Executor of a $1.5M Ontario Estate: Legal Fees, the 2.5% Compensation Rule and a Line-by-Line Cost Breakdown in 2026

The $1.5M Estate: What the Executor Is Working With

Margaret Chen dies in February 2026, a resident of Mississauga, Ontario. Her will names her adult son Kevin as the sole estate trustee (executor). The estate consists of:

Note that the RRIF names the estate as beneficiary — not a specific person. This means the full $220,000 RRIF value flows through the estate, is subject to probate fees, and is included as income on Margaret's terminal return. If Margaret had named Kevin directly as RRIF beneficiary, that $220,000 would bypass the estate entirely. For a full guide to how Ontario probate fees work on different asset types, see our Ontario probate fee calculator for 2026.

Cost #1: Ontario Probate Fees (Estate Administration Tax) — $22,000

The first cost Kevin faces is Ontario's Estate Administration Tax, payable when he applies for the Certificate of Appointment of Estate Trustee With a Will. The calculation is straightforward:

This fee is non-negotiable. It must be paid upfront — before Kevin can access most estate assets. Some executors pay out of pocket and reimburse themselves from the estate later. Others use the deceased's bank account (most banks will release funds for probate fees and funeral costs with a death certificate before the Certificate of Appointment is issued). For strategies to reduce this fee, see our guide to avoiding Ontario probate fees in 2026.

Cost #2: Executor Compensation — The 2.5% Guideline

Margaret's will is silent on executor compensation — the most common scenario in Ontario. When the will does not specify a fee, Ontario courts apply the guideline established in Re Executor Compensation case law: 2.5% on capital receipts, 2.5% on capital disbursements, and 2.5% on income received during administration.

This is sometimes called the "five percent rule" because the 2.5% on receipts and 2.5% on disbursements of capital roughly equal each other, together approximating 5% of estate value. But the math is not quite that simple.

Kevin's executor compensation of approximately $75,450 is taxable income. It will be reported on a T4A slip and added to his personal income for the year. At a combined marginal rate of approximately 43%, Kevin's after-tax compensation is closer to $43,000. For a deeper look at executor duties and compensation mechanics, see our executor duties and compensation guide.

Cost #3: Estate Lawyer Fees — $5,000 to $15,000

Kevin is not required to hire a lawyer, but on a $1.5M estate with real property, a RRIF flowing through the estate, and a non-registered investment portfolio, professional legal assistance is strongly recommended. Typical estate lawyer fees break down as follows:

Some estate lawyers quote a flat fee for the probate application and charge hourly (typically $350–$550/hour) for administration work. Others offer a percentage-based fee, which can become expensive on larger estates. Kevin should request a detailed fee estimate in writing before retaining counsel.

Cost #4: Accounting Fees and the Terminal Tax Return — $3,000 to $6,000

Margaret's terminal T1 tax return is more complex than a typical annual filing. The terminal return must include:

• Employment and pension income earned from January 1 to the date of death
• RRIF income: The full $220,000 RRIF value is included as income on the terminal return because the estate — not a spouse or qualifying beneficiary — is the named beneficiary
• Deemed disposition of non-registered investments: All capital property is deemed sold at fair market value under subsection 70(5) of the Income Tax Act
• Final CPP, OAS, and any employment income prorated to the date of death

Cost #5: Income Tax on Margaret's Terminal Return — The Biggest Line Item

The terminal return is where the largest single cost hides. Margaret's $220,000 RRIF and the deemed disposition of her non-registered investments combine to create a substantial income tax bill on the final return.

The Full Cost Table: Where the $1.5M Goes Before the Heirs See a Cent

Here is the complete line-by-line breakdown of what Kevin must pay — from estate assets — before distributing anything to the beneficiaries:

Beneficiaries of a $1.5M Ontario estate can expect to receive approximately $1.27M to $1.30M — roughly 85 cents on the dollar. The income tax on the terminal return is the single largest cost, followed by executor compensation and then probate fees.

