Anyone who has been an Estate Executor, or Personal Representative, can attest to the fact that there’s a lot of work involved in administering an Estate. Even with the assistance of a skilled probate lawyer and an experienced tax accountant, an Executor still has many responsibilities to the Estate that are often time-consuming and challenging. Because of the effort involved, Alberta law provides for Executor compensation—in other words, Estate Executors in Alberta are, in most cases, entitled to be financially compensated for the effort, expertise, and time that they put into administering a deceased’s Estate. This article addresses two main questions concerning Executor compensation in Alberta:
- Which circumstances entitle an Estate Executor to compensation?
- How much compensation, if any, is the Executor entitled to in the circumstances?
Did the Deceased Leave a Valid Will?
If the deceased left a valid Will, it will, in most cases, decide the question of Executor compensation. Nearly every Will addresses the topic of Executor compensation in one of three ways:
- The Will specifies how much compensation the Executor is entitled to receive—this is typically a specific dollar amount or a percentage of the overall Estate value;
- The Will states that the Executor is not entitled to compensation—this is typically done in circumstances where the Executor is also an Estate beneficiary, or in circumstances where the Executor is a close loved one and the Will-maker believes that the Executor has a moral duty to act as Executor without receiving compensation for doing so; or
- The Will is silent on Executor compensation—in such circumstances, Executor compensation is determined in the same way it would be if the deceased neglected to leave a valid Will.
If the Deceased Didn’t Leave a Valid Will
If the deceased didn’t leave a valid Will, or if the deceased’s Will is silent on Executor compensation, the Executor is still entitled to reasonable compensation. While an Executor can propose their own compensation amount based on their efforts and level of responsibility, the compensation amount must be approved by either the Estate beneficiaries or the Alberta Courts.
In most cases, an Executor or their probate lawyer will draft an “Executor Compensation Schedule” and send it to the Estate beneficiaries along with a “Release”. By signing the release, the beneficiaries ‘agree’ to the proposed Executor compensation amount. If the beneficiaries refuse to approve the proposed compensation amount, the Executor must make a court application to have their compensation request approved.
How Much Compensation is the Executor Entitled to in Alberta?
It’s helpful to keep in mind that there’s a difference between Executor compensation and reimbursement for out-of-pocket expenses. Even if the Will doesn’t entitle the Executor to compensation, they’re still entitled to reimbursement for expenses—i.e. accounting fees, legal fees, travel expenses, parking, postage, and other expenses that they incur while fulfilling their Executor duties. If you’re an Estate Executor, it’s prudent to keep receipts for all out-of-pocket expenses that you incur, however, doing so isn’t required by law.
While it’s fairly easy to quantify out-of-pocket expenses, determining Executor compensation often falls within a ‘grey-area’. However, the Surrogate Rules, which are Alberta laws governing Estate distribution, outline a number of factors to consider when determining an Executor compensation amount:
- The gross value of the estate;
- The amount of revenue receipts and disbursements;
- The complexity of the work involved and whether any difficult or unusual questions were raised;
- The amount of skill, labour, responsibility, technological support, and specialized knowledge required;
- The time expended;
- The number and complexity of tasks delegated to others; and
- The number of Personal Representatives appointed in the Will, if any.
The following situations may also entitle an Executor to additional compensation:
- The Executor is called upon to perform additional roles in order to administer the Estate, such as exercising the powers of a manager or director of a company or business;
- The Executor encounters unusual difficulties or situations; or
- The Executor must instruct a lawyer on litigation.
What Do the Alberta Guidelines Say?
The Alberta Surrogate Rules Committee created an Executor fee guideline in the 1990s. Some may argue that the guidelines are outdated, and while it is worth keeping in mind that the guidelines never made it into the actual Surrogate Rules, the guidelines are helpful in that they provide Executors with a range of fees that are likely to be considered reasonable by the Alberta Courts.
The guidelines suggest the following Executor compensation in Alberta:
|CAPITAL (Value of the Deceased’s Assets Upon Death)||Suggested Executor Compensation|
|On the first $250,000.00 of capital:||3% – 5%|
|On the next $250,000.00 of capital:||2% – 4%|
|On the balance:||0.5% – 3%|
|REVENUE (Funds or Assets That Come Into the Estate While
the Estate is Being Managed by the Executor, i.e. dividends, etc.)
|Suggested Executor Compensation|
|On revenue receipts:||4% – 6%|
|CARE & MANAGEMENT (Assets That are Managed by the
Executor While Awaiting Distribution)
|Suggested Executor Compensation|
|On the first $250,000.00 of capital:||0.3% – 0.6%|
|On the next $250,000.00 of capital:||0.2% – 0.5%|
|On the balance:||0.1% – 0.4%|
Depending on the complexity of the Estate, the amount of work involved, and the factors listed in the Surrogate Rules, an Alberta Court will likely validate an Executor compensation amount that falls somewhere within the range of percentages outlined in the table above. It’s also worth considering that it’s much easier for an Executor to have the Estate beneficiaries approve an Executor compensation amount than it is for an Executor to make a court application. As such, it’s helpful to be fair with your proposed compensation amount and to obtain advice from a knowledgeable probate lawyer who can guide you as to what’s reasonable and fair in the circumstances.
Our Probate Lawyers Are Here to Advise You Regarding Executor Compensation
If you’re an Estate Executor or Personal Representative, the experienced probate lawyers at West Legal can help you determine how much Executor compensation you’re entitled to. It’s important that you’re fairly compensated for your efforts in administering the deceased’s Estate, and that your compensation is reasonable in the circumstances. If you’re unsure of whether you’re entitled to Executor compensation, or of how much compensation you’re entitled to receive, contact the knowledgeable Wills & Estates lawyers at West Legal today for a free-of-charge, no-obligation consultation.