Chapter 9

Compensation and Expenses

Learning Objectives .................................................................................................................9-3

9.1 General Rules .............................................................................................................9-5
9.1.1 Common Law Only: Common Law Rules and Compensation.......................................9-5
9.1.2 Quebec Only: CCQ Rules for Trustees and for Liquidators ...........................................9-5
9.2 Compensation (Remuneration) Agreements ............................................................9-5
9.3 Statutory Rules for Executor and Trustee Compensation .......................................9-6
9.4 Approval to Compensation ........................................................................................9-9
9.4.1 Beneficiary Approval ....................................................................................................9-9
9.4.1.1 Estates 9-9
9.4.1.2 Common Law Only: Trust Beneficiary Approval .........................................9-9
9.4.1.3 Quebec Only: Trust Beneficiary Approval .................................................9-10
9.4.2 Court Review..............................................................................................................9-10
9.4.3 Agent for Executor Services .......................................................................................9-10
9.5 Taxation of Executor and Trustee Fees ..................................................................9-10
9.6 Compensation of Substitute Decision-makers .......................................................9-11
9.6.1 Property Guardians ....................................................................................................9-11
9.6.2 Attorneys Acting Under an Enduring Power of Attorney ............................................. 9-12
9.7 Common Law Only: Compensation of Executors and Trustees and
Reimbursement for Expenses ................................................................................ 9-12
9.7.1 Calculating Executor Compensation Using “Percentage Guidelines” ..........................9-13
9.7.1.1 Ontario Practice (No Compensation Agreement) ......................................9-14
9.7.1.2 Five Factors for Determining Fair and Reasonable Compensation ...........9-16
9.7.1.3 Factors that May Reduce the Compensation Allowance ...........................9-16
9.7.2 Pre-taking Compensation ...........................................................................................9-16
9.7.3 Legacies in Lieu of Compensation ..............................................................................9-17
9.7.4 Sharing Compensation Among Executors and Trustees .............................................9-18
9.7.5 Compensation of Inter Vivos Trust Trustees ...............................................................9-18
9.7.6 Indemnification for Estate and Trust Expenses and Liabilities .....................................9-18
9.7.6.1 Court Review of Proper Expenses............................................................9-19
9.7.7 Contractual Liabilities .................................................................................................9-20
9.7.8 Legal Services to an Estate or Trust ...........................................................................9-20
9.7.9 Managing Beneficiary Expectations ............................................................................9-20
9.8 Quebec Only: Remuneration of Liquidators and Trustees and Reimbursement of
Expenses ................................................................................................................. 9-21
9.8.1 Right to Remuneration and Reimbursement of Expenses .......................................... 9-21
9.8.2 The Approach to Establishing Quantum of Remuneration in Quebec ........................ 9-22
9.8.2.1 Proportionality Principle ........................................................................... 9-23
9.8.2.2 Determining an Hourly Rate .................................................................... 9-23

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 9.8.2.3 Factors to be Considered ........................................................................ 9-23
9.8.2.4 Observations ........................................................................................... 9-24
9.8.2.5 Fees for Professionals ............................................................................. 9-24
9.8.2.6 Setting Beneficiary Expectations ............................................................. 9-25
9.8.2.7 Differentiating Between Administrative and Legal Work Performed ......... 9-25
9.8.2.8 Conflict of Interest ................................................................................... 9-25

Figure 9.1: Legislation for Compensation of Executors, Trustees, and Property Guardians ..................... 9-6
Figure 9.2: Executor and Trustee Compensation Calculations – Example ............................................. 9-14

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 Chapter 9

Compensation and Expenses

Learning Objectives
One of the more contentious issues that may arise with beneficiaries is executor and
trustee compensation. Beneficiaries may not appreciate the time, responsibility and
often extensive duties involved in an administration. Or, if there is a complaint about
how the administration is conducted, or the amount of expenses incurred, the
beneficiaries may argue that compensation is not warranted. Where an executor or
trustee is a family member, there may be an expectation that the role will be carried out
for free. Or the family member may have commenced the administration intending to not
charge for his or her time, but realize that it has become more onerous than anticipated
and wishes to be paid for their time and efforts.
Executors and trustees are entitled to reimbursement for expenses properly incurred,
but they are not permitted to be compensated unless it is provided in the will, trust, or
approved by all beneficiaries. Legislation also permits executors and trustees to apply to
court for approval to compensation and it permits reimbursement for proper expenses.
The case law from the courts provides further guidance on factors to be considered
when determining fair and reasonable compensation and what is a proper expense.
Legislation governing the appointment of property guardians addresses the process for
approval of the property guardian’s compensation and expenses. However, only some
jurisdictions have legislation governing compensation of an attorney acting under an
enduring power of attorney.
Upon completion of this Chapter students will be able to:
• Summarize the rules that apply to executor and trustee entitlement to
compensation
• Summarize the applicable provincial or territorial laws governing executor and
trustee entitlement to reimbursement of expenses
• Describe the purpose of a compensation agreement
• Identify the options for executors and trustees to obtain approval to their
compensation where it is not provided in the will or trust
• Identify the options for executors and trustees to obtain approval for
reimbursement of expenses

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 • Summarize the criteria the court will consider when determining an executor or
trustee’s compensation
• State the general requirements for approval to compensation and expenses for
property guardians in the student’s jurisdiction
• State the general rules governing compensation and reimbursement for
expenses when attorneys are acting under an enduring power of attorney in the
student’s jurisdiction
• Demonstrate learning by applying rules and concepts to a given scenario

REMINDER: Terminology varies significantly between provinces, and even more

so with Quebec. For ease of reading, as terminology is defined one word or phrase is
selected for purposes of the materials in this course. Jurisdiction-specific
terminology is only used if required. See the Generic Terms Cheat Sheet for the full
list of generic terminology.

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 Compensation and Expenses

9.1 GENERAL RULES

9.1.1 Common Law Only: Common Law Rules and Compensation
One of a trustee’s core obligations is the duty of loyalty, which requires that a trustee not put
him- or herself in a position where personal interests are in conflict with the trustee’s duties.
Accordingly, at common law, a trustee may not receive compensation from the estate or trust.
There are three exceptions to this common law rule:
1. The Trust has a Charging Provision: The settlor can permit a conflict of interest in
the trust document by explicitly providing for the trustee to be paid compensation and
setting out the amount or rate.
2. Beneficiaries Consent: If all of the beneficiaries are adults and have full legal
capacity, the beneficiaries may consent to proposed compensation.
3. Court’s Inherent Power: The courts have an inherent power to allow remuneration.
However, this is rarely used given the statutory power for the court to approve
compensation that is now provided for in all jurisdictions.

