When someone passes away, their last will and testament outlines their wishes for the distribution of their assets. The executor is the person designated to carry out these instructions and ensure that the deceased’s final wishes are fulfilled. In Canada, the executor is typically a close relative or trusted friend of the deceased. In exchange for their services, the executor is entitled to receive an executor fee. But how does this fee work, and what factors determine its amount?
Executor Fees by Province
Executor fees vary from province to province, with some provinces offering a set fee and others leaving it up to the discretion of the court. Here is a table summarizing the executor fee structure in each province:
| Province | Maximum Executor Fee | Notes |
|---|---|---|
| Alberta | 5% of the estate’s net worth | The fee is set by the court. |
| British Columbia | 5% of the estate’s net worth | The fee is set by the court. |
| Manitoba | No set fee | The fee is determined by the court based on the executor’s services. |
| New Brunswick | No set fee | The fee is determined by the court based on the executor’s services. |
| Newfoundland and Labrador | No set fee | The fee is determined by the court based on the executor’s services. |
| Northwest Territories | No set fee | The fee is determined by the court based on the executor’s services. |
| Nova Scotia | 5% of the estate’s net worth | The fee is set by the court. |
| Nunavut | No set fee | The fee is determined by the court based on the executor’s services. |
| Ontario | 5% of the estate’s net worth | The fee is set by the court. |
| Prince Edward Island | No set fee | The fee is determined by the court based on the executor’s services. |
| Quebec | No set fee | The fee is determined by the court based on the executor’s services. |
| Saskatchewan | No set fee | The fee is determined by the court based on the executor’s services. |
| Yukon | No set fee | The fee is determined by the court based on the executor’s services. |
Calculating the Executor Fee
For provinces with a set fee, the executor’s fee is calculated as a percentage of the estate’s net worth. For example, if the estate is worth $1 million and the maximum executor fee is 5%, the executor would receive $50,000.
For provinces without a set fee, the executor’s fee is determined by the court based on the executor’s services. This fee can range from a few hundred dollars to several thousand dollars, depending on the complexity of the estate and the executor’s responsibilities.
It is important to note that the executor fee is not the same as an inheritance. The executor fee is a payment for the executor’s services, while an inheritance is a portion of the deceased’s assets that is bequeathed to a specific individual or individuals. Additionally, the executor fee does not have to be equal to the maximum allowed by the court. The executor and the beneficiaries can agree on a lower fee if they choose.
- In some provinces, the executor fee is taxed as income. For example, in Ontario, the executor fee is considered taxable income and must be reported on the executor’s tax return.
- The executor fee is often paid out of the estate’s assets, which means that the beneficiaries may receive a smaller portion of the estate as a result.
- In rare cases, the court may award the executor a larger fee if they perform extraordinary services, such as selling the deceased’s business or resolving a complicated legal dispute.
The concept of executor fees dates back to medieval England, where executors were appointed by the king to carry out the deceased’s final wishes. The executor was often paid a fee for their services, and this practice has continued to the present day. In Canada, executor fees have been regulated by the courts for hundreds of years, with the fee structure and calculation method varying from province to province.
Examples
In a simple estate with few assets and no disputes, the executor’s fee may be relatively small. For example, if the estate is worth $100,000 and the executor is a close relative, they may agree to accept a fee of $1,000.
In a more complex estate with multiple assets and potential disputes, the executor’s fee may be much larger. For example, if the estate is worth $10 million and the executor is a professional with expertise in estate administration, they may receive a fee of $500,000.
Pros and Cons
One advantage of the executor fee is that it provides compensation for the executor’s time and effort. This can be especially important in complex estates where the executor may have to devote a significant amount of time and energy to carrying out the deceased’s final wishes.
On the other hand, the executor fee can also create conflicts of interest if the executor is also a beneficiary of the estate. In such cases, the executor may be motivated to prioritize their own interests over the interests of the other beneficiaries.
It is likely that the executor fee structure in Canada will continue to evolve in the coming years. As technology advances and the process of estate administration becomes more streamlined, it is possible that the court-determined fee structure will be replaced by a set fee in all provinces. Additionally, with the increasing popularity of online estate planning tools, it may become more common for individuals to appoint professional executors to handle the administration of their estates.
The executor of a Canadian will can receive an executor fee for their services. The amount of this fee varies from province to province, with some provinces offering a set fee and others leaving it up to the discretion of the court. The executor fee is a payment for the executor’s services and is separate from any inheritance the executor may receive. It is important to consider the pros and cons of the executor fee, as well as the potential conflicts of interest, when selecting an executor for your will.