1. What Is Executor Compensation?

2. What Does Alberta Law Say?

3. How Is Executor Compensation Determined?

4. Factors Alberta Courts Consider

5. Can the Will Set the Executor's Compensation?

6. Can Beneficiaries Approve the Compensation?

7. When Is Court Approval Required?

8. Can an Executor Be Reimbursed for Expenses?

9. Common Mistakes

10. Costs and Considerations

11. When Should You Speak With an Estate Lawyer?

12. How Bridgestone Law Can Help

Introduction

Many people agree to act as an executor because they want to honor the wishes of a family member or close friend. Only after the administration begins do they realize how much work the role can involve.

An executor may spend months, or even years, collecting assets, communicating with financial institutions, arranging the sale of property, filing court documents, working with accountants, responding to beneficiaries, and ensuring that taxes and debts are properly addressed.

Given these responsibilities, many executors ask a reasonable question:

Am I entitled to be paid?

Yes. An executor in Alberta is generally entitled to reasonable compensation for administering an estate unless the will provides otherwise or the executor chooses not to accept payment.

Unlike some provinces, Alberta does not have a statutory fee schedule that automatically determines how much an executor is paid.

Instead, compensation is assessed based on factors such as:

• the size and complexity of the estate;

• the amount of work performed;

• the skill and responsibility involved;

• the time required to administer the estate;

• the results achieved; and

• whether the compensation is reasonable in all of the circumstances.

Because every estate is different, executor compensation varies from case to case.

What Is Executor Compensation?

Executor compensation, sometimes called executor remuneration, is payment made to an executor for the work involved in administering an estate.

It recognizes that acting as an executor is often similar to managing a complex project. Depending on the estate, the executor may be responsible for dozens of legal, financial, and administrative tasks over an extended period.

Executor compensation is separate from any inheritance the executor may receive as a beneficiary under the will.

A person can be:

• an executor only;

• a beneficiary only; or

• both an executor and a beneficiary.

Being a beneficiary does not automatically prevent someone from receiving reasonable executor compensation, although the will may contain specific directions regarding payment.

What Does Alberta Law Say?

In Alberta, there is no legislation that sets a fixed percentage or mandatory fee for executor compensation.

Instead, the law recognizes that executors are generally entitled to fair and reasonable compensation for the services they provide.

The amount may be:

• specified in the will;

• agreed upon by the beneficiaries; or

• determined or reviewed by the Court of King's Bench if necessary.

When reviewing compensation, Alberta courts consider whether the amount requested is reasonable in light of the work actually performed.

The goal is not to reward the executor simply because the estate is valuable. Rather, compensation should reflect the nature of the services provided and the responsibility assumed.

How Is Executor Compensation Determined?

Unlike some Canadian provinces, Alberta does not use a statutory fee table to calculate executor compensation.

Instead, the amount is determined by considering what is fair and reasonable in light of the work actually performed.

No two estates are identical. Administering a modest estate consisting of one bank account and a vehicle is very different from administering an estate involving multiple properties, businesses, investment portfolios, or disputes between beneficiaries.

As a result, compensation should reflect the executor's responsibilities rather than simply the value of the estate.

Factors Alberta Courts Consider

When reviewing executor compensation, Alberta courts have traditionally considered a number of factors, including:

The Size of the Estate

Larger estates often involve more assets and greater responsibility.

However, a larger estate does not automatically justify higher compensation.

For example, an estate worth $5 million that consists primarily of one investment account may require considerably less work than a $750,000 estate containing multiple rental properties, a private corporation, several beneficiaries, and ongoing litigation.

The value of the estate is only one consideration.

The Complexity of the Estate

Complex estates generally require more time, judgment, and expertise.

Complexity may arise where the estate includes:

• multiple parcels of real estate;

• operating businesses;

• farms;

• foreign assets;

• extensive investment portfolios;

• tax planning issues;

• trusts;

• missing beneficiaries;

• litigation; or

• disputes among beneficiaries.

The greater the complexity, the more extensive the executor's responsibilities are likely to be.