9.1.2 Quebec Only: CCQ Rules for Trustees and for Liquidators
Article 1300 of the CCQ provides that unless the administration is gratuitous according to the
law, the act (e.g. the will or the trust document), or the circumstances, the administrator is
entitled to remuneration fixed in the act, by usage, or by law, for the value of the services.
The law also confirms that a trust company is entitled to remuneration for services rendered,
including services that are gratuitous according to law.1
With respect to estate administration, the CCQ confirms that a liquidator is entitled to
remuneration if he or she is not an heir. If the liquidator is an heir, he or she may nonetheless be
entitled to remuneration as stipulated in the will, or with the heirs’ approval, and failing that,
with court approval (art. 789 CCQ).

9.2 COMPENSATION (REMUNERATION) AGREEMENTS

There are two approaches commonly used to provide for compensation in wills and trusts. One
approach is to include the terms of payment within the will or trust document. The executor or
trustee may or may not have been a party to the decisions on the rate and terms of the
compensation. The provision must be clearly spelled out in order to be binding.2

1
See s. 174 of An Act Respecting Trust Companies and Savings Companies, CQLR, c. S-29.01.
2
See Re Bryant Isard & Co., 57 O.L.R. 471, [1925] 4 D.L.R. 157 (Ont. C.A.); Stephen v. Miller, [1918] 2 W.W.R.
1042, 40 D.L.R. 418 (B.C. C.A.), affd (1919), 59 S.C.R. 690, 49 D.L.R. 698 (S.C.C.).

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 Compensation and Expenses

Common Law Only: A provision that authorizes compensation, or authorizes a trustee or

executor who is also a professional to charge professional fees for professional services
provided to the estate or charge, is sometimes referred to as a “charging provision”.
The second approach, often used by corporate executors and trustees, is to enter an agreement
with the testator or settlor setting out a detailed fee scale. The agreement addresses the amount of
compensation or rates that will be applied, as well as when and how compensation will be
charged. The agreement may also specifically address annual expenses for tax return preparation
and other estate or trustee expenses for professional services such as investment management
fees.
Common Law Only: The signed agreement is often incorporated by reference into the will (see
Chapter 3 at 3.2.2.5 Common Law Only: Doctrine of Incorporation by Reference).
Note that some wills or trust documents may specifically prohibit compensation. When making
the decision to accept an appointment, the executor will need to consider whether or not this
restriction is acceptable. Legal advice may be required to determine whether or not an
application to court for compensation might be possible should the executor wish to claim
compensation at a later date and, if so, what steps should be taken prior to intermeddling and/or
accepting the appointment.

9.3 STATUTORY RULES FOR EXECUTOR AND TRUSTEE

COMPENSATION
The Trustee Acts and/or other relevant legislation of each jurisdiction provide for a court to
allow compensation to an executor or trustee. Students should review their own legislation for
the specific language and any unique features about their legislation. See Figure 9.1: Legislation
for Compensation of Executors, Trustees, and Property Guardians
Legislation for Compensation of Executors, Trustees, and Property Guardians, for the relevant
legislation in each jurisdiction and the provisions governing compensation, and special features
to be noted.
Common Law Only: Note that the legislation often refers to “a fair and reasonable allowance
for the care, pains and trouble and the time spent in administering the estate or trust.” These
factors are referred to in the case law.
Quebec Only: See 9.8.2 The Approach to Establishing Quantum of Remuneration in Quebec for
a discussion of the criteria that may be relevant when determining compensation.

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 Compensation and Expenses

Figure 9.1: Legislation for Compensation of Executors, Trustees, and Property

Guardians

Jurisdiction Trustee Act Limits, Compensation Agreements, Additional

Legislation
British Trustee Act, • Applies to trustees, personal representatives, and
Columbia R.S.B.C. property guardians. Two fees are identified:
1996, c. 464, o The first is a maximum of 5% on the gross
ss. 88, 89, 97 aggregate value, including capital and income, of all
assets.
o The second is an annual care and management fee
not exceeding .4% of the average market value of
the assets.
• A compensation agreement is binding.
Alberta Trustee Act, • Applies to trustees of trusts only.
R.S.A. 2000, • Compensation for personal representatives is governed by
c. T-8, Schedule 1 of the Surrogate Rules, Alta. Reg. 130/95
ss. 44-46 under the Judicature Act, R.S.A. 2000, c. J-2. It lists the
criteria the court must consider when determining the
compensation, including the management of testamentary
trusts. Also addresses additional fees, care and
management fees, pre-taking, sharing fees, and fee
agreements.
• Compensation of trustees appointed under the Adult
Guardianship and Trusteeship Act, S.A. 2008,
c. A-4.2 is governed by s. 66 of that Act and not the
Trustee Act.
Saskatchewan Trustee Act, • Applies to trustees, personal representatives, and property
S.S. 2009, guardians.
c. T-23.01, • The court may vary terms of a will or trust setting
ss. 52-53 compensation if not sufficient (but not a contract).
• Permits pre-taking with notice to certain beneficiaries.
Manitoba The Trustee • Applies to trustees, personal representatives/ and
Act, R.S.M. guardians.
1987, c. T160, • The court must approve a compensation agreement.
ss. 90
Ontario Trustee Act, • Applies to trustees, personal representatives, and
R.S.O. 1990, guardians.
c. T.23, s. 61 • A compensation agreement is binding.

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 Compensation and Expenses

Quebec Civil Code of • Liquidator (art. 789).

Quebec, S.Q. • Trustee (art. 1300).
1991, c. 64 • Mandatary (art. 2134).
An Act • Tutor
Respecting • Curator
Trust • Trust Companies and Savings Companies (s. 174).

Jurisdiction Trustee Act Limits, Compensation Agreements, Additional

Legislation
Companies
and Savings
Companies,
CQLR, c. S-
29.01
New Trustees Act, • Applies to trustees, personal representative, and guardians.
Brunswick R.S.N.B. • A compensation agreement is binding.
1973, c. T-15,
s. 38
Newfoundland Trustee Act, • Applies to trustees and personal representatives.
and Labrador R.S.N.L.1990, • Two fees are identified:
c. T-10, s. 52 o The first is a maximum of 1/20 (5%) on the gross
aggregate value, including capital and income, of all
assets.
o The second is an annual care and management fee
not exceeding 1/250 (.4%) of the average market
value of the assets.
• A compensation agreement is binding.
Nova Scotia Trustee Act, • S. 62 is limited to trustees and guardians.
R.S.N.S. • A compensation agreement is binding.
1989, c. 479, • Compensation for a personal representative is governed by
s. 62 the Probate Act, S.N.S. 2000, c. 31 and cannot exceed 5%
(s. 76).
• A compensation agreement is binding on an executor
unless the executor renounces it in accordance with s. 77
of the Probate Act, N.S.S. 2000, c. 31.
Prince Edward Trustee Act, • S. 31 is limited to trustees, guardians, and committees.
Island R.S.P.E.I. • The Act is silent on compensation agreements.
1988, T-8, • Compensation for a personal representative is governed by
s. 31 the Probate Act, R.S.P.E.I. 1988, c. P-21, and cannot
exceed 5% (s. 11)

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 Compensation and Expenses

Yukon Trustee Act, • Applies to trustees, executors, and guardians.

