Trustee Compensation - How much?

Previous | Next
 rated by 0 users
Latest post 07-07-2009 12:18 PM by LIMAMA. 5 replies.
  • 01-03-2006 9:18 PM

    Question [=?] Trustee Compensation - How much?

    My father and mother set up ABC trust in their home state of California. My father died in ’98 and the three trusts were created and funded Survivor’s Trust, Marital Trust and Bypass Trust. Also at that time an Investment Firm in San Francisco took over investing all the assets which could now be sold without tax consequence because of the Stepped up value. They are doing a great job.

    My Mother had a stroke in 2001. This left her quite debilitated, paralyzed on one side unable to speech and not with her previous mental capacities. As a result under the terms of the trust the Successor Trustee my brother became Trustee. He has done as he should and paid the bills and the taxes, provided accounting. He is responsible for investing but wisely has left that with the same Investment firm.

    The trust allows for Trustee compensation and I have encouraged him to take it but up until 2005 he has chosen not to. Along with 2004 accounting he included the following statement. “I will collect a trustee fee starting in 2005. My research on trustee fees indicates rates normally start higher, but 1% annually of the market value of the assets in the trust is commonly considered reasonable compensation. I am setting my trustee fee at one half of that amount or 0.5% annually of the market value of the assets in the trust.”
    The trusts combined are worth quite a lot about 16 million. This make his pay $80,000.

    To me this sound like over compensation.

    Does this seem high to you?

    Thank you for you thoughts in advance.
  • 01-04-2006 9:57 AM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,498

    re: Trustee Compensation - How much?

    Not a lawyer nor in CA--but seems reasonable to base the fees on asset values (not the amount of work per se).
    Here in PA it was common to set fees as a % of income say 5% but law changed and everyone seems to have jumped on the higher fee structure permitted by an asset based charge--and some even tried to do so retroactively.

    So unless there is some basis to conside 1% out of line I doubt you have much quarrel with a mere .5%

    And the situations I am aware of where there are essentially two trustees the system has permitted double billing--but I would check out that point in CA--if it applies to your facts.

    Suggestion--make a few calls to professional trust manangers and ask for example fee schedules.

    And that does not inclued costs--so if the trustee employs an accountant and a lawyer--its on top. One case I recall in PA the trustee even put in her full office expenses--which in fact she set up for the sole purpose of managing the trust (The bank was co trutee and was seeking to tack onwhopping fees as well--)



  • 01-04-2006 1:27 PM In reply to

    re: Trustee Compensation - How much?

    Depends on the terms of the trust and state law.

    Talk with a local estate-probate-trust attorney if you think .5% is too high given the amount of effort involved, what the investment company gets, etc.

    Note that depending on the terms of the trust, you may be opening a really unpleasant can of worms if you irk the trustee. And note that you'd have to spend your own money to take this issue to the courts, and that the trustee could use trust assets to defend his position.


    http://www.courtinfo.ca.gov/rules/titleseven/title7-69.htm
  • 07-07-2009 12:40 AM In reply to

    re: Trustee Compensation - How much?

    I am interested in getting some more info on this topic. 

    Drew, I am also in PA.

    I am the "family trustee" of my late mother's trust, along with an "independent trustee," who is a lawyer with the firm that drew up all the estate papers.  I have not discussed this with him, because he fights me tooth and nail whenever I try to get certain covered expenses paid out of the trust.

    The trust states, inter alia, that the "trustees shall be entitled to receive annual compensation for services hereunder, but not in excess of of such compensation as would be approved by a court of competent jurisdiction ...." (emphasis added).

    I did receive a one-time random fee from the trust right after my mother's death.  But based on this language, does it seem that I may be entitled to receive annual compensation from the trust (simply because I am a trustee)?  And if so, does anyone have any idea what percentage might be "reasonable?"

    I welcome your input (and understand that such input would not be "legal advice").  :-)  Thank you!

     

  • 07-07-2009 9:36 AM In reply to

    • Drew
      Consumer
    • Top 10 Contributor
    • Joined on 03-30-2000
    • PA
    • Posts 49,498

    re: Trustee Compensation - How much?

    I am NOT a lawyer----but if par in your local courts is to approve trustee fess in range of say 4% for trusts of that size then by all means sort out getting yourself paid said sums---and I see no reason that trust should not reimburse you your costs.

     

    If there are 2 trustees it may be a subject of some intrepretation as to if fees are capped at 4% or 8% in the above example.

     

    Fees may be a function of both asset size and trust income--depends

     

     

    Me I'd call a couple of trust firms in my part of state to get some input as to reasonable fees and how they are computed for trusts in my size range.  I'll bet I can make 2 phone calls and get a pretty close opinion....

     

    Take a look to see if lawyer is using the trust as a private money tree------

     



  • 07-07-2009 12:18 PM In reply to

    Re: Trustee Compensation - How much?

    You say yourself that your brother is "doing as he should" and you seem to have no qualm or quibble with his trustee performance. .5 seems very reasonable when it seems he could charge more. If he is permitted to be compensated--as it seems you are as well--why not? By your own admittance, the trust is no danger of going kaput.

Page 1 of 1 (6 items) | RSS

My Community

Community Membership New Users: Search Community