The Time Devoted to the Administration

Estate administration often requires far more work than beneficiaries realize.

Executors may spend significant time:

• locating assets;

• communicating with banks;

• arranging appraisals;

• working with accountants;

• preparing probate documents;

• maintaining vacant property;

• selling real estate;

• organizing personal belongings;

• responding to beneficiaries;

• meeting with lawyers; and

• maintaining financial records.

Keeping a detailed record of the time spent administering the estate can be extremely helpful if compensation is later questioned.

The Skill and Responsibility Required

Some estates require specialized judgment.

For example, an executor may need to:

• oversee the operation of a business;

• manage investment decisions;

• supervise the sale of valuable assets;

• negotiate with creditors;

• coordinate tax planning; or

• make decisions affecting multiple beneficiaries.

The greater the responsibility assumed, the more likely it is that higher compensation may be justified.

The Results Achieved

Courts also consider how effectively the estate was administered.

An executor who acts diligently, preserves estate assets, communicates appropriately with beneficiaries, and completes the administration efficiently is generally in a stronger position than one whose poor administration causes unnecessary delays or financial loss.

This does not mean every estate must be completed quickly.

Many estates legitimately require a year or more to administer, particularly where tax matters, property sales, or litigation are involved.

Can the Will Set the Executor's Compensation?

Yes.

Some wills contain a clause that specifically addresses executor compensation.

For example, a will may:

• specify a fixed dollar amount;

• establish a formula for calculating compensation;

• authorize "reasonable compensation";

• prohibit compensation altogether; or

• leave the issue to be determined later.

Where the will clearly addresses compensation, those provisions will often guide how the executor is paid, although questions can still arise depending on the wording and the circumstances.

Because every will is different, the compensation clause should be reviewed carefully before the executor accepts payment.

Can Beneficiaries Approve the Compensation?

Yes.

In many estates, beneficiaries approve the executor's compensation after reviewing the executor's accounting.

Where the beneficiaries are adults, legally capable, fully informed, and in agreement, compensation can often be resolved without involving the court.

This is one reason executors should maintain detailed records throughout the administration.

Clear financial records allow beneficiaries to understand:

• the work performed;

• the time involved;

• the expenses incurred;

• the estate transactions completed; and

• the basis upon which compensation has been calculated.

Transparent administration often reduces misunderstandings and helps preserve family relationships.

When Is Court Approval Required?

Court involvement is not required in every estate.

However, the Court of King's Bench may become involved where:

• beneficiaries disagree about the proposed compensation;

• the will does not clearly address compensation;

• the executor's accounting is challenged;

• there are minor or incapable beneficiaries whose interests require protection;

• the executor seeks formal approval of the estate accounts; or

• allegations are made regarding the executor's administration of the estate.

When reviewing compensation, the court's objective is to determine what amount is fair and reasonable based on the circumstances of the particular estate.

Can an Executor Be Reimbursed for Expenses?

Yes.

Executor compensation is different from reimbursement for reasonable expenses.

Executors are generally entitled to be reimbursed for legitimate out-of-pocket expenses incurred while administering the estate.

Examples may include:

• court filing fees;

• postage and courier charges;

• travel expenses reasonably incurred for estate business;

• property maintenance costs;

• insurance premiums paid on estate property;

• locksmith services;

• appraisals;

• accounting fees paid on behalf of the estate;

• legal disbursements; and

• other reasonable administration expenses.

These reimbursements are not the same as executor compensation.

An executor who receives reasonable reimbursement for estate expenses may still be entitled to reasonable compensation for the work performed.

As with every aspect of estate administration, executors should retain receipts and maintain accurate records supporting every reimbursement claimed.

Practical Examples

Example One: A Straightforward Estate

Linda appoints her daughter, Jennifer, as executor.

The estate consists of a home, two bank accounts, a vehicle, and a small investment account. Jennifer obtains probate, sells the home, works with an accountant to prepare the tax returns, distributes the estate, and maintains detailed financial records throughout the administration.

Because Jennifer devoted considerable time and accepted significant responsibility over the course of more than a year, she is entitled to request reasonable executor compensation in addition to reimbursement of her legitimate estate expenses.