Territory R.S.Y. 2002, • A compensation agreement is binding.
c. 223,
ss. 49-54
Northwest Guardianship • Applies to trustees, executors, and guardians.
Territory and Trustee • A compensation agreement is binding.
Act, S.N.W.T. • See also s. 36(2)(q) of the Guardianship and Trustee Act,
1994, c. 29, S.N.W.T. 1994, c. 29, and reference to prescribed fees for
ss. 49-54 a trustee appointed under that Act to manage the affairs of

Jurisdiction Trustee Act Limits, Compensation Agreements, Additional

Legislation
an incapable person.
Nunavut Trustee Act, • Applies to trustees, executors, and guardians.
S.Nu. 2013, • A compensation agreement is binding.
c. 20, s. 47, • See also s. 36(2)(q) of the Guardianship and Trustee Act,
ss. 49-53 S. Nu. 2013, c. 13, and reference to prescribed fees for a
trustee appointed under that Act to manage the affairs of
an incapable person.

9.4 APPROVAL TO COMPENSATION

Subject to a binding compensation agreement in a trust or will, an executor or trustee must obtain
approval to the proposed compensation before charging the fees to the trust or estate. There are
two ways to obtain approval – from the beneficiary(ies) or from the court.

9.4.1 Beneficiary Approval

9.4.1.1 Estates
If all of the beneficiaries of the estate are adults and have legal capacity, they may
approve an executor’s compensation.
Quebec Only: The usual practice is to obtain approval from the heirs pursuant to article
789 CCQ.
Where beneficiary approval is possible, the executor or trustee will set out the request for
approval in writing. The request should set out the details supporting the calculation of
the compensation to ensure that the beneficiary understands how the fees are calculated.
The written consent should be retained on file.
Prior to requesting approval to compensation, the executor or trustee must provide the
beneficiaries with a full accounting of the administration, which will demonstrate the
nature of the assets managed and all receipts and disbursements. See Chapter 10 Estate
and Trust Accounts.

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 Compensation and Expenses

9.4.1.2 Common Law Only: Trust Beneficiary Approval

This rule also applies to the approval of a trustee’s fees. However, when a trustee of a
continuing trust is requesting approval to fees for services to date, and not at the time of
final distribution, beneficiary approval is only possible if all current, future, and
contingent beneficiaries consent. As a result, it is less likely for a testamentary trustee to
be able to rely on this process.

9.4.1.3 Quebec Only: Trust Beneficiary Approval

Although the CCQ is silent on beneficiary approval for trustee remuneration (see 9.1.2
Quebec Only: CCQ Rules for Trustees and for Liquidators), it is prudent to advise the
beneficiaries of the compensation proposal at the outset to avoid future disputes.

9.4.2 Court Review

When it is not possible to obtain beneficiary consent, or all beneficiaries do not consent, the
executor or trustee can apply to the courts to approve the compensation.
Common Law Only: When compensation needs to be approved, it is necessary to “pass the
accounts” (see Chapter 10, Estate and Trust Accounts) and seek approval to the compensation
claimed. Disputes about the accounts, including expenses, are addressed during the passing.
Once disputes are resolved, if there are any, the court will consider the question of the
compensation.
Quebec Only: The court procedure is called a judicial rendering of account (arts. 1364 CCQ
and 675-678 CCP). Although not common, the procedure provides a mechanism for resolving
disputes and determining the allocation of remuneration between liquidators and trustees.

9.4.3 Agent for Executor Services

When a corporate trustee or law firm provides administration services to executors who do not
have the time or skill to administer the estate, the fees paid to the agent will likely reduce the
executor’s entitlement to compensation. The executor should be advised of this prior to entering
the agreement to ensure there are no disputes once the work has been completed.

9.5 TAXATION OF EXECUTOR AND TRUSTEE FEES

If an executor or trustee charges compensation, the amount received is treated as taxable income.
If the executor or trustee is an individual and does not include the compensation as business
income, it is treated as income from an office or employment. All applicable taxes must be
charged, including GST/HST if applicable, and withholdings from the fees may be required. 3
The applicable pension plan premiums must also be paid.
Common Law Only: Canada Pension Plan (CPP) premiums, for example.
Quebec Only: Quebec Pension Plan (QPP) premiums, for example.
3
For more information see chapter 1 in the CRA Guide T4001, Employer’s Guide – Payroll Deductions and Remittance
– “Employment by a Trustee”. Accessed Dec 20, 2014. See also Tax Interpretation 2012-0462961C6 E – 2012 Ont CTF
Q10 – Executors’ Fees and Withholding.
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 Compensation and Expenses

9.6 COMPENSATION OF SUBSTITUTE DECISION-MAKERS

Substitute decision-makers for financial affairs (e.g. property guardians and attorneys acting
under an enduring power of attorney4) are allowed to be reimbursed for their proper expenses.
However, the entitlement to compensation is less consistent across jurisdictions.

9.6.1 Property Guardians

The legislation that provides for the appointment of a property guardian addresses the right to
compensation. In some jurisdictions a property guardian is required to have accounts approved
before a public official annually, or at some other frequency. In other jurisdictions, the court may
order an accounting. In addition, most jurisdictions permit certain people with an interest in the
adult’s estate to apply to court for an order asking that the property guardian have the accounts
approved by the court.
Common Law Only: Compensation is usually fixed at the time the accounts are passed. In
most, if not all jurisdictions, the approach to compensation for substitute decision makers is
similar to that used for executors and trustees. See Figure 9.1: Legislation for Compensation of
Executors, Trustees, and Property Guardians
Legislation for Compensation of Executors, Trustees, and Property Guardians, above for those
provinces where the trustee act covers guardians. See also Chapter 11 Substitute Decision-
makers for Financial Affairs, for more information on the governing legislation.
Ontario: Ontario has established a prescribed fee scale for substitute decision-makers under the
Substitute Decisions Act, 1992.5 Property guardians and attorneys acting under a continuing
power of attorney may charge the following without approval:
• 3% on capital and revenue receipts,
• 3% on capital and revenue disbursements, and
• an annual fee on the average market value of the assets at the rate of .6% or 3/5 of 1%.
The guardian or attorney may apply to the Public Guardian and Trustee for an additional
allowance.
Northwest Territories and Nunavut: These two territories have established a prescribed fee
scale for trustees appointed to manage the financial affairs of an incapable person. The
following fees may be charged monthly, quarterly, or annually as follows:
• 2.5% on capital and income receipts,
• 2.5% on capital and income disbursements, and
• 2/5 of 1% on the annual average value of the assets as a care and management fee.

