Executor Compensation in Alberta: Understanding Fees and Expenses

When a loved one passes away, the person appointed to handle their estate - known as the personal representative (formerly called an executor or administrator) - is entitled to be paid for their time and effort. However, in Alberta, there is no fixed fee set by law for executor compensation. Instead, payment must be reasonable and can be determined in a few different ways.

How Executor Fees Are Set

Executor fees can be established in one of three ways:

As outlined in the Will – if the deceased specified compensation, that amount generally governs, unless all beneficiaries agree to a different amount or the court orders otherwise.
By consent of the beneficiaries – if all beneficiaries agree, they can approve a reasonable fee.
Through court approval – if there is no agreement or direction in the will, the executor must formally submit a passing of accounts application to the court for approval.

Factors That Influence Compensation

When the court is asked to determine an appropriate fee, it considers a variety of factors, including:

The overall value of the estate
The level of responsibility involved
The complexity and duration of the administration
Any challenges faced during the administration
The skills and experience the executor brought to the role

If an estate is insolvent (meaning it does not have enough assets to pay all debts), executor fees are prioritized after funeral and testamentary expenses.

When an estate has more than one personal representative, compensation is assessed in the standard way. However, it does not have to be divided equally - each personal representative may receive a different amount, depending on the extent and value of their individual contributions. Once the total compensation is determined, it should be divided according to an agreement among the personal representatives or, if necessary, as directed by the court.

In special situations, such as when the executor must manage a business or deal with unusual complications, additional compensation may be appropriate.

Keeping Records

It’s essential for executors to keep detailed records of:

Time spent on estate matters
Tasks completed
Receipts and disbursements
These records help support any claim for compensation, particularly if there is disagreement with the beneficiaries.

Interim Payments

An executor may be paid before completing the estate administration, but only if:

The Will specifically allows it,
All beneficiaries consent, or
The court approves it.

If all the affected beneficiaries agree, a personal representative may be paid compensation, whether it is interim or final. Normally, the personal representative submits a statement of proposed compensation with or as part of the accounting to the beneficiaries. The approval of the proposed interim or final distribution is generally part of the interim or final release executed by the beneficiaries. If the final fee is later reduced by the court, the executor must repay the excess amount with interest.

Suggested Fee Guidelines in Alberta

Although there are no mandatory fees, Alberta’s Surrogate Rules Committee has published guidelines (1995) to help assess fair compensation. These are not legally binding but are commonly used for reference. There is no definitive rule as to the amount of compensation allowed to a personal representative. Each case is decided on its own merits. The size of an estate is not necessarily determinative of the amount of compensation.

The guidelines suggest the following:

Capital Fees

- 3% to 5% of the first $250,000 of the estate
- 2% to 4% on the next $250,000
- 0.5% to 3% on the remainder

Revenue Fees

- 4% to 6% of the income (e.g., rent, dividends) earned by the estate during administration

Care and Management Fees

- If the estate is held in trust and not immediately distributed, an ongoing fee may apply, with the beneficiaries’ consent

Extraordinary Services

- A personal representative may be entitled to charge additional compensation for special services that are outside the realm of an ordinary administration. They may be entitled to additional compensation for acting as a director of a company, for preparing income tax returns, or for winding up a business. The amount of additional compensation is dependent on the qualifications and expertise of the personal representative and the extraordinary services rendered to the estate.

Executor Expenses

Executors are also entitled to reimbursement for reasonable out-of-pocket expenses, such as mileage or postage. While receipts aren’t always required, keeping them is wise in case questions arise later.

Tax Considerations

Executor fees are considered taxable income and must be reported to the CRA. However, reimbursement of expenses is not taxable. GST does not apply unless the executor provides services as part of a business activity.

Need Guidance as an Executor?

If you're acting as an executor or have questions about estate administration and compensation in Alberta, we’re here to help. Contact our office for clear, practical legal advice tailored to your situation.

NOT LEGAL ADVICE. This article is for general informational purposes only and does not constitute legal advice. To obtain advice tailored to your specific situation, please consult a lawyer or a qualified professional.