REASONABLE TRUSTEE FEES & EXECUTOR FEES

Trustee Fees

Most trust agreements state that the trustee is entitled to a “reasonable fee” — without further explanation. The Oregon Uniform Trust Code [ORS 130.635(1)] is no better: “If the terms of a trust do not specify the trustee’s compensation, a trustee is entitled to compensation that is reasonable under the circumstances.”

What is reasonable? One benchmark is the fee charged by professional trustees. Most banks will charge about 1% per year to administer a trust. (The percentage is usually a sliding scale that decreases as the value of the trust increases.) But the bank’s 1% fee usually covers both trustee duties and investment management services, which are bundled together. This complicates comparing a bank’s 1% fee with a “trustee only” fee. In the latter case, there will be two fees; an investment management fee of roughly 1%, and a trustee fee of roughly .5% to 1%. So the aggregate fee is usually higher if trustee and investment services are purchased separately.

It gets more complicated, depending on the services the trustee actually provides.

Trust Holding Liquid Assets for Cooperative Beneficiary. On one end of the spectrum, a trustee might manage a $1M portfolio for a minor child and issue an equal payment each month. In this scenario, a 1% fee is a reasonably good deal for the trustee.

Trust Holding Liquid Assets for High Maintenance Beneficiary. Another alternative is an adult beneficiary (undoubtedly angry that his inheritance is locked up in trust) who constantly badgers the trustee about extraordinary distributions (cars, wedding rings, spending money, etc.), excessive fees, inadequate investment performance, improper asset allocation, etc. In these cases, a reasonable fee might be 1% plus an hourly rate for telephone calls in excess of perhaps two hours per month.

Post-Death Administration of Revocable Trust. Finally, there is the trustee of a revocable trust engaged in post-death administration. The assets of the decedent must be inventoried and liquidated; the house must be cleaned up and sold; scores of bills must be paid; tax returns must be filed; and there will be a steady dialog with numerous beneficiaries. The post-death administration process will usually last a year or longer. During this period, a reasonable trustee fee might be the same as the 2% fee allowed to court appointed executor, as discussed below.

Executor Fees

Under Oregon law, specifically ORS 116.173, a court appointed executor is automatically entitled to a fee of roughly 2% of the probate estate. An additional fee of 1% is allowed for non-probate assets, such as IRAs, life insurance, and joint bank or brokerage accounts. If the probate estate is a $1M brokerage account and there are only a couple of beneficiaries, a 2% fee may be a windfall to the executor. On the other hand, a 2% fee may be inadequate if the executor must maintain and sell real property, liquidate multiple assets, settle creditor claims, file multiple years of tax returns, deal with contentious beneficiaries, wind down a closely-held business, etc. In these cases, an executor can apply for fees in excess of the 2% statutory fee. A court is likely to approve an additional fee if none of the beneficiaries object.

Conclusion

It is common for lawyers to state that trustee fees and executor fees are roughly 1% and 2%, respectively. However, as described above, the services to be provided must be evaluated on a case-by-case basis, and the fee should be adjusted commensurately. About the only generalization that can be made is that the 1% and 2% thresholds are usually the “floor” when determining the reasonableness of the fee.

48 thoughts on “REASONABLE TRUSTEE FEES & EXECUTOR FEES

  1. Hi David,
    How’s your golf game!
    My mother passed away a few months ago. She had a living trust, of which I am the executor. So there is no probate. It’s been a lot of work, and I feel there should be some compensation.
    What are your thoughts?
    Thanks, Don

    • Don,

      You are indeed entitled to compensation. In general, administering a living trust is similar to administering a decedent’s probate estate. Oregon probate laws provide for a minimum executor fee of roughly 2% of the probate assets, without reduction for debts. And additional fees are allowed for extraordinary services. I think a 2% fee is reasonable for your administering your mother’s living trust.

      Dave

  2. Hi David ,My father just passed away and I am the trustee ,I know we dont have to go thru probate but do I need to have an attorney to oversee anything else ?Are there other legal reasons to have an estate attorney ?