4
Substitute Decision Makers were introduced in Chapter 2 Trustees, Personal Representatives, and Substitute
Decision-makers. They are dealt with in more detail in Chapter 11 Substitute Decision-makers for Financial
Affairs.
5
S.O. 1992, c. 30.

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 Compensation and Expenses

British Columbia, Alberta, Saskatchewan, Manitoba, Quebec, Prince Edward Island,

Northwest Territories, and Nunavut: These jurisdictions require an annual or other periodic
accounting to certain people, a public official, or the court. Compensation is approved at this
time (except see regulation for Northwest Territories and Nunavut).
Yukon: A guardian is required to maintain accounts and to produce them to the adult or the
Public Trustee or Court on request.
New Brunswick, Newfoundland and Labrador, and Nova Scotia: Certain people may apply
to court to have the guardian pass his or her accounts.
Quebec: In Quebec, a tutor or curator is entitled to request remuneration from the tutorship
council and the court can approve the amount, which is usually an hourly rate. 6

9.6.2 Attorneys Acting Under an Enduring Power of Attorney

Common Law Only: At common law an attorney cannot charge compensation. It must be
approved by the donor, or in the case of an enduring power of attorney it must be included in the
document. In some situations a separate contract may be sufficient.
The following provinces have provisions specifically addressing compensation. All other
jurisdictions appear to be silent. Some contemplate compensation but the authority for the
compensation is not set out.
Ontario: See Property Guardians, for the allowance permitted for an attorney acting
under a continuing power of attorney.
British Columbia: Compensation must be in the document (Power of Attorney Act, s. 24).7
Saskatchewan: A reasonable fee may be charged (Powers of Attorney Act, 2002, s. 27).8
Nova Scotia: An attorney can apply to court to have a compensation claim allowed (Powers of
Attorney Act, s. 5).9
Quebec: In the case of a protection mandate, remuneration must be authorized in the document;
a trust company is entitled to remuneration: section 174 of the Act respecting Trust Companies
and Savings Companies, S.Q. c. S-29.01.

9.7 COMMON LAW ONLY: COMPENSATION OF EXECUTORS AND

TRUSTEES AND REIMBURSEMENT FOR EXPENSES
Subject to the limits on the amount of compensation for the provinces of British Columbia, Nova
Scotia, Prince Edward Island, and Newfoundland and Labrador (see Figure 9.1 Legislation for

6
See Chapter 2 Trustees, Personal Representatives, and Substitute Decision-makersand Chapter 11 Substitute
Decision-makers for Financial Affairs for more information about tutors and curators.
7
R.S.B.C. 1996, c. 370.
8
S.S. 2002, c. P-20.3.
9
R.S.N.S. 1989, c. 352.

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 Compensation and Expenses

Compensation of Executors, Trustees, and Property Guardians), the legislation in each

jurisdiction provides no further guidance on how to calculate executor or trustee compensation.
As a result, a percentage-based approach for determining an appropriate fee for executor and
trustee fees has evolved. However, although these “usual percentage” calculations may provide a
starting point, the courts have ruled that the resulting calculation must be assessed against a set
of criteria that has evolved under the case law. This two-step process is summarized below (see
9.7.1 Calculating Executor Compensation Using “Percentage Guidelines”).

9.7.1 Calculating Executor Compensation Using “Percentage Guidelines”

The general practice is to charge fees to an estate and the ongoing trusts as follows:
1. Capital Fees: Up to 5% on the value of the assets passing through the estate is
charged against the capital of the estate assets. The executor normally calculates the
fee based on the date of death value.
o Ontario Students: See 9.7.1.1 Ontario Practice (No Compensation
Agreement).
2. Revenue Fees: Up to 5% of the value of income collected in the estate or trust each
year is charged to the income collected.
3. Care and Management Fees: Up to 0.4% of the average market value of the assets
of the trust each year. This fee is often allocated between the capital and revenue
accounts. Historically it has been allocated 2/3 to capital and 1/3 to revenue. This fee
is charged to ongoing testamentary trusts. An executor may also seek to charge this
fee where an estate requires ongoing management pending a prolonged administration
before final distribution.
These three categories of fees generally continue to be used today and are used in many
compensation agreements. Compensation agreements may adjust the percentage applied and/or
the allocation of the care and management fees between capital and income.
NOTE: Although the Trustee Acts’ rules apply to an inter vivos trust most inter vivos
trusts address trustee compensation in the document or an agreement and the capital fee is
much less than 5%.
An example of executor and trustee compensation is found below

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 Compensation and Expenses

Study Note: Fees, Corporate Trustee Agreements and CETA examinations.

Students working for a corporate trustee should become familiar with the components
and terms of their compensation agreements for wills and inter vivos trusts. However,
for purposes of examinations in the CETA program, students should refer to the three
categories and maximum usual percentages described in the materials.

9.7.1.1 Ontario Practice (No Compensation Agreement)

In Ontario, where there is no compensation agreement, a different approach is used to
calculate the fees. Rather than charging a single percentage against capital and revenue as
set out above, the general rule is to charge up to 2.5% on the value of the asset or cash
received, including revenues, and 2.5% on the value of the asset or cash distributed.
Because the initial charge to the capital is based on the date of death value of an asset, if
the asset is sold at a gain, an additional fee is charged against the gain when it is realized.
For details of this calculation, students should review their internal practices. For students
who do not have access to a sample set of accounts, including a compensation
calculation, see the paper “A Discussion of Estates Accounts”.10 Students may also refer
to the sample accounts on the STEP website under “Student Resources”. A compensation
calculation for Ontario is found at the end of these accounts.

10
Ian Hull, Suzana Popovic-Montag, and Jordan Atin, June 16, 2010, at http://www.hullandhull.com/Text-From-
2010-Breakfast-Series-Presentations/June-2010-Estate-Accounts.pdf.

