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Q: Executor's fee for administration of an estate trust ( Answered 5 out of 5 stars,   0 Comments )
Subject: Executor's fee for administration of an estate trust
Category: Relationships and Society > Law
Asked by: hawkster-ga
List Price: $30.00
Posted: 29 Mar 2005 13:18 PST
Expires: 28 Apr 2005 14:18 PDT
Question ID: 502203
I live in the province of Ontario, Canada.  I am the executor of my
late uncle's estate.  The estate is held in trust for my aunt until
her death.  I would like to know the law or custom regarding the
administrative fee which an executor of an estate trust can charge per
year.  I think it's a certain percentage
of the principal amout of the estate plus a percentage of the annual
interest generated by the principal. In addition to the percentage
amount(s) I would like to be able to quote a reference for the source
of the information. ie: Ontario law, tax law, a law society, whatever.
Subject: Re: Executor's fee for administration of an estate trust
Answered By: websearcher-ga on 29 Mar 2005 14:22 PST
Rated:5 out of 5 stars
Hi hawkster:

Thanks for the interesting question. 

I've done some extensive searching for you and believe I have found
the accepted answer for your question. First off, the name "trustee"
is the one used in Ontario to describe someone who administers an
ongoing trust such as your late uncle's.

There *is* mention in Ontario law of compensating trustees of estates:

Trustee Act - R.S.O. 1990, CHAPTER T.23
Quote: "Allowance to trustees, etc.
      61.  (1) A trustee, guardian or personal representative is
entitled to such fair and reasonable allowance for the care, pains and
trouble, and the time expended in and about the estate, as may be
allowed by a judge of the Superior Court of Justice.  R.S.O. 1990, c.
T.23, s. 61 (1); 2000, c. 26, Sched. A, s. 15 (2)."

There is, however, no set schedule of fees that can be claimed laid
out in any laws.

But don't despair! The issue of trustee compensation has come up many,
many time over the years, and the courts have "settled" on a standard
set of rates:

Compensation For Executors & Trustees
The Act contains no rules as to the calculation and amount of the
compensation. In Ontario, as in other Canadian jurisdictions, there is
no tariff that can be applied to the estate to determine an amount of
compensation. However, over the years, the courts have applied a ?rule
of thumb? tariff, and it is departed from only in special
circumstances. In such cases, the court will reduce or increase the
compensation or may permit a special fee.

The tariff at its present level is often calculated as follows:

(a) 2.5% to 3% of capital receipts;

(b) 2.5% to 3% of capital disbursements;

(c) 2.5% to 3% of income receipts;

(d) 2.5% to 3% of income disbursements; and

(e) for ongoing trusts, 2/5 of 1% or 3/5 of 1% of the average annual
market value of the trust assets as the fee for ongoing care and
management, and 5% to 6% of income generated by the trust.

It is preferable that compensation be paid on a regular basis to avoid
a heavy tax burden on the trustee and to ensure a more even cash flow
in the estate. Thus, it is possible to include a clause in the will
permitting trustees to take reasonable installments of compensation.

This information is also backed up by the following website:

Compensation for Executors and Trustees

Both of these legal websites also say that a judge might consider
making alterations to these fees, based on the circumstance
surrounding any specific trust. Some criteria they might look at are:

"(1) the magnitude of the trust;
(2) the care and responsibility arising from the trust;
(3) the time occupied in performing duties;
(4) the skill and ability displayed;
(5) the success in administering the trust."

Search Strategy (on Google):
* executor estate ontario fees
* "administering an estate" ontario
* "Ontario Trustee Act"
* "Ontario Trustee Act" compensation tariff OR formula
* "Compensation for Executors and Trustees"
* capital income "ongoing trusts"

So, it looks like your original inklings were correct. I hope that
these figures help you determine what you need to do next.

hawkster-ga rated this answer:5 out of 5 stars and gave an additional tip of: $5.00
Very complete answer provided almost immediately.
Many thanks. Hawkster.

There are no comments at this time.

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