    • Tawni,

      First of all, I am sorry you lost your father.

      In my experience, it is helpful for the trustee to hire an attorney to coach the trustee through the process of terminating the trust. The fees will only be a few hours (and light years less than a probate), but usually well worth the cost. I have seen too many trustee mistakes that have caused lingering issues to the family. For example, if your father had IRA accounts, the distribution options and tax elections need to be analyzed. Life insurance must be collected. His final tax returns must be filed and his bills must be paid. It may or may not be necessary to file estate tax returns. The trustee has to decide whether to distribute 100% of some items to certain beneficiaries and 100% of other items to other beneficiaries, or whether to distribute each asset in equal shares. The trustee needs to decide which assets to sell, and which to distribute in kind. The trustee needs to wrap up the trust in a manner that coordinates with the taxable year selected for the trust. None of these are rocket science, but I have been involved (fortunately after the fact) in cases in which the trustee made serious errors which resulted in acrimonious lawsuits.

      Dave

      • Dave, can you give examples of these serious errors please? I am co-executor and co-trustee with my brother on our father’s trust and estate (he was not able to put everything in his trust beforehand). However, I am handling the duties myself almost entirely because my brother lives out of town but also because of our differing levels of willingness and responsibility. Our father’s estate planning attorney has offered his services, but when we met about it I felt as if I was (hopefully!) reasonably on track with what is required, and would rather not pay 2% fees for administration that I can handle.
        However, we have a very contentious and deceitful beneficiary of the trust (our father’s girlfriend), and I am very concerned about misstepping or failing on an obligation and allowing her to complicate matters even further. We have already had several incidents requiring me to act in a fairly “legal” manner by restating our conversations, having third-party witnesses present, and putting our agreements in writing.
        Any thoughts would be greatly appreciated.
        R

        • Dear R:

          Where does your reference to a 2% attorney fee come from? Is this the automatic California attorney fee for representing an executor of a probate estate? You should check local law to determine if this automatic 2% fee applies to administration of revocable trusts. Even if the answer to these questions is “yes,” you can always make a take-it-or-leave-it offer to the attorney that you will hire him only on an hourly as needed basis and will not pay him a flat 2%. If he agrees, you can hire him as a coach when needed. If he doesn’t, you can offer this deal to other attorneys.

          A threshold observation is that your brother should resign or agree to take a smaller executor / trustee fee. This is moot if neither of you will claim a fee no matter who does more work. But having to get a second set of signatures from someone who is inaccessible is an unreasonable burden.

          I don’t know what state you live in, but there are various filings, notices, reports, etc. that must be provided to beneficiaries. If handled correctly, these procedural steps can be done in a manner that limits the beneficary’s ability to challenge your actions. For example, by giving proper notice, the beneficiary has a limited time period to present claims (usually four months), and claims presented after the deadline are automatically barred. It is probably wise to deal with the girlfriend exclusively in writing. If a beneficiary becomes an unreasonable pest, I sometimes tell them I will speak to their attorney but no longer take their calls. An attorney is usually much easier to deal with than an emotional or ill advised beneficiary. Also, the executor can use assets of the estate to pay attorney fees, whereas a beneficiary must usually advance personal funds. Thus, insisting on an attorney causes them to make an investment in their unreasonable position, which usually stops the problem.

          If you have specific examples, I can be more specific on the pitfalls and possible solutions.

          With best regards.

          Dave

  3. My mother passed away last week and left no US will. She had a trust and the beneficiaries are myself (trustee) and 3 other siblings. It says in the trust that the trustee is not entitled to compensation for services to the trust. But further down it says I am entitled to reimbursement for reasonable expenses incurred in my duties as trustee. My question is: What is reasonable? What expenses? Phone calls, stamps, my time? How much do I charge for my time? Boy, if you can help me with this question, I would be greatful!
    Norma

    • Norma,

      First of all, I can talk with you for a few minutes on the phone without charge if you have questions. My direct number is 503.417.2119.

