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How Much Should A Trustee Be Paid In Fees?

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How Much Should a Trustee Be Paid in Fees?

A trustee fee is a payment to a person or organization for managing finances, property, or other assets after a grantor passes away. As the trustee, it is your job to ensure assets in the trust are used per the

grantor’s wishes. A trustee is responsible for managing everything that’s

trust-related to the benefit of the beneficiaries.

A trustee is responsible for managing trust and carrying out its objectives. This can involve tasks like filing taxes, distributing assets, or managing investments. Trustees may be compensated for their work through fees.

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How Much Should a Trustee Be Paid in Fees?

How much does a trustee get paid?

There are many ways to structure the fees, which are usually specified within the trust paperwork. It can be structured in different ways,

depending on the needs of the trust.

A trust can be a great way to protect your assets and ensure they are distributed according to your wishes. One way to do this is to compensate the trustee based on an annual percentage of assets. A large trust with more assets that have the potential to appreciate or create income over time will thus require a higher fee. The fee structure for a small trust may differ with a one-time payment rather than an annual percentage fee.

But, if the trustee’s duties are fewer, hourly payment applies. When creating a trust, the grantor can dictate payment terms for the trustee, for instance, by setting a maximum amount to be spent on fees. Still, they may establish different terms for successors. State laws can determine the fee if a grantor fails to include the trustee payment in their will. Typically, states use executor fee rules when setting trustee payments.

However, fees associated with a trust can be complex and vary depending on the state in which the trust is located.

Trustees can get paid by calculating a percentage of the assets or transactions, and the state can dictate payment terms for the successor. Understanding all aspects of the fees associated with trust is essential before setting one up. There are three types of trustees, and their payment terms differ accordingly.

How much does a trustee get paid if they are corporate?

A corporate trustee could be a bank or investment firm that administers a trust. They usually charge a yearly fee of 1 to 2 percent from trust assets. For instance, a $100,000 asset will amount to a fee of $1,000 to $2,000

Fee for a professional trustee

A professional trustee will manage trusts and carry out other fiduciary duties. The pay is billed hourly, at a rate of $100 per hour, but they may also be paid a percentage of the assets in certain trusts.

How much should a private trustee get paid?

As private trustees may be family members or friends of the grantor, they are usually not paid on an asset percentage basis. Rather, they get $25-35 for each hour spent working on the trust. Others may work without payment.

What percentage does a trustee get paid? How do you calculate a fair fee?

A trustee is in control of the trust assets and responsible for paying themself from those assets. They will likely be responsible for setting their own compensation. This can be done by setting a flat fee or hourly rate. State law may not apply, as it has rules for executors and not trustees. When left to decide on a fair fee, you should:

Leverage your state rules on executor payment

The work of trustees and executors have many similarities. So, one may use their percentage of the total assets to determine their fees.

Ensure your hourly rate is fair

Arguing over the time and work done is hard. The rate you have to set should be reasonable and not that of a professional trustee unless you are one yourself.

How does the size of the trust affect the trustee fee?

There are a few things to keep in mind when deciding on trustee fees. The fees will differ depending on the trust’s size and scope and the trustee’s experience. Generally, a more significant trust will mean a fee higher than one percent — that is $20,000 for a trust worth $2 million.

If the trust has fewer assets, you may be able to negotiate a lower flat fee. For example, if the trust is worth $200,000, the trustee might charge a one percent management fee, which would amount to $2,000 annually. However, it might be possible to negotiate a $1,000 flat fee if management won’t take long.

Other factors that may affect trustee fee

When it comes to trust issues, consider using a bank or other financial institution as your trustee. It’s important to always ask about a company’s fees before making any decisions. That way, you’ll know exactly how much you’ll be paying and can make an informed choice.

Although it would not make sense for someone who is not a licensed attorney to charge fees similar to an attorney, a trustee should be paid for their work. 

When can a beneficiary contest the trustee fees?

There could be several different outcomes if a beneficiary contests a trustee fee. The beneficiary may file a petition to a probate court for a review of the payment terms for the trustee. If the judge decides that the current arrangement is illogical, they can revoke the terms.

When a trustee’s pay is disproportionate under the conditions, the legislation permits beneficiaries to request the removal of such trustees. Further, the law permits beneficiaries to ask for the trustee’s salary to be withheld or decreased to cover a betrayal of trust and compensation.

Wrapping up

Trustees deserve to be paid. But, the pay has to make sense, considering the trust. You can use the hints above to see where you stand with your trust. Remember, you should speak with a trust lawsuit lawyer immediately if you think a trustee is charging inexplicably high fees to manage

a trust. An expert attorney can analyze the facts in question to assess the fairness of the trustee costs and guide you on the appropriate response. 

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Hess-Verdon & Associates, PLC
620 Newport Center Drive Suite 1400
Newport Beach, California, 92660
Office: (949) 706-7300 
Toll Free: (888) 318-4430

Copyright © 2022 Hess-Verdon, PLC. All rights reserved. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. The verdicts and settlements listed on this site are intended to be representative of cases handled by Hess-Verdon & Associates, PLC. These listings are not a guarantee or prediction of the outcome of any other claims. The information contained on this website is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.

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Hess-Verdon & Associates, PLC
620 Newport Center Drive Suite 1400
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Office: (949) 706-7300 
Toll Free: (888) 318-4430

Copyright © 2022 Hess-Verdon, PLC. All rights reserved. The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship. The verdicts and settlements listed on this site are intended to be representative of cases handled by Hess-Verdon & Associates, PLC. These listings are not a guarantee or prediction of the outcome of any other claims. The information contained on this website is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.

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