Your estate may incur a number of fees and expenses during the settlement process, such as commissions on home sales, fees on investment transactions, estate administration tax (commonly called a probate fee) and your executor’s out-of-pocket expenses. Your executor is also legally entitled to a fee, even if they are a friend or family member.
While friends or family members may say that they will not charge a fee, this can change when the extent of the work involved becomes apparent. There have been many cases where the issue of executor fees is settled by a court. Courts generally accept that the executor is entitled about 5% of the estate’s value, plus an ongoing management fee of 2/5 of 1% of the average annual value of the estate assets during the settlement process.
Discuss executor fees up front
Discuss the issue of executor fees with your family and your executor when making your estate plan. These fees are often a surprise to beneficiaries so it helps if they understand what the usual fee range is. They should also understand that your executor could be entitled to additional fees if the estate becomes unduly complicated and requires more work for the executor.
Don’t let fees influence your executorExecutor Someone you name to carry out the wishes that you set out in your will after your death. May be named by the court if you dont name one. In Ontario, an executor is called an estate trustee.+ read full definition decision
Family members or close friends may choose not to charge an executor fee. However, this should not be your primary reason for choosing them. You need someone who will do the job well, not necessarily cheaply. Executors earn their fee – and estateEstate The total sum of money and property you leave behind when you die.+ read full definition settlement mistakes can be costly.
Your executor has a legal right to be paid an amount equal to about 5% of your estate’s value.