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 Compensation and Expenses

Figure 9.2: Executor and Trustee Compensation Calculations – Example

Kyle died leaving an estate worth $1,000,000. After legacies, taxes, and estate expenses, there
was an ongoing trust for his wife, Alexis, worth $750,000. On the death of Alexis, the estate
was to be distributed to their three children or the survivor of them. The executor and trustee
was Kyle’s friend and business partner, Liam.
The administration of the estate was completed thirteen months after Kyle’s death. Liam
wanted to charge a fee for his services as executor. Because all of the beneficiaries were adults
and capable, he can ask them to consent to his fees to date. In this example, there is no gift over
to grandchildren if a child pre-deceases Alexis so Liam does not need to apply to court for
approval.
Based on the usual percentages, and before adjustments, Liam’s fees would be calculated as
follows:
• Capital fee: $50,000 ($1,000,000 x 5%).
• Revenue fee: If the estate earned $10,000 in interest and dividends in the period, an
additional $500 ($10,000 x 5%) would be charged against the revenue earned.
• Future fees to be charged to the trust which will need to be approved:
o Revenue fee: 5% against the income earned each year
o 0.4% on the average value of the trust. Example:
Assuming the trust was worth $800,000 at the end of the first year, the care and
management fee would be $3200. One third ($1067) would be charged against the
revenues and two thirds would be charged against capital ($2133).
Note: there are two approaches to calculating the average market value. One way is
to take the value at the beginning of the year and the end of the year, and divide by
2. In this case, the average would have been $775,000 ($750,000 + $800,000)/2)
and the fee would be recalculated as applicable. A second approach where there is
a compensation agreement may be to charge the fee at the end of each month or
quarter, based on the value as of that date.
Ontario Exception: Applying the Ontario method the fees would be charged as follows:
• Capital fee on assets collected at date of death: $25,000 ($1,000,000 x 2.5%)
• Capital fee on expenses of $250,000: $6250 ($250,000 x 2.5%)
• Revenue fee on revenue collected: $250 ($10,000 x 2.5%)
• Revenue fee on revenues paid to Alexis: $250 ($10,000 x 2.5%)
• If Liam had sold a property during the estate administration an additional fee would be
charged on the gain realized from date of death. Example: If the date of death value
was $200,000 and the proceeds of sale were $225,000, $625 would be charged on the
gain realized ($25,000 gain x 2.5%)
• Future fees to the trust will be:
o 2.5% on the income received,
o 2.5% on the income distributed,
o 2.5% on the net realized gains each year,
o 2.5% on amounts paid out to beneficiaries, and
o 4% annual care and management fee

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9.7.1.2 Five Factors for Determining Fair and Reasonable

Compensation
Once the usual percentages are applied it is necessary to review the final amount and
consider the five factors set out in the case law to determine what is fair and reasonable in
the circumstances.11 In assessing the reasonableness of the remuneration, courts
consider:12
1. the trust’s magnitude,
2. the care and responsibility springing therefrom,
3. the time occupied in performing its duties,
4. the skill and ability displayed, and
5. the success which attended its administration.
The court has a wide discretion within these guidelines. Each case will be determined
based on the facts. Although time is only one factor that is considered, time records may
be of assistance and should be kept where possible to help support a claim.

9.7.1.3 Factors that May Reduce the Compensation Allowance

An executor’s compensation may be disallowed where the trustee has been guilty of
serious misconduct. Where the misconduct began later in the administration, an
allowance for the period up until the misconduct began may be permitted. Misconduct
may include any breach of the duties owed by the executor or trustee.
Compensation might be disallowed if the work was totally unnecessary, or if the executor
or trustee agreed to accept the role for no compensation.
Compensation may also be reduced by the amounts paid to agents who assisted the
executor and carried out tasks that the executor could have performed personally unless
the will specifically authorized the agent to be hired. In these situations, each case is
decided on the facts. Assuming the executor or trustee was permitted to hire the agent and
was not improperly delegating his or her duties, the question is whether or not the
expense is a proper expense (see 9.7.6.1 Court Review of Proper Expenses) or should be
deducted from the compensation allowed to the executor or trustee. When making the
decision, a court considers the complexity of the management, prudent practice, and the
executor or trustee’s own skills.13

9.7.2 Pre-taking Compensation

Generally, compensation may not be charged until it has been approved by the beneficiaries or
the court. Where the executor or trustee pre-takes compensation, they may be ordered to repay
the amount in excess of the amount finally approved, with interest, from the time of pre-taking.

11
Re Jeffery Estate (1990), 39 ETR 173 (Ont. Surr. Ct.).
12
Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350 (Ont. H.C.) at 354; Laing Estate
v. Hones (1998), 41 O.R. (3d) 571 (C.A.).
13
For a review of recent cases on this issue, see Widdifield at para. 11.12.

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 Compensation and Expenses

It has been suggested that the courts in Ontario have returned to a hard line on pre-taking.14 As a
result there are two schools of thought:15
• View #1: The rule is strict – pre-taking is not permitted and is a breach of trust. The
amounts should be repaid, with interest, until determined by the court.
• View #2: There will be an exception to pre-taking in limited situations. Where permitted,
as long as the fees taken do not exceed the final amount approved, there is no breach. If
the amount taken exceeds the amount approved, the excess must be repaid to the trust
plus interest.16 An example where this may be permitted is when a trustee wishes to claim
the annual care and management fee. In the William George King Trust case, Misener J.
noted on the burden of the cost to trust if annual applications are made each year to pass
accounts and obtain approval to the fees.
Corporate trustee compensation agreements specifically address the timing for payment of
compensation to avoid these issues.

9.7.3 Legacies in Lieu of Compensation

If a will leaves a legacy to the executor there is a rebuttable presumption that the legacy was
intended to be in lieu of compensation. Unless the will specifically indicates that the legacy is in
lieu of compensation, an executor who wishes to claim compensation must rebut the presumption
by providing evidence to show that the legacy was intended to be in addition to compensation.
Although it is not difficult to rebut the presumption, the executor’s success will depend on the
facts. Factors include the relationship of the executor to the testator, the amount of the legacy,
gifts to other beneficiaries, and the wording used.17 Legal advice may be required and if any
disputes cannot be resolved, an application to court may be required to determine whether or not
the legacy is in lieu of compensation.
Where a legacy is in lieu of compensation, it will usually be treated as a legacy, and will not be
treated as taxable income.18

14
See Widdifield at para. 11.11. The authors do not comment on trends in other provinces.
15
The “two schools of thought” are described by Greer J. in Re Pilo Estate, [1998] O.J. No. 4521 (Gen. Div.) at
para. 56; see also Re Byrne Estate, 2004 CanLII 190 (ON SC), 2004 CanLII 190 (ON S.C.) per Lalonde J., at
paras. 63-66.
16
See Re William George King Trust, 1994 CanLII 7497 (ON SC), 1994 CanLII 7497 (ON S.C.) per Misener J., at
para. 11.
17
See Widdifield at para. 11.2 for case examples.
18
However, the language in the will is important. The CRA may treat the legacy as income from an office. Tax
advice should be obtained to confirm whether or not the legacy may be taxable. See Boisvert v. R., 2011 TCC 290
(CanLII), and Messier v. R., 2008 TCC 349 (CanLII) and case comment by Rosie Dikeakos, “Remunerative
legacy or particular legacy?” (2010) 29 Estates, Trusts & Pensions Journal 105.

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9.7.4 Sharing Compensation Among Executors and Trustees

When dealing with executor compensation, the courts look at the compensation to be awarded
generally for the work done. The court does not become involved in the division of the
compensation among trustees. A dispute between executors and trustees will likely be a separate
action and because it does not affect the estate or trust, all costs incurred in the dispute will likely
be paid for by the parties personally.
Compensation agreements with corporate trustees generally deal with the corporate trustee’s
entitlement to compensation. Payment to other co-executors and co-trustees may or may not be
addressed. If additional fiduciaries have been appointed and they wish to seek compensation,
legal advice may be required. It may be necessary to obtain consent from the beneficiaries or
apply to court.

9.7.5 Compensation of Inter Vivos Trust Trustees

As noted above, the Trustee Act rules also apply to inter vivos trusts. However, it is more
common to see compensation addressed in an inter vivos trust deed or in a compensation
agreement. Compensation agreements will vary between corporate trustees and other
professionals. Where possible, students are encouraged to review the agreements used in their
companies and firms.
While care and management fees and revenue collection fees may be included in a compensation
agreement, the approach to charging capital fees may vary. For example, one approach is to
charge a “set up fee” to compensate for the work involved in setting up the inter vivos trust, and
to charge a “distribution fee” when assets are distributed. Fees might also be customized for
different types of assets such as private company shares or real estate.

9.7.6 Indemnification for Estate and Trust Expenses and Liabilities

The common law recognizes that an executor or trustee should be reimbursed for proper
expenditures required in the administration. The right to reimbursement is also referred to as the
right of indemnification. While the usual practice is for an executor or trustee to pay for expenses
directly from the estate or trust assets, if this is not possible, it may be necessary to advance the
funds on behalf of the estate or trust to prevent a loss and or penalties. Legislation also
recognizes this entitlement to reimbursement. See Figure 9.1: Legislation for Compensation of
Executors, Trustees, and Property Guardians
Legislation for Compensation of Executors, Trustees, and Property Guardians.
Beneficiaries may dispute an expense for a number of reasons. These include:
• the necessity of an expense incurred,
• the reasonableness of the amount paid,
• the decision as to whether the expense should be borne by the capital beneficiaries or the
revenue beneficiaries, and/or

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 Compensation and Expenses

• the executor or trustee is personally liable for expenses or liabilities under a contract.
Beneficiaries may also argue that the expense incurred should be deducted from the
compensation awarded to the executor.
Finally, if an executor or trustee retained his or her own firm to provide services, the
beneficiaries may object on the basis of a breach of the duty of loyalty. See Chapter 2 at 2.2.10
Trustee Duties.

9.7.6.1 Court Review of Proper Expenses

Expenditures and payment of estate liabilities will be reflected in the estate and trust
accounts provided to the beneficiaries (see Chapter 10 Estate and Trust Accounts). If the
beneficiaries dispute any aspect of the accounts it will be necessary to resolve the dispute
in a court passing. Disputes may relate to expenses incurred, the amount of the sale
proceeds received or the appropriateness of the sale price, or any other transaction that
affects the amount that a beneficiary might receive.
Generally, if the executor or trustee incurs the expense in good faith and the expenditure
benefits the estate or trust, it will be approved. However, the general duty of care (see
Chapter 2 Trustees, Personal Representatives, and Substitute Decision-makers) always
applies.
Examples: If Amber is the trustee of a trust and hires an auctioneer to assist with the
valuation and sale of household goods, and the commissions paid are double the
commissions charged by another auctioneer, Amber may be required to reimburse the
estate for the excess amount paid unless she can demonstrate why it was necessary and
appropriate to pay the higher commissions.
Similar considerations will apply when other professional fees are incurred, including
accounting fees, tax return preparation fees, investment management or advisory fees,
real estate commissions, and legal services.
Given the many reasons for a beneficiary to dispute an expenditure or liability paid, there
are many cases dealing with a wide variety of situations that attempt to settle when an
expense or liability was properly incurred. Executors and trustees need to remain vigilant
when making decisions to incur expenses or to accept a bill presented for payment. The
rule is well summarized in this statement:
The rule is fairly simple: a trustee will be indemnified in respect of expenses properly
incurred in the context of an administration. The difficulty, however, lies in the fact that
the propriety of a given expense will often be judged by the beneficiaries after the event
and in light of its outcome. A trustee, however, does not have the benefit of hindsight.19

19
Suzana Popovic-Montag, “Revisiting a Trustee’s Right to Indemnification”, (2003) 50 ETR (2d) 161 at pp. 185-6.
Students interested in this topic are referred to this article for a thorough analysis of the categories of
indemnification and related issues.

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 Compensation and Expenses

9.7.7 Contractual Liabilities

When an executor or trustee enters a contract to deal with third parties it is important to
recognize the executor or trustee’s legal position. Generally, an executor or trustee enters
contracts personally and not as an agent of the estate, trust, or beneficiaries. Where the contract
is properly entered, the executor or trustee is entitled to indemnification if the executor or trustee
is liable for any losses or liabilities arising under the contract. However, personal liability may
also arise for which there is no indemnity. It is for this reason that a prudent trustee attempts to
ensure that an executor or trustee’s personal liability is limited whenever a contract is entered
with a third party. The validity of such agreements will depend on the circumstances.

9.7.8 Legal Services to an Estate or Trust

When an executor or trustee is also providing legal services to a trust, it is necessary for the will
or trustee to specifically permit the executor or trustee to charge his or her professional fees for
those services. This avoids a breach of the duty of loyalty and situations where there is a conflict
of interest. Where an executor or trustee is providing legal services in addition to executor or
trustee services, the legal services should be identified separately from executor and trustee
services to avoid any confusion as to the basis for the expense and the methods used to determine
the amount due. The clause in the will that authorizes these fees is also referred to as a charging
provision. See 9.2 Compensation Agreements.
Alberta, Saskatchewan, Manitoba, Ontario, Nova Scotia, Yukon, Northwest Territories
and Nunavut: The Trustee Acts in these jurisdictions specifically permit a barrister and
solicitor to charge for professional work done in connection with the trust.20 However, clear
records must be kept to ensure that legal services are distinguished from administration tasks
that are not eligible for the same fees.

