Executor fees in Ontario: what is fair pay, and how it is taxed

Being an executor is real work. Ontario’s official word for the job is estate trustee. The law says you can be paid for it. But the rules surprise people twice. First, no law sets a percentage. Second, the pay is taxable income — while the inheritance itself mostly is not. This guide explains what the law actually says, the usual numbers, who has to agree, and the tax rules from the CRA.

If you are still sorting out what the job involves, start with our guide on executor duties in Ontario.

What the law actually says

The rule lives in one section of Ontario’s Trustee Act (section 61). It says an estate trustee is entitled to a “fair and reasonable allowance for the care, pains and trouble, and the time expended” on the estate, as allowed by a judge of the Superior Court of Justice.

That is the whole rule. Read it again and notice what is missing: there is no percentage anywhere in the section. No dollar amount either. “Fair and reasonable” is the only test the law gives.

One more thing the Act says: if the will itself sets the pay, the will’s number governs. Section 61 does not apply then.

The usual percentages — a starting point, not a rule

In practice, most people start from a well-known set of percentages. Courts have described it as a starting point. The Law Society of Ontario’s own course materials set it out — and say plainly that it is “not prescribed by any statute or regulation.” It is a habit of practice, not a law.

The starting point is 2.5% of each of four things:

• money and property that comes into the estate (capital receipts),
• money and property paid out of the estate (capital disbursements),
• income the estate earns while open, like interest (income receipts),
• income the estate pays out (income disbursements).

There is one more piece. For the time an estate is being managed, the same practice adds a care-and-management fee: 2/5 of 1% each year — that is 0.4% — of the average value of what the estate holds that year. Like the rest, no statute or regulation sets it.

Here is the part people miss. The percentages are only step one. A court then checks whether the number is fair in the real circumstances, using five factors: the size of the estate, the care and responsibility involved, the time spent, the skill shown, and the results. The court can move the number up or down. So the percentages are a place to start the conversation — never a promise of what you will get. Only “fair and reasonable” is the law.

Three proper ways to take the fee

Law Society course materials describe three routes. Taking pay early, without one of them, is generally not allowed — and not wise.

1. The will sets the pay. If the will fixes an amount or a formula, that governs. Done.
2. Every beneficiary agrees. The informal route: the beneficiaries sign a release approving the accounts and the fee. This works only when every beneficiary is an adult who can decide for themselves.
3. The court approves it. The formal court process is called a passing of accounts (Rule 74.18 of the Rules of Civil Procedure). The estate trustee files the estate’s accounts, sworn by affidavit (Form 74.43), plus a copy of the certificate of appointment. A judge reviews everything and may allow a fair and reasonable amount.

If the beneficiaries and the executor cannot agree on the fee, that is a real dispute — and a lawyer licensed in Ontario is the right help. The Law Society Referral Service offers a free half-hour consultation to get you started.

The fee is taxable income

This is the second surprise, and it comes from the CRA’s own published guides.

• Executor pay is income. For a regular person — not a professional — the fee is income from an office or employment.
• The estate must make a T4 slip when the fee is $500 or more.
• No slip does not mean no tax. The CRA says the executor must report the fee as income even if they do not receive a T4 slip.
• The estate handles the deductions. The CRA makes the trustee — and that includes an executor — responsible for taking the deductions off the payment and sending them in. Income tax and CPP can apply. There are no EI premiums: the CRA lists an executor’s office as work that is not insurable.
• Professionals are different. Someone who acts as an executor as part of their business reports the fee as business income, on a T4A slip instead.

These are the CRA’s published rules, not ours. Tax has moving parts, and an accountant can confirm what applies to your estate. We do not give tax advice.

A fee is not an inheritance

Keep these two kinds of money separate in your head.

• The fee is pay for work. It is taxable income, as above.
• The inheritance is a gift. The CRA lists most gifts and inheritances among amounts you do not report or pay tax on. (“Most” matters: money the inherited property earns later is taxable, and the estate itself pays certain taxes first.)

Many executor-beneficiaries skip the fee

Now put the two rules together. Say the will leaves you most of the estate and you are the executor. A fee would be taxed as income. Your share as a beneficiary mostly would not be. So many executors in that spot simply choose not to take a fee, and take only their inheritance.

To be clear about what this is: a common choice people make, not a formal legal step. We found no official government or court text setting out a waiver procedure. Before deciding, talk to an accountant — the right answer depends on your estate and your own tax picture.

The takeaway

Executor pay in Ontario rests on five words: fair and reasonable, if allowed. The familiar 2.5% figures are a starting point courts have described — no law sets them, and a court can move the number either way. Take the fee only one of the three proper ways: the will fixes it, every adult beneficiary signs off, or a judge approves it. And remember the tax split: the fee is taxable income; the inheritance mostly is not.

The fee is separate from the estate’s other costs — court tax, filing costs, and help with the forms. Our guide on what probate costs in Ontario covers those. And whether or not you take a fee, the Estate Information Return deadline still belongs on your list.

Related guides

• Executor duties in Ontario, in plain words
• The Estate Information Return: the 180-day filing
• How much does probate cost in Ontario?

Sources

• Trustee Act, s. 61 — the “fair and reasonable allowance” rule
• Rules of Civil Procedure, r. 74.18 — application to pass accounts
• Law Society of Ontario CPD materials — Estate Accounting and Passing of Accounts (2021): the usual percentages, the care-and-management fee, the five factors, and the three routes
• CRA Employers’ Guide T4001 — executor fees as income; the trustee’s deduction duty
• CRA T3 Trust Guide (T4013) — the $500 T4 rule; reporting without a slip; professional executors
• CRA — Amounts that are not reported or taxed: most gifts and inheritances
• CRA CPP/EI Explained — Tenure of office: an executor’s office is not insurable employment

All sources checked 17 August 2026.