Executor Fee Calculator (MB)
If the will does not specify how executor compensation should be calculated, MB estates must follow provincial compensation rules (see MB calculator below).
How Much Should an Executor be Paid in MB?
The Manitoba Trustee Act states that estate executors are entitled to fair and reasonable allowances for their services.
Consideration Factors: Courts have interpreted "fair and reasonable" to mean that the following factors should be considered in determining a fee:
- Size of the estate
- Care and responsibility involved
- Time required
- Skill and ability demonstrated by the trustee
- How successful the trustee was
Typical Base Fee: A typical base fee for a standard estate might be 3% of the combined value of the gross assets at death and any income generated by the estate. So, for example, a standard estate with gross assets of $700,000, that generated $50,000 of income during the settlement process, would generate $22,500 in executor fees. This amount should be reduced or increased according to the consideration factors above.
Annual Fee: For estates that take a significant time to settle, the court may also allow an executor to take an annual fee, typically something on the order of 0.4% of assets under management.
Extra Fee The court may also allow an additional fee for extraordinary services, such as overseeing the sale or lease of real estate, running a business, conducting litigation, preparing tax returns yourself, handling tax audits, and so on.
Note that assets which pass directly to named beneficiaries, such as life insurance policies, are generally not included in any of the above calculations.
MB Compensation Calculator
EstateExec provides the following executor compensation estimator for MB estates, but please keep in mind that there are no hard and fast rules for MB estates, and ultimately you (and the courts) must determine what would be reasonable for your particular circumstances. By using this estimator, you acknowledge that EstateExec provides any results as informational input only, not as legal advice, and cannot be held responsible for any inaccuracies for, or misunderstandings about, any given estate. See estimation methodology for calculation details.
You can use this calculator now, but if you use EstateExec to help you track the settlement process, it will automatically analyze your estate and suggest values for the Gross Assets and Income fields below (you can create an estate for free).
Executor Compensation Considerations
Timing: Generally, any executor compensation is paid during the final stages of estate distribution, as one of the last things the executor does. Be careful in situations in which there is not enough to pay yourself and all other outstanding debts, as this may expose you to legal issues. However, in most provinces, executor compensation has precedence over almost all other debts.
Communication: You may wish to discuss your compensation with the other heirs early during the process, so they don't end up surprised and unhappy when they notice their shares are somewhat less than expected. You may also want to leave the door open to modify your planned compensation as the process unfolds and you determine how much or how little work will actually be required on your part.
Optional: Keep in mind that collecting executor fees is optional. Even if the will specifies compensation, or if province laws support specific fees, the executor can choose to forego that compensation, and many do. That being said, serving as an executor is A LOT of work, and there's a reason that province laws support such compensation.
Tax Optimization: Executor compensation is considered income to the executor, so acting for the estate, you must deduct CPP and income taxes from any compensation payment, submit those deducted funds to the CRA, and issue a T4-slip to yourself by February 28 of the year following the payment. (see Employer's Guide (Publication T4001)). Keep in mind that there may be some situations in which it is financially beneficial to the executor to forgo any fees. Since executor compensation is taxable, and inheritances are generally not taxable, if the entire estate (or a large portion of it) is going to be inherited by the executor, you may end up with more after-tax value if you forgo explicit executor compensation. On the other hand, if the will does not explicitly address compensation and you forgo executor fees, the CRA may decide that some bequest in the will was in lieu of such compensation, and tax you on that bequest.
Trusts: Note that trustee compensation for managing a trust is handled differently than that of executor compensation for settling an estate (see Trustee Compensation).
Reimbursement: An executor is also entitled to reimbursement from estate proceeds for legitimate and reasonable estate administration costs, such as death certificate copies, notarization of documents, the EstateExec licensing fee, and even travel costs strictly associated with managing the estate. Once you have established an estate banking account, you can often pay for these costs directly from that account, so that no reimbursement is necessary, but you should keep good records in case you later have to justify your expenditures to the CRA or to estate heirs. Executor expenses can be reimbursed when desired, although certain probate or court-supervised proceedings may require prior approval. While executor expenses are generally not considered when calculating executor compensation (i.e., executor fees), if the executor incurs substantial costs paying for services that would normally be directly handled by an executor, a probate judge may sometimes require that the default executor fee be reduced accordingly.
Additional Information
See also the EstateExec Complete Executor Guide.
In case you're interested, see also Compensation for general remarks on executor compensation, and note that other provinces can be found here: