Today’s blog is the second in a three-part series that explores estate accounts from the perspective of a beneficiary, and more specifically a beneficiary of an estate in the Province of British Columbia. These blogs were written by Caroline Caron, a paralegal in the Vancouver office of Fasken LLP, to provide practical and helpful tips for beneficiaries who are navigating estate accounts. In the first part of this series, Caroline provided a general introduction to estate accounts and then discussed issues that relate to specific types of assets. In this instalment, Caroline focuses on expenses incurred by executors in the administration of an estate, including executor compensation, and issues around the timing of estate expenses.

As we noted in Part One, it is important to remember that estate accounting, including the form of accounts and the calculation of executor compensation, is a matter of Provincial law in Canada, so it is always important for beneficiaries to obtain professional advice in their local jurisdiction, as the rules may vary.

Understanding Executor Expenses, Reimbursements, and Remuneration

When reviewing estate accounts, you may notice that the executor has reimbursed themselves for certain expenses. While this might initially raise concerns, it’s actually a normal and legitimate part of the estate administration process. Executors often pay certain costs out of pocket before gaining full access to estate funds. These costs might include probate fees, legal fees, or other necessary expenses required to keep the estate administration moving forward.

Executors are entitled to reclaim reasonable, estate-related expenses, provided they are legitimate and well-documented. If you spot a line item showing the executor being reimbursed for a filing fee or a legal bill they have covered, that’s generally completely normal. It’s all part of making sure the estate’s costs are handled fairly.

What executors can’t do is use estate funds for their own personal benefit beyond those proper reimbursements. If you have any doubts, you can always ask for supporting documentation, such as receipts or invoices, to confirm the legitimacy of these reimbursements.

In addition, you might see a calculation in the estate accounts for the executor’s remuneration. Executors are typically entitled to some form of compensation for the work they do managing the estate. This remuneration is typically calculated as a percentage of the estate’s gross value (up to 5%), along with an annual care and management fee (up to 0.4%). The exact amount will vary depending on the complexity of the estate and the level of work required.

Seeing remuneration listed in the estate accounts can sometimes surprise beneficiaries, but it’s a normal and legitimate part of the process. Executors handle significant responsibilities, and the law ensures they are compensated fairly for their time and effort.

It is worth noting that an executors cannot take remuneration without the consent of the beneficiaries or court approval. The accounts you are reviewing may include a calculation setting out the remuneration and a request for consent, but should not show any remuneration being pre-taken by the Executor. If you see remuneration already paid out in the accounts, this may be cause for concern, and you should request an explanation.

Understanding the Timing of Estate Expenses

When reviewing estate accounts, it’s important to remember that estate expenses are often front-loaded. In the early stages after someone passes away, there are typically significant costs that need to be paid immediately. These might include funeral expenses, memorial services, probate fees, or outstanding bills. As a result, the first few pages of the accounts may show a higher concentration of spending.

As time goes on, those larger initial costs usually taper off. Later in the estate process, you might just see smaller ongoing expenses—like utilities for a home that hasn’t been sold yet or minimal upkeep costs. It’s completely normal for the expenses to look bigger at the start and then settle down as the estate moves closer to final distribution.

It’s also common for executors to retain a holdback from the estate’s funds for pending liabilities, such as taxes, professional fees, or other unresolved expenses. The executor may need to wait for a CRA Clearance Certificate before distributing the remaining estate assets. If you notice a holdback in the accounts, this is generally a prudent and appropriate step to ensure all obligations are satisfied before finalizing the distribution.

Stay tuned for Part Three!