Have you been named as an executor in a Will, and are curious as to whether you are entitled to any form of compensation to act in that role? If so, the answer is yes, you are!
In your role of executor, you are responsible for the distribution and administration of the estate of the deceased. Executor duties entail taking care of any debts owed by the deceased and distributing the deceased's assets in accordance with the terms of their Will. Given this important undertaking, many executors wonder whether they are entitled to compensation for this role.
When determining the compensation you are entitled to as executor, the first place to look is the Will of the deceased. Oftentimes, the testator will identify a specific percentage or dollar amount that he or she wishes the executor to receive as a fee for their role, and this stipulation is legally binding.
If, however, the Will does not specify an executor fee, a fair rate for an executor who is a member of the general public is between 2%-5% of the total Part 1 Assets listed in the Statement of Property form for the estate. These Part 1 Assets include real property, bank accounts, investment accounts, cash on hand, life insurance payable to the estate, annuities and pensions payable to the estate, and miscellaneous personal property. Identifying where you fall on the spectrum of fees is often determined according to the volume of work required of you when attending to your executor duties, as well as the value of the estate.
When deciding whether to charge executor fees, there are a few critical points to keep in mind:
- Aside from circumstances in which the executor fee is specifically stipulated in a Will, all beneficiaries must consent to the executor fee determined by the executor. Therefore, it is in your best interests to choose a fee that is reasonable given the circumstances of the estate you are managing, and the volume of work involved.
- Executors are not required to charge executor fees. Whether you do so will depend on several factors including the amount of work involved, the value of the estate, or the executor's personal preference.
- Any compensation received for executor fees is considered taxable income. Therefore, depending on the size of the estate, charging these fees can have significant tax implications.
Note that executors must render a full and final estate accounting of their executorship within two years of the grant of letters probate.1 Any executor fees charged must be included in the final accounting.
Footnote
1. The Wills Act, 1996, SS 1996, c W-14.1, s 35(1).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.