Lawyers should never underestimate the importance of an Executor’s role and legal duties when dealing with the administration of an estate. We set out briefly the important legal duties of executors here.
It can be helpful for both will-makers and future executors, as well as existing executors about to start the administration of an estate, to understand a few basic issues that executors will need to know – particularly what fees and costs are payable to whom out of the estate.
What are Executors’ fees?
The general principles have been set by the Provincial Courts. In Ontario, the customary fee is 5% of the value of assets submitted for probate.
However, the guiding principle is reasonableness, rather than a fixed percentage fee. Where an estate is very large but simple to administer, a lower percentage fee might be appropriate, and the converse for a small but time-consuming estate.
What about Government Estate Taxes?
These vary by province. In Ontario, an Estate Administration Tax is calculated on the total value of a deceased person’s estate that is over $50,000 at the rate of 1.5%. The first $50,000 is exempt. Sometimes, it can be calculated on the estimate of the total value of the estate. The fees are ordinarily payable to the Ontario government at the time an application for probate is submitted. However, where the executor cannot afford to pay the tax in advance, it is possible to seek a deferral of payment.
Who else gets ‘paid’ during the estate administration?
The law firm acting in the estate administration will rightly be paid for its work on behalf of the executors/estate trustees. Other professionals whose services are required during the administration of the estate can also charge for their work, for instance, accountants and property managers).
What if the estate is insolvent?
Where an estate is insolvent (ie, there are insufficient assets to pay off all the creditors) the law states who will be paid first. The order of payment is, in this order, the funeral home; testamentary expenses (legal fees and payment of compensation to the Executor); other debts such as Crown debts. There will be nothing left over for the beneficiaries named in the will.
How can we help?
If you are considering making a will, or you are an executor and want to know what sums are payable out of the estate, contact us for specialist legal advice. The experienced Estate Administration lawyers at Rogerson Law Group can expertly guide you through estate administration process and the fees and costs payable both to executors and others.
Rogerson Law Group provides Estate Administration and Estate Litigation services in the entire GTA including Toronto, Scarborough, Mississauga, Vaughan, Brampton, Richmond Hill, Etobicoke, and Barrie and surrounding areas with offices located in downtown Toronto, Barrie, and an associated office Ottawa. Contact us now at firstname.lastname@example.org