January 5, 2015

In a recent passing of accounts case, the court reduced the estate trustee’s compensation for the following reasons:

– No compensation should be charged on investment losses listed as capital disbursements;

– The costs connected to the sale of real property (real estate commission, property taxes, and legal fees) are not to be included when calculating compensation;

– Any funds paid to the estate trustee should be excluded when calculating compensation;

– The costs of preparing the accounts should be excluded when calculating compensation; and

– The 2.5 % tariff rate is not often justified for large transactions and the court will consider a number of competing factors when awarding compensation including if the estate trustee kept time dockets.

In this case, the court decided on a median rate of 2% be applied to large transactions in the accounts citing the lack of time dockets and level of complexity of the large transactions. While time dockets are not an absolute requirement, they help the court decide the appropriate compensation rate.  The court also referenced an overall 1.5% compensation rate as suitable for payments to beneficiaries.

This case is a good reminder of some of the common objections made to estate trustee’s compensation and how the court addresses these objections.

The Estate Administration Tax Act

Effective January 1, 2015, the Estate Administration Tax Act has come into effect. The background to this legislation, passed over three years ago, can be found here.

An estate representative has to file with the Ministry of Revenue an estate administration return no later than 90 days after a certificate for the appointment of an estate trustee is issued.

The new requirement does not apply to an estate trustee who applied for a certificate prior to January 1, 2015.  New reassessment requirements in the Act also mean the estate trustees have to retain estate administration records for a number of years.