Executor compensation is one of the most common flashpoints in estate cases. For estate litigators, these disputes are bread-and-butter—frequent enough to be familiar, but nuanced enough to warrant careful treatment. The fights usually fall into two camps: should the executor be paid according to the “percentages” often cited in practice, or according to broader “principles” that measure what is fair and reasonable in the circumstances?

The “Percentage” Guideline

Ontario law recognizes that executors are entitled to be paid for their work, but the statute gives very little direction on how much. Section 61(1) of the Trustee Act, RSO 1990, c T.23, simply says that a trustee may receive a “fair and reasonable allowance” for the time and effort spent, as approved by a judge. Because the legislation is open-ended, the courts have developed guidelines through case law.

Over the years, a common shorthand has emerged: 2.5% on all money or property that comes into the estate (receipts) and 2.5% on what goes out (disbursements), whether capital or revenue. Capital receipts include things like real estate, investments, or insurance proceeds, while capital disbursements are payments or transfers of assets to beneficiaries. Revenue receipts cover income earned by the estate—interest, dividends, rent—while revenue disbursements are the expenses tied to that income, such as taxes, maintenance, or management fees. When both sides are counted, the total can approximate 5% of the estate’s value in many straightforward cases.

But that “5% rule” is only a rule of thumb. The courts have never treated it as a fixed entitlement. As far back as Toronto General Trusts Corp. v. Central Ontario Railway (1905), 6 O.W.R. 350^[1], judges stressed that compensation must always be fair and reasonable. Later cases—Re Jeffery Estate (1990), 39 E.T.R. 173 (Ont. Surr. Ct.)^[2], Re Atkinson Estate (1953), O.W.N. 703 (Ont. H.C.), and Zimmerman v. McMichael Estate, 2010 ONSC 2947^[3] —confirmed that the percentages are a starting point, not an entitlement, and must be adjusted to fit the circumstances. In Laing Estate (Re) (1998)^[4], the Court of Appeal explained that the tariff can be calculated first, but must then be measured against the “five factors” of size, care, time, skill, and results to ensure the outcome is reasonable.

The message is consistent: the 2.5% guideline is a tool. It helps frame the discussion, but the ultimate measure is fairness in the particular estate.

The “Five Factors”

Ontario courts repeatedly refer to five governing principles when fixing compensation:

1. The size of the estate,
2. The care and responsibility involved,
3. The time occupied,
4. The skill and ability displayed, and
5. The success achieved in administering the estate.

This framework, rooted in Toronto General Trusts, was reaffirmed in Re Jeffery Estate (1990), 39 E.T.R. 173 (Ont. Surr. Ct.) and remains the barometer for modern disputes. These factors give courts—and mediators—a way to move beyond percentage arithmetic and grapple with what is fair in context.

Modern Case Law: Percentages in Check

Recent decisions reinforce the point that percentages are merely starting markers. In Zimmerman v. McMichael Estate, 2010 ONSC 2947 Justice Strathy (as he then was) rejected an executor’s inflated claim, underscoring that fiduciaries must keep detailed records and justify their fees by reference to actual work done. The case is now a staple in executor compensation cases, cited as a warning that courts will not reward sloppy accounting or self-serving claims.

Similarly, in Aber Estate (Re), 2013 ONSC 6363^[5] the court scrutinized the executor’s claim against the complexity of the estate and reduced the requested fees where the percentages produced an unreasonable result. These decisions highlight a core principle: executor compensation must be earned, not assumed.

Why These Battles Persist

Despite a century of guidance, fights over compensation remain common. Executors often assume the percentages are “their due,” while beneficiaries balk at figures they perceive as disproportionate to the effort actually expended. In estates with modest assets, the percentages can appear generous relative to the work performed. In complex estates, executors may feel undercompensated when percentages fail to reflect extraordinary effort.

These opposing perceptions create fertile ground for mediation. Executors point to the guideline, beneficiaries point to the principles, and mediators help bridge the gap with practical resolution strategies.

The Mediation Lens

Mediation offers an opportunity to recalibrate the discussion. Instead of arguing over rigid formulas, the parties can focus on the estate’s unique features:

• Was the estate largely cash, requiring little more than banking?
• Did the executor manage rental properties, complex tax filings, or hostile litigation?
• Was there cooperation among beneficiaries, or did the executor absorb years of conflict management?

By walking through the five factors together, parties can often agree on a blended approach—anchored by percentages but adjusted by principles. The result may be a negotiated figure that recognizes both the executor’s efforts and the beneficiaries’ concerns about proportionality.

Why It Matters

Executor compensation disputes rarely justify the legal fees they generate. Yet they persist because they symbolize something larger: trust, transparency, and fairness in the administration of a loved one’s estate. For mediators, the key is not to resolve an abstract legal question of percentages versus principles, but to help families craft a resolution that acknowledges both.

As Ontario courts have reminded us for more than a century, compensation must be “fair and reasonable.” Mediation is where those words take on practical life.