9.7.9 Managing Beneficiary Expectations

As noted in the opening of this Chapter, compensation and expenses can be a contentious matter.
This is particularly so when these topics have not be discussed early in the administration and the
beneficiary suddenly realizes that the amount to be distributed is less than expected.
The compensation agreements used by corporate trustees and other professionals who agree to
accept appointments help to avoid disputes as they provide evidence to the beneficiaries that the
settlor or testator was aware of the costs that would be incurred.
Whether or not there is a compensation agreement, the prudent executor or trustee will ensure
that compensation and the right to reimbursement for expenses, and what those expenses might
include, are addressed early on. Many will also provide information to the beneficiaries
explaining the many duties and responsibilities that must be addressed, when fees will be
charged and how the beneficiaries will be kept informed. Keeping beneficiaries informed (see
Chapter 10 Estates and Trust Accounts) also demonstrates the work that is being carried out and

20
See sections ATA s. 45, STA s. 52, MTA s. 90(4), OTA s. 61(4), NSTA s. 63, YTA s. 53, NWTTA s. 54, NTA
s.53.

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 Compensation and Expenses

helps to reduce the suspicion that can arise when no information is shared for long periods of
time.

9.8 QUEBEC ONLY: REMUNERATION OF LIQUIDATORS AND

TRUSTEES AND REIMBURSEMENT OF EXPENSES
9.8.1 Right to Remuneration and Reimbursement of Expenses
The absence of a remuneration clause in a will or inter vivos trust deed does not preclude the
liquidators and trustees from seeking to be paid for the services they perform on behalf of the
estate. The general principle expounded in the CCQ is that administrators of the property of others
are entitled to remuneration unless the law, the act, or the circumstances have excluded this right,
pursuant to article 1300 CCQ:

Art. 1300. Unless the administration is gratuitous according to law, the act
or the circumstances, the administrator is entitled to the remuneration fixed
in the act, by usage or by law, or to the remuneration established according
to the value of the services rendered. […]

This provision speaks to liquidators as well as testamentary and inter vivos trust trustees since both
are administrators of the property of others.21 The right to remuneration was introduced in the
1994 CCQ in an effort to encourage more people to accept the office of administrator. In the old
Code, administrators were presumed to act gratuitously so remuneration had to be set out in the
will or trust.

Furthermore, the administration of estates and trusts has become increasingly complex, onerous,
time-consuming and even costly in recent times. The office of administrator must not be a source
of financial hardship or impoverishment for administrators. The administrator has the right to be
remunerated regardless of the results of his or her administration.22

The remuneration of the liquidator is borne by the estate just as other expenses of administration
are.23

Articles 1367 and 789 CCQ provide that expenses of the administration are paid by the estate or
trust, as the case may be. Expenses include costs of compiling the inventory, publication of notices,
and rendering accounts to beneficiaries.

The remuneration of the trustee is borne by the trust and is allocated, according to articles 1346
and 1347 CCQ, between the revenue account and the capital account. (See Chapter 10 Estate and
Trust Accounts.)

21
See arts. 802 and 1278 par. 2 CCQ
22
See “Commentaire sur l’article 1300 C.C.Q.” in REJB, EYB2004DCQ730 (March 2004); see also Madeleine
Cantin Cumyn and Michelle Cumyn, L’administration du bien d’autrui (Cowansville, Qc. : Édition Yvon Blais,
2014,) p. 176.
23
Ibid.

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 Compensation and Expenses

Absent a remuneration clause in a will or a statutory provision fixing the administrator’s

remuneration, the proper benchmark for fixing the remuneration of an administrator is usage or
the value of the services rendered.
While there is no specific provision in the CCQ’s chapter on trusts dealing with remuneration of
trustees, the CCQ’s book on successions does contain a specific provision for the remuneration of
liquidators. Article 789 CCQ states that liquidators who are not heirs are, as of right, entitled to
remuneration. It reads:

Art. 789. The liquidator is entitled to the reimbursement of the expenses

incurred in fulfilling his office.
He is entitled to remuneration if he is not an heir; if he is an heir, he may
be remunerated if the will so provides or the heirs so agree.
If the remuneration was not fixed by the testator, it is fixed by the heirs
or, in case of disagreement among the interested persons, by the court.

Where a person is acting in his or her capacity as liquidator, the remuneration is fixed by the heirs
or, in the event of a disagreement between the interested persons, by the court. “Interested persons”
includes not only the heirs but also the liquidators.24 Hence, liquidators were intended to have a
say in the quantum of their own remuneration. It is fair to infer from article 789 CCQ that a
discussion or negotiation between the liquidator and the heirs as to establishing the remuneration
is envisaged, and that recourse to the courts is a last resort measure.

Note as well, that unlike the common law jurisdictions that have rules against taking remuneration
before it is approved, Quebec has no comparable rules. However, it is good practice to obtain
approvals prior to charging fees, whether at the outset of the administration or at the time the fee
is being determined.

9.8.2 The Approach to Establishing Quantum of Remuneration in Quebec

Articles 789 and 1300 CCQ are of limited assistance in determining the appropriate quantum of
remuneration. If the scope of remuneration is not fixed in the will, the only guiding factors of
assistance in article 1300 CCQ are “usage” and the “value of the services rendered”. The initially
proposed text of article 789 CCQ suggests that liquidators be entitled to an equitable indemnity.25
This begs the question of what constitutes an equitable indemnity for a professional acting as
liquidator in light of the value of the services he or she provides. Professor Cantin Cumyn has
commented as follows:

La valeur des services est la façon la plus équitable de fixer le montant

de la rémunération d’un administrateur du bien d’autrui.26

24
Germain Brière, Les successions (Cowansville, Qc.: Éditions Yvon Blais, 1994) at p. 728.
25
Projet de Code civil (Livre III, art. 339 al. 1): “Si le testateur n’y a lui-même pourvu, l’exécuteur a droit à une
indemnité équitable fixée en accord avec les héritiers ou, à défaut, par le tribunal.” [Emphasis added]
26
Supra, note 16, p. 153.

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 Compensation and Expenses

Given that the legislative provisions on remuneration have not attracted much judicial
interpretation to date, the decision rendered in Langevin (Succession de)27 is of considerable
interest on the issue of proper quantum of remuneration. Even though the case dealt with
liquidator’s fees, it is, nonetheless, enlightening for establishing certain parameters for
determining trustee’s fees as well. The case is briefly summarized and reviewed below to identify
some of the more important comments and decisions in the case.

The heirs of the Langevin estate designated the nephew of the deceased, who was not himself an
heir, as liquidator of the estate valued at approximately $500,000. The nephew was chosen because
he had prepared the deceased’s income tax returns and was familiar with her financial affairs.

The Superior Court was asked to determine the appropriate hourly rate at which the liquidator, a
chartered accountant for fifteen years, could charge the estate for his services. The liquidator
argued that he should be remunerated at his usual hourly rate of $150/hour, while conceding that
it would be appropriate to fix a maximum amount of compensation.

9.8.2.1 Proportionality Principle

The court in Langevin relied on the proportionality principle, stating that a liquidator’s
remuneration should be limited in proportion to the value of the assets under
administration. The liquidator, an Ontario resident, suggested that his fees be limited to
5% of the gross value of the estate, the norm applied in Ontario. Interestingly, the court
retained the Ontario guideline and ordered that the liquidator’s remuneration not exceed
5% of the gross value of the estate regardless of the hourly rate.

9.8.2.2 Determining an Hourly Rate

Solely for the purpose of determining the appropriate hourly rate, the court in Langevin
took into account the number of hours already expended by the liquidator and the estimated
time remaining to administer the estate. This permitted the court to assess what the global
costs would be applying one hourly rate over another. Furthermore, the court fixed the
hourly rate while keeping in mind the maximum compensation allowed.

9.8.2.3 Factors to be Considered

The following factors, among others, were considered relevant in the Langevin decision
for the purpose of fixing the liquidator’s hourly rate at $60/hour:
• the liquidator was a professional and should, therefore, be remunerated more than
a layperson knowing little about the work involved;

27
C.S. Saint-Hyacinthe, 750-14-000951-013, April 16, 2003, Jean-Pierre Senécal, J.C.S., REJB 2003-41041
[“Langevin”].

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 Compensation and Expenses

• the liquidator was related to the deceased and would not be expected to charge the
estate the same hourly rate as he would charge a total stranger who seeks his
professional services;
• the liquidator was not designated because of his professional qualifications but
because he was the most knowledgeable about the affairs of the deceased;
• a liquidator who insists on being paid a significant sum or his hourly rate in his
capacity as a professional, rather than as a member of the deceased’s family, should
inform the heirs at the very outset, thus giving them the opportunity to accept the
fees or not;
• the administration of the estate was straightforward and did not involve any
complex issues; and
• the task of the liquidator was rendered somewhat difficult because there were
eleven heirs to deal with and because a family feud broke out.

9.8.2.4 Observations
The Langevin case suggests that a court:

1. has the ability to modify administrator fees that are unreasonable in given
circumstances;
2. may evaluate reasonability in light of the proportion of fees to the amount of
assets administered, by relying on the principle of proportionality; and
3. may even look to external norms such as exist outside the province for a
comparative standard in determining appropriate fees.

9.8.2.5 Fees for Professionals

Employing the same line of reasoning as the Superior Court did in Langevin leads to the
conclusion that it would be reasonable for a professional such as a lawyer or notary to
charge his or her usual hourly rate for the services performed for the estate. Ultimately, the
standards by which remuneration is measured are reasonableness and proportionality.
The more recent decision of Rajesky v. Orenstein Little28 endorsed this conclusion. In this
case, the long-standing professional relationship and friendship between two of the
liquidators and trustees (one was his lawyer and the other his accountant) with the
deceased, which the court appreciated, had motivated the deceased’s choice and implicitly
reflected this approval of the application of their hourly rates in administering his estate
and the trusts he established in his will. In fact, the court commented on the fact that the
deceased designated the liquidators and trustees by name and professional qualification.

28
2015 QCCS 5268 (S.C.).

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 Compensation and Expenses

9.8.2.6 Setting Beneficiary Expectations

It is advisable for liquidators and trustees to provide a proposal at the outset of their
administration in the form of a retainer letter, that discloses to the beneficiaries the hourly
rate they will be charging and a brief description of the work involved, including the
various tasks to be mandated to their law firm colleagues, as for example, to paralegals or
junior lawyers. This will avoid any potential surprises and challenges in the future. The
proposal, ideally, should be accepted in writing by the beneficiaries (and, if they are minors,
by their tutors).

9.8.2.7 Differentiating Between Administrative and Legal Work

Performed
It is difficult to distinguish between the functions of a lawyer acting as liquidator/trustee
and the lawyer as legal counsel, given that the process of liquidation of an estate and the
administration of trusts are essentially legal processes, regulated in the CCQ. Therefore,
there is some justification for applying the professional hourly rate for all functions
assumed by the lawyer.
The lawyer acting in the capacity as liquidator and trustee must ensure that if he or she
does not have the requisite competency to carry out all aspects implicit in such offices, he
or she should delegate tasks accordingly.
The lawyer assuming these offices should also seek to reduce fees by retaining the services
of paralegals or junior lawyers to carry out clerical and less-demanding tasks (for example,
completing forms, attending at banks, etc.). Reminder: even if administration tasks are
delegated to others, the liquidator and trustee still remain accountable, pursuant to article
1337 CCQ.
While it is arguable that the need to delineate between the two functions of liquidator and
trustee, it is not necessary in Quebec because Quebec does not have an equivalent to the
different Ontario legal tariff rates applied to estate trustees and solicitors. The safest course
of action is to keep detailed records to support a future billing.

9.8.2.8 Conflict of Interest

In determining whether a lawyer would be placed in a conflict of interest if he or she were
to hold the office of liquidator and trustee and, at the same time, engage the services of his
or her own firm to provide legal, notarial, accounting or other services with respect to
certain aspects of the liquidation of the estate and the administration of a trust, the terms
of the will may be relevant. Many wills contain a clause similar to the following:

My liquidators may, for certain specific acts only, delegate their functions
or have themselves represented by a third party chosen by them, even if it
is in favour of persons of the same office or firm of any of them.

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 Compensation and Expenses

The will may also empower the liquidators and trustees “to employ for reasonable
remuneration any professional person”.

It is noteworthy that article 1311 CCQ addresses the issue of conflict of interest in the
context of the administration of property of others. The provision suggests that the mere
potential of a conflict of interest is not a ground for disqualification. The only requirement
is disclosure to the beneficiaries of the potential conflict.

A conflict of interest would also arise where the liquidators or trustees are favouring their
own best interest rather than the best interest of the estate and heirs. This would be the case
if the professional hired his or her firm and the firm’s fees were higher than other similarly
qualified professionals. Other examples include where there is an interpretation or drafting
problem with a will or trust and the professional needs to defend his or her actions or
litigious matters arise that place the liquidator’s personal interests at odds with the co-
trustees or beneficiaries. It should be recalled in this context that article 1309 CCQ sets out
the core obligations of an administrator of property of others, among which is the duty to
act “in the best interest of the beneficiary”.

Where a lawyer acting as liquidator and trustee refers work to her or his law firm during
the course of the administration of an estate, no conflict of interest arises as long as the
work is necessary, is performed in the best interests of the estate and the beneficiaries, does
not involve any litigious matters in which the lawyer would be adverse to the estate or the
beneficiaries, is competently performed, is necessary and not for the purpose of
maximizing fees, and is billed at a reasonable rate.

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