How Much Should a Trustee Be Paid in Fees?

How Much Does a Trustee Get Paid?

Trustee fees can be structured in various ways, often detailed in the trust documents. Compensation methods include an annual percentage of the trust’s assets, a one-time payment, or hourly rates for less involved duties. The terms for trustee payment can be set by the grantor and might be influenced by state laws if not specified in the will, typically aligning with executor fee guidelines.

Corporate Trustee Fees

Corporate trustees, such as banks or investment firms, typically charge an annual fee ranging from 1 to 2 percent of the trust’s assets.

Professional Trustee Fees

Professional trustees are paid either hourly, around $100 per hour, or by a percentage of the assets, depending on the trust’s specifics.

Private Trustee Compensation

Private trustees, often friends or family of the grantor, may receive $25-35 per hour for their services, though some may choose not to accept payment.

Calculating a Fair Trustee Fee

Trustees typically set their own compensation based on the trust’s assets, either as a flat fee, an hourly rate, or a percentage of the assets. Factors to consider include state laws for executors, the size and complexity of the trust, and the trustee’s responsibilities and experience.

Influencing Factors on Trustee Fees

The size of the trust significantly impacts the fee structure, with larger trusts potentially commanding fees higher than one percent. Other considerations include the trustee’s workload, the trust’s complexity, and negotiation for flat fees based on the required management effort.

It’s advisable to thoroughly discuss and understand fee structures when considering a financial institution as a trustee, ensuring the fees are justified and transparent.

Do trustees get paid

Trustees can usually self-compensate without a court order, provided it’s deemed “reasonable compensation,” even if the trust doesn’t specify the fee amount.

When Can a Beneficiary Contest the Trustee Fees?

Beneficiaries may contest trustee fees by filing a petition with a probate court for a review of the trustee’s compensation terms. If deemed unreasonable, a judge may alter the payment terms. Beneficiaries have the right to challenge disproportionate trustee fees and can request the reduction or withholding of such fees, especially in cases of trust mismanagement or breach of fiduciary duty.

Trustee Fees in California

In California, non-professional trustees typically charge hourly rates between $30 to $75. While some may choose to waive their fees, it’s important to remember that this is a voluntary decision and not a legal obligation.

Wrapping Up

Trustees are entitled to reasonable compensation for their services, but the fees must be aligned with the trust’s needs and size. If you suspect a trustee is demanding excessively high fees, consulting with a trust litigation attorney is advisable. An experienced lawyer can evaluate the situation to determine if the fees are justifiable and advise on the next steps.