When someone passes away, their estate must be administered. This job often falls to an executor. Someone in this role is entitled to compensation for their work and there are a number of factors that determine how much one should be allotted in executor fees.

If you have been named as an executor in Alberta (otherwise known as a personal representative), it is essential to understand your rights and responsibilities so that you can properly administer the estate. Also, as a beneficiary, you might find it helpful to know what is common practice when establishing executor fees in Alberta.

Executor compensation can vary from estate to estate, and in the midst of grief, administering an estate can seem like a monumental task. Therefore, it is prudent to partner with a probate lawyer if you have any questions regarding this complex area of the law.

Is an Executor Entitled to Compensation?

Being an executor of an estate is a time-consuming and intensive task. As such, executors are entitled to reasonable compensation for their efforts. An executor (or personal representative) is either named in the last will or appointed by the Court to complete the Estate Administration process. However, no one is obligated to take on this role. Instead, they must agree to do it.

An executor will be responsible for distributing the assets of the estate to beneficiaries, keeping accurate records and accounting, and ensuring that all debts and taxes of the deceased are paid, and deadlines are met for important documents like tax returns and probate applications.

The complexity of one’s role as an executor is often determined by the size of the estate. Estate executors have a fiduciary duty to act in good faith and in the best interests of the estate and the beneficiaries. Therefore, they must avoid conflicts of interest and self-dealing.

Executors are entitled to compensation for this work. In some scenarios, the last will and testament will specify how much compensation the personal representative will receive. Otherwise, the amount of executor compensation will depend on the size, value and complexity of the estate, the time commitment required to administer it, and your level of experience.

In general, executor compensation amounts to a percentage of the estate’s value, with the most common range being between one and five percent. This falls in line with the Alberta suggested fee guidelines.

Executor Fees in Alberta

The Alberta Executor Fees Guidelines are a good resource for determining an appropriate level of compensation. These guidelines set out by the Surrogate Rules Committee suggest that the following factors are relevant when determining the compensation charged by or allowed to personal representatives (in their words):

• 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;
• The number of personal representatives appointed in the will, if any.

Based on these criteria, fair and reasonable compensation should amount to a percentage of the value of the estate. This amounts to 3% to 5% of the gross capital value of the estate on the first $250,000, 2% to 4% on the next $250,000 and 0.5% to 3% on the remaining balance.

If revenue is amassed during the administration of the estate, then compensation is suggested to be at 4% to 6%. In some cases, an executor may receive compensation for the care and management of property in an estate while it is being administered.

Again, these guidelines do not pass as law in Alberta. The Alberta Surrogate Rules Committee suggests these executor fees as a guideline only. Alternatively, an amount may be allocated in the will, or beneficiaries will have to agree to another figure.

Additional Executor Compensation

For a personal representative, out-of-pocket expenses tend to arise throughout the course of the estate administration process. These can seem small at first, like the postage costs or travel expenses, but they tend to add up over time. Fortunately, these expenses can be submitted for reimbursement and are separate from an executor’s compensation.

However, all receipts and a detailed account of your expenses must be kept in order to receive out-of-pocket reimbursement.

Significant expenses like accounting fees, reasonable funeral arrangements, fees charged by probate lawyers, and realtor fees are all charged to the estate. A personal representative or beneficiary will not have to take these on themselves.

Executor Compensation Schedule

In most cases, the executor’s compensation is paid out of the estate once it has been settled. Therefore, estate beneficiaries will not have to pay out of pocket for this expense.

However, this can leave executors waiting for some time without compensation. In most cases, an estate is settled in a year. Still, if finances or events surrounding the estate are particularly complex, it can take several years.

In some cases, a personal representative can request compensation be paid out of the state prior to its settlement. However, this can only occur if the will provides for it, all beneficiaries agree in writing, or if the Court orders it.

As you can see, a number of factors go into calculating executor fees in Alberta. If you have any additional questions about executor compensation, your role as a personal representative, or if you would like to discuss your specific situation, please don’t hesitate to contact our team of experienced estates lawyers for advice.