Example Two: A Complex Estate

Robert owned several rental properties, a successful construction company, and multiple investment accounts.

His executor spends nearly two years administering the estate. During that time, they oversee property management, negotiate the sale of the business, coordinate with accountants regarding significant tax matters, supervise the sale of real estate, respond to numerous beneficiary inquiries, and work closely with legal counsel.

Although the estate is valuable, the compensation reflects not only its size but also the exceptional amount of work, responsibility, skill, and time required to complete the administration.

Example Three: A Dispute Over Compensation

Susan acts as executor of her mother's estate and requests compensation after completing the administration.

Several beneficiaries believe the amount claimed is excessive because they are unaware of the work Susan performed behind the scenes.

Fortunately, Susan maintained detailed records of every meeting, telephone call, receipt, financial transaction, and hour spent administering the estate.

After reviewing the accounting, the beneficiaries are able to understand the extent of the work involved and ultimately agree on reasonable compensation without requiring the court to decide the issue.

Common Mistakes

Disagreements about executor compensation often arise because expectations were never discussed or proper records were not maintained.

Assuming There Is a Standard Percentage

Many people believe Alberta law automatically entitles an executor to a fixed percentage of the estate.

This is not correct.

Unlike some provinces, Alberta has no statutory fee schedule. Every estate is assessed individually, and compensation must be reasonable in light of the work performed.

Failing to Keep Time Records

Executors frequently underestimate how much time they devote to an estate.

Keeping a log of meetings, telephone calls, travel, correspondence, property visits, banking appointments, and administrative work provides valuable evidence if compensation is later questioned.

Paying Yourself Too Early

Executor compensation should generally be addressed near the end of the administration once the estate accounts have been prepared and the remaining obligations of the estate are known.

Taking compensation prematurely can create unnecessary disputes and, in some circumstances, cash flow problems for the estate.

Confusing Reimbursement With Compensation

Some executors believe reimbursement for expenses is the same as compensation.

They are separate.

An executor may generally recover reasonable out-of-pocket expenses incurred on behalf of the estate while also receiving reasonable compensation for the work performed.

Both should be properly documented.

Poor Communication With Beneficiaries

Beneficiaries are often surprised by the amount of work required to administer an estate.

Regular communication and transparent accounting can help beneficiaries understand why compensation is being requested and reduce the likelihood of unnecessary disputes.

Costs and Considerations

Executor compensation is only one of many costs associated with administering an estate.

Other common estate expenses may include:

• probate court filing fees;

• legal fees;

• accounting fees;

• appraisal fees;

• Land Titles registration fees;

• real estate commissions;

• insurance premiums;

• property maintenance expenses;

• investment management fees;

• tax preparation costs; and

• other reasonable administration expenses.

These expenses are generally paid by the estate rather than personally by the executor, provided they are properly incurred for the administration of the estate.

Because every estate is different, the overall administration costs will depend on factors such as the type of assets, the complexity of the estate, tax issues, and whether disputes arise.

When Should You Speak With an Estate Lawyer?

Legal advice may be particularly valuable if:

• the will is silent regarding executor compensation;

• beneficiaries disagree with the proposed compensation;

• the estate includes a business or multiple real estate holdings;

• the estate involves significant tax issues;

• there are disputes between co-executors;

• beneficiaries request a formal passing of accounts;

• the estate includes minor or incapable beneficiaries;

• you are uncertain whether a particular expense is reimbursable; or

• you are concerned that accepting compensation could result in a dispute.

Obtaining legal advice early can often prevent disagreements from escalating and help ensure the administration proceeds efficiently.

How Bridgestone Law Can Help

Acting as an executor is a significant responsibility, and determining reasonable compensation is only one aspect of administering an estate properly.

Bridgestone Law assists executors and families throughout Calgary and Alberta with probate applications, estate administration, executor advice, estate accounting, and the resolution of compensation issues. We can help you understand your legal responsibilities, maintain appropriate records, respond to beneficiary concerns, and ensure that compensation is addressed fairly and in accordance with Alberta law.