In accordance with Ontario legislation an estate trustee is entitled to receive compensation for his/her efforts in administering the estate of a deceased person. The legislation does not provide a fixed percentage or methodology for calculating same.
The case law provides relevant criteria to be applied when fixing compensation, referred to as the five factors approach as follows:
- The value of the estate assets;
- The care, responsibility and risks assumed by the estate trustee;
- The time spent by the estate trustee in carrying out responsibilities in the administration of the estate;
- The skill and ability required and displayed to administer the estate assets; and
- The results obtained and degree of success associated with the estate trustee’s efforts.
This criteria alone does not provide a specific method for calculating the quantum of compensation to which an estate trustee may be entitled. To provide some certainty to the determination of the amount of compensation the former tariff has been used as a guideline and followed for many years. That tariff is:
- 2½% of capital and income receipts; and
- 2½% of capital and income disbursements;
Therefore, as a general rule of thumb, an estate trustee may claim compensation of approximately 5% of the value of the estate assets using the tariff guideline.
It is important to note that if the estate trustee’s compensation is fixed by the provisions of the Will or in a separate agreement between the testator and the estate trustee and referred to in the Will, the amount of compensation to which that estate trustee is entitled is governed by the provisions of the Will or the agreement and not the legislation and the case law.
The amount of compensation claimed by an estate trustee must be approved by the residual beneficiaries of the estate or by a Judge on a Passing of Accounts and should not be pretaken unless the provisions of the Will provide otherwise.