      First of all, do you want a trustee fee? If your siblings consent, you can claim a fee. And you might be able to get court approval for a fee even if they don’t consent. If you hired a professional trustee, the fee would probably be $100+/hour or perhaps 1% or 2% of the trust. Thus, I think it is reasonable if you pay yourself $50 per hour. (But you must get consent from your siblings or court approval, since the trust does not authorize compensation.) The actual rate you claim is probably more of a political decision than a legal one. Would your siblings scream if you paid yourself $50?

      Reimbursements… You can’t “reimburse” yourself for your time. Instead, you will be compensated for your time only if you claim a trustee fee. All of your out of pocket expenses are reimbursable. I would charge the IRS rate for mileage. All long distance phone calls and postage are reimbursable. If you have to travel in order to visit property of the trust, the travel cost is reimbursable. Basically, any out of pocket cost that is related to handling your mother’s affairs is reimbursable.

      Dave

  4. Hi Dave,

    My husband’s cousin wants me to be the trustee of a trust he inherited from his recently passed mother because he doesn’t want to pay the fees. I like helping people, but my concern is that if a fee is so large that he doesn’t want to pay it, one reason could be that of course it’s not that large and he is cheap, but more importantly there is a lot of work involved. I can’t cut into my client hours so he doesn’t have to pay, but thought perhaps I would charge a smaller fee to help him out. Then of course I have to find out what the responsibilities are before I can even offer anything. We are in CA, do you have any educational links or advise on I should move towards making a decision?

    Thanks,
    Shannon

    • Shannon,

      I think the starting point is to estimate the amount of work involved. If the trust assets are cash and marketable securities, the amount of work may be modest. On the other hand, if the trustee must manage real estate, the work involved might be substantial.

      Next, your focus should move to the distribution standards in the trust agreement. Are you merely required to distribute all income? Or, are you required to exercise discretion and dole money out as needed for health, education, support and maintenance? The more discretion you have, the more decisions you will have to make, and the more time you will spend.

      How demanding is your husband’s cousin? If you offer him an allowance of $500 per month (in lieu of micro-managing his expenses), will he continually ask for more? Is he a responsible and reasonable kid?

      Finally, how long will the trust last? If he is now 22 and the trust terminates at 25, your responsibilities are relatively short. But not if the trust continues until he is 35.

      In general, a professional trustee will charge an annual fee equal to about 1% of the value of the trust assets at the start of the year. If the trust is a $1M stock portfolio, this might be a good deal for the trustee. And in this scenario, you might be content with a smaller fee. (Keep in mind that the trustee can hire an investment advisor, and charge his fees to the trust.)

      I would focus on the type of assets involved, the length of the trust, and the tendencies of your cousin to be demanding or unreasonable.

      With best regards.

      Dave

  5. My father died, and left his brother (my Uncle Bill) in charge of the trust. For the three years that Uncle Bill has paid my brother and me the dividends, Uncle Bill has paid himself 38-39% of the profits, then dividing the remainder to us two beneficiaries. Uncle Bill, therefore, pays himself more than either one of us two beneficiaries actually get. When I asked him how he is doing that, ethically, he told me. “Don’t worry. I’m not doing anything illegal.” I see he has a whole slew of initials after his name, one the trust records. The trust records are photocopies of brief investment final dividends he wrote in cursive, on lined paper, at the end of the year.

  6. I want to charge my mother’s trust for the health care I have given her for the last 6 years. My siblings left me with all her care and I feel I deserve payment for putting my life on hold for 6 years to find my self at an age which I have no ability to find a well paying job. On top of it all, I find my mother has taken a $30,000 deduction for my living expenses while I was caring for her. Please advise me if I can present a bill to the trust. Thank you in advance.

