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Executor Compensation: What are the tax implications?

executor tax Nov 20, 2019

An estate executor recently contacted our office and advised that they were unhappy with having to pay the CRA tax on their remuneration for acting as the administrator and trustee of an estate.

Paying taxes are never fun, and we know that – but acting as the executor of an estate is still a job. Similar to working as a teacher, truck driver, or business owner – you are compensated for the work that you perform, and it is treated as taxable income. The money needs to be declared to Revenue Canada.

A way to get around this is to leave your executor behind with a monetary gift as opposed to compensation. However, we would caution you that if funds are left as a gift and not tied to any sort of work, the executor would receive these funds even if they were unable or unwilling to act. Further, the executor could potentially apply for compensation from the courts, receive more than you originally intended, and essentially “double dip.” This is why our office suggest including executor compensation in your will.

In certain cases, it may be best to not take compensation and simply receive a larger inheritance – and in other cases, this may not be a good idea. If you aren’t sure how to include executor compensation in your estate plan, please contact our office to meet with one of our experienced lawyers. We are here to help!


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