.

When the will sets the fee

A will can name a flat amount, a percentage, or a gift to the executor in place of pay. When it does, the provincial rules mostly don’t apply. Ontario’s Trustee Act (opens in a new tab) says its compensation section doesn’t apply where the will sets the amount, and British Columbia’s Trustee Act (opens in a new tab) has the same rule.

Manitoba is the exception. Under its Trustee Act (opens in a new tab), a will clause that fixes the executor’s pay isn’t valid unless a judge approves it.

When the will says nothing

Then the executor proposes a fee, usually along with the estate’s final accounts, and the beneficiaries accept it or object. If someone objects, a judge sets the amount. Alberta’s Surrogate Rules (opens in a new tab) list what a court looks at: the estate’s value, how complex the work was, the skill and time it took, how much of it was handed to a lawyer or someone else, and how many executors there were.

How much can an executor charge in each province?

British Columbia, Nova Scotia, Prince Edward Island and Newfoundland and Labrador cap the fee at 5% of the estate. Ontario’s law has no cap, but its courts use a guideline that comes to about 5%. Quebec, Alberta, Saskatchewan, Manitoba, New Brunswick and the territories set no percentage, so the will, the beneficiaries or a judge decides.

On a $500,000 estate, 5% is $25,000. Where there’s a cap, it’s the most a court can allow, not an amount the executor is owed.

How Ontario’s guideline works

Ontario’s courts start from a guideline the Court of Appeal described in Laing Estate v. Hines (opens in a new tab) in 1998: 2.5% of everything the executor collects for the estate, like the house, the bank accounts and the investments, and 2.5% of everything they pay out, like the debts, the taxes and the heirs’ shares. For an estate that’s collected and paid out once, that comes to about 5%. Income the estate earns while it’s being settled is counted the same way. The court in Laing also noted that no statute or regulation sets these percentages, so a judge can go higher or lower.

What the caps are measured on

British Columbia’s 5% applies to the gross value of everything in the estate, before debts are paid. Nova Scotia’s is on what the executor receives, and Prince Edward Island’s is on the gross amount received. Newfoundland and Labrador’s is written as 1/20 of the assets’ realized value, which is what they actually bring in.

Yearly fees when money stays in trust

Some estates hold money for years, such as a share kept in trust until a child turns 25. British Columbia allows a yearly care-and-management fee of up to 0.4% of the assets’ average market value on top of the 5%, and Newfoundland and Labrador allows the same 0.4% (1/250) for a continuing trust. Ontario’s guideline includes a yearly management fee of two-fifths of 1%. Alberta allows one only for property that stays in trust instead of being handed out at the death.

What part of the estate is the fee based on?

The fee is based on what goes through the estate. Outside Quebec, a joint account passes straight to the surviving owner, and an RRSP, RRIF, TFSA or life insurance policy with a named beneficiary is paid to that person directly. That money never becomes part of the estate, so it doesn’t count toward the executor’s fee.

So the estate an executor is paid on can be much smaller than what the person owned. Take someone in Ontario with a $600,000 house that passes to their spouse as joint owner, a $150,000 RRSP naming the spouse as beneficiary, and $120,000 in an account in their own name. Their estate is the $120,000. At the guideline’s 5%, the executor’s fee is about $6,000, not the $43,500 it would be on everything.

Quebec is different. A joint account in Quebec doesn’t pass straight to the other holder, so the deceased’s share stays in the succession.

Are executor fees taxable?

Yes. For an executor who doesn’t do this for a living, the CRA counts the fee as employment income (opens in a new tab). The estate reports it on a T4 slip (opens in a new tab) and takes off income tax and, outside Quebec, CPP contributions before paying it, though not EI premiums (opens in a new tab). In Quebec, the estate also files an RL-1 slip, because Revenu Québec (opens in a new tab) treats the pay as employment income too.

For a lawyer or accountant who acts as executor as part of their business, the CRA treats the fee as business income instead, reported on a T4A slip.

Your inheritance isn’t taxed as income

What you receive from an estate isn’t income. Canada has no inheritance tax, and the estate pays what the deceased owed before anything is handed out, as our guide to inheriting money in Canada explains. So the same $25,000 can reach you tax-free as part of your share, or as a taxable fee.

Expenses are separate from the fee

An executor is paid back from the estate for what the job costs, like court filing fees, postage or travel, whether or not they take a fee. Prince Edward Island’s Probate Act puts the commission on top of necessary expenses, for example. Those repayments come out of the estate along with its other bills, including the funeral, before anyone inherits.

Should you take the executor fee or waive it?

It depends on who inherits. If you’re the only heir, taking a fee usually leaves you with less, because money you’d have inherited tax-free arrives as taxable income instead. If the estate is shared and you’re doing the work, the fee is how that work gets paid, and it comes out of everyone’s share, yours included.

Take a $500,000 Ontario estate shared equally by three children, one of whom is the executor. With the guideline fee of about $25,000, taxed at a 30% marginal rate:

Taking the fee leaves each sibling with about $8,300 less and the executor with about $9,200 more, and $7,500 goes to tax. If the executor were the only heir, the same fee would leave them with $492,500 instead of $500,000. The example leaves out CPP contributions, which the estate also deducts from the fee.

None of that makes the fee wrong to take. Settling an estate can mean months of paperwork, calls and decisions, and an executor who isn’t an heir, or who does far more than the others, is entitled to be paid for it. Raising it with the beneficiaries early can save an argument at the end.

How are liquidators paid in Quebec?

Quebec calls the executor a liquidator, and its Civil Code sets no percentage. Under article 789 (opens in a new tab), a liquidator who isn’t an heir is entitled to be paid. One who is an heir is paid only if the will provides for it or the heirs agree. If the will doesn’t set the amount, the heirs do, and if there’s a disagreement, the court decides.

The same article entitles every liquidator, heir or not, to be reimbursed for the expenses of the job. And because a liquidator who is also an heir is paid only when the will provides for it or the heirs agree, the tax question above comes up only in that case.

Saving what you inherit, with a chance to win every week

An executor’s fee or an inheritance often comes as a lump sum, after months of waiting. If some of it goes into savings, Lodavo gives you a reason to leave it there.

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This article is general information, not legal or tax advice. An estates lawyer or, in Quebec, a notary can tell you how these rules apply to a particular estate.

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