    • Stacy,

      The short answer is “No” unless you and your mother entered into a contract before you provided the services. Dave

  7. Hello,

    I am trying to get our wills in order after the birth of a child, and currently we have my father designated as executor of our wills and the trustee of testamentary trusts set up for our children. He will also be their guardian. I’m curious, though, how his basic living expenses will be paid if he should move to town to care for our children. He would likely have to take a significant income hit to move here, and I want him to be adequately compensated for his services. I also believe there will be enough money between life insurance and railroad disability benefits to care for our children’s basic needs should something happen to us. I have set aside $200K in life insurance for him in case this should happen, but over 15+ years, I’m not sure how far that will go. I don’t believe my father can commingle their funds and his, but can he take a fee as the trustee to help support his own needs, since the children will be cared for?

    Thanks!

    • Margaret,

      If the child’s inheritance is held in trust, the trustee will pay the guardian an amount equal to the extra expenses the guardian incurs by reason of raising the child. Some wills go further, and provide that the trustee can pay for improvements or additions to the home, for example. Normally, a trustee will ask the guardian for a monthly budget, and will automatically pay that amount each month to the guardian. If there are extra expenses, the trustee will usually approve additional distributions.

      If you want to compensate your father for moving expenses and his time, you might add to your will a specific gift of a fixed sum of money to the person who is appointed guardian of your children.

      Dave

  8. Dave,

    My father died in September of 2013, and as successor trustee to his revocable living trust (beneficiaries are myself and my 2 siblings) as well as trustee to a marital trust set up with his surviving spouse (not my mother) as beneficiary, I am interested in determining the maximum reasonable fee I can take as trustee in both cases.

    The marital trust contains his retirement account and is set up as a see-through (conduit) trust. I will be managing both the assets as well as administration of the trust. My relationship with his spouse has been moving towards a somewhat acrimonious state, and continues to represent a great deal of energy and stress for me.

    My father had established a fairly detailed estate plan, and had transferred the bulk of his assets through gifting while he was alive. The trust for my father’s children contains approximately 400K in liquid assets, the residual of which will be eventually distributed to the beneficiaries. The estate matters however have been, and continue to be fairly involved (settlement of debts, closing of accounts, preparing for multiple tax returns, etc.)

    Additionally, there is another trust for which I am also trustee, the beneficiaries of which are again myself and my siblings. It will see approximately 65K of income annually. And other than distributions to beneficiaries and tax matters, the administration of this trust is fairly straightforward.

    What would be the maximum reasonable fees for me in each of these 3 cases:

    • Revocable living trust (trust will be terminated eventually)
    • Marital trust (administration as well as investment management duties until the death of my father’s spouse)
    •Trust with 65K annual income to be distributed to beneficiaries and tax matters handled.

    Your advice is greatly appreciated!

    • Jonathan,

      Oregon law does not state what a reasonable or maximum trustee fee might be. One can look at court cases, but they are all over the ballpark and not especially relevent or helpful.

      If a bank administers a garden-variety trust, the annual fee is about 1% of the trust assets. Thus, for example, if a bank holds an $800,000 brokerage account for the benefit of a minor child or disabled individual, the fee might be $8,000/year. Investment management advice is normally included in the 1%, but tax returns and extraordinary items are not.

      Administering a trust after death is much more complicated. The decedent’s bills have to be paid, tax returns have to be filed, assets have to be identified and liquidated, and there are perhaps a dozen other details that must be handled during a time period of roughly one year. If the administration were done through a probate proceeding, the court appointed executor would receive 2% as a fee. (This is under Oregon law.) Thus, it is probably reasonable for a trustee under a revocable trust to charge the same percentage for the post-death administration work. So long as you can demonstrate that the work was time-consuming and reasonably challenging, I suspect a court would uphold a 2% fee for the first year following the decedent’s death.

      Dave

  9. Dave,

    My son has a special needs trust. He has recently started receiving payments, and I am named as the trustee. The amount of running, paperwork and accounting is already exhausting. His trust states I can charge for acting as his trustee, but I am unsure what to charge for and how much to charge.

    Any advice is appreciated!

    • Angel,

      Roughly 1% (of the value of the trust) per year is customary. An hourly rate based on perhaps $50/hr might also be reasonable.