The Three Executor Mistakes That Trigger Personal Liability

Kevin's compensation reflects real risk. As estate trustee, he is personally liable for errors that cause financial harm to the estate, its creditors, or CRA. These are the three mistakes that most commonly result in executors paying out of their own pockets:

Mistake #1: Distributing Before Receiving the CRA Clearance Certificate

Subsection 159(2) of the Income Tax Act states that if an executor distributes estate property without first obtaining a clearance certificate, and CRA later assesses additional taxes, the executor is personally liable for the unpaid amount — up to the value of the property distributed. Kevin files the terminal return in June 2026 and applies for the clearance certificate via Form TX19. CRA's processing time is 4 to 12 months. If Kevin distributes the home sale proceeds in August because the beneficiaries are pressuring him, and CRA later reassesses the terminal return and finds $18,000 more owing, Kevin pays that $18,000 from his own funds.

Mistake #2: Failing to Advertise for Creditors

Under subsection 38(2) of Ontario's Trustee Act, an executor who distributes the estate without properly advertising for creditors can be held personally liable if an unknown creditor later surfaces. The required process: publish a notice to creditors in the Ontario Gazette and in a newspaper of general circulation in the area where the deceased lived, providing a minimum notice period (typically 30 days) for creditors to come forward. The cost is modest — approximately $100–$300 for the Gazette notice — but the liability for skipping it is unlimited.

Mistake #3: Missing the 180-Day Estate Information Return Deadline

Ontario requires executors to file an Estate Information Return with the Ministry of Finance within 180 calendar days of receiving the Certificate of Appointment. The return discloses the value of all estate assets — and the Ministry uses it to verify that the correct probate fees were paid. Missing this deadline triggers penalties: $1,000 for the first day late, plus $100 for each additional day up to a maximum of $50,000. Kevin receives the Certificate of Appointment in April 2026 — his Estate Information Return is due by October 2026. If he forgets, the penalties start accumulating immediately.

The Clearance Certificate Timeline: Why Estates Take 12 to 18 Months

Most beneficiaries expect to receive their inheritance within a few months of the death. The reality for a $1.5M Ontario estate looks more like this:

Kevin can make interim distributions during this period — most executors distribute 60–80% of the estate once the creditor notice period has passed and a reasonable tax holdback is set aside. But the final distribution should wait for the clearance certificate. For a broader look at the Ontario probate process and timeline, see our Ontario probate process timeline guide.

How Courts Can Adjust the 2.5% Compensation Guideline

The 2.5% guideline is exactly that — a guideline. Ontario courts have consistently held that executor compensation must be "fair and reasonable" in the circumstances. In practice, this means:

• Simple estates with cooperative beneficiaries: Courts may approve the full guideline amount or slightly less, particularly if the executor is a family member who relied on professional advisors for most tasks.
• Complex estates with litigation: Courts may approve compensation above 5% — sometimes significantly above — when the executor managed business interests, defended the estate against will challenges, or navigated multi-jurisdictional tax issues.
• Estates where the executor made errors: Courts routinely reduce compensation when the executor caused unnecessary delays, failed to invest estate funds prudently, or incurred avoidable costs. In extreme cases, courts have reduced compensation to zero.
• Professional executors (trust companies, lawyers): Professional trustees typically charge 3–5% of estate value and are less subject to reduction because they bring institutional expertise and insurance coverage.

If all beneficiaries agree in writing, Kevin can take his compensation without court approval. If any beneficiary objects, Kevin must pass accounts before the Ontario Superior Court of Justice — a formal process where the court reviews every receipt, disbursement, and the compensation claimed. Passing accounts adds $5,000–$15,000 in legal fees to the estate.

What Kevin Could Have Done Differently: Reducing Administration Costs

Several of the costs in the table above were avoidable with better planning during Margaret's lifetime:

Estate planning is not about eliminating costs — some fees are unavoidable. It is about structuring asset ownership and beneficiary designations so that the avoidable costs are eliminated before death, not discovered after it. For a complete Ontario estate planning checklist, see our estate planning checklist for 2026.