      Dave

  10. Mr. Streicher,
    My wife was appointed executor of her aunt’s will. The aunt lived in Oregon. After seven months, a daughter (and California attorney) of one of the two beneficiaries declared that my wife was embezzling funds and demanded her resignation. She also claimed our trips to Oregon weren’t justifiably reimbursed after they were court approved. This daughter is the secondary executor. Even though there was no wrongdoing, my wife decided to resign to avoid the headaches of law suits, unnecessary stress, etc. we asked the estate about executor fees but he stated most likely not since the new executor would probably not approve them. Two questions: 1) shouldn’t my wife be entitled to some fee even if she resigns after seven months? 2) If the new executor refuses a claim by the original executor for fees, is there another way to claim a fee?

    • Tony,

      Your wife can always petition the court for a fee, and see what happens. But her resigation in response to embezzlement charges makes it unlikely that a court will approve a fee. And in some instances courts will hold an executor personally liable for misappropriated assets. Thus, I am not optimistic that your wife will every convince a court to approve a fee, and asking for one may make matters worse.

      Dave

  11. My mom died in feb of 2013 leaving my younger brother executor of her will .my older brother fought this in probate court after a long court battle my older brother won in court and now my older brothers now saying that the attorneys fee for him to fight the will I now have to pay 1/3. Of his attorney fees,I can’t find anything inthe oregon probate laws where it says I am responsible for his attorney fees.could you please advise me as to the truth of this matter

    Thank you
    Mary owens

    • Mary,

      It sounds like your older brother challenged the will and the court ruled it was invalid. If so, his attorney fees are customarily paid by the estate.

      Dave

  12. I have a problem 9 years after my husband’s death. His estate did not go through the probate process, since I thought that all assets were held jointly or with me as the beneficiary. With this one exception- he had 3 individual accounts benefitting our children for the Georgia College 529 Plan. For some reason, no beneficiary was named. I have contacted the plan several times and have finally gotten to the point that they need Letters Testamentary appointing me as the personal representative of his estate. He had a will. Is this something that can be done 10 years after his death and can I do this without an attorney, since the sum of the accounts is around $2,000. If I had to retain an attorney, what would this cost? Also, I live in Linn County now and he died in Multnomah. Do the filings have to take place at the county of death?

  13. Hi Dave,
    My Father-in- Law recently passed away and my husband is the Executor of his estate. What expenses are reimbursable to my husband while he is performing this duty? He is traveling to and from the city where his father lived and where his home is located. Should anyone else helping with the packing, moving and selling of his belongings and assets be reimbursed for their travels to the home as well?
    Thank you.

    • Elizabeth,

      A threshold inquiry is to identify potential complaining parties. If all of the interested parties are in agreement with reimbursing a given expense, then a legal judgment is not needed.

      All of your husband’s out-of-pocket travel expenses pertaining to administration of the estate should be reimbursed by the estate. If it is necessary to bring along another person to help with this work, his or her travel expenses should be reimbursed as well. In evaluating reasonableness, look at the alternatives. For example, if it would have cost $_____ to hire an estate sale outfit, temporary staffing agency, etc. to help with these tasks, would the cost be more or less than a helper’s travel costs? So long as the helper’s costs are not substantially more than the cost of hiring an independent person, a court will be inclined to concur with the executor’s judgment.

      Dave

  14. Hi Dave,

    I am the successor trustee of my deceased mothers RLT. At the time of her death, she lived in NW Washington and I live in SW Idaho. I know I can claim reasonable fees for my travel to Washington 2 times – for her death and the sale of her house. I have claimed mileage and expenses at the IRS rate for that part of Washington, and the salary I lost due to missing work. I am also claiming a 2% asset fee. I have done all work related to the trust; handled all death and funeral arrangements, banks, certificate of deposits, bills, insurance, utilities, sale of real estate, and anything else that could come up. Her estate was not large – less than 200k.
    I have two questions for you: Would I be better off charging a 50.00 hr fee, even though I have not kept track of time (but can get a very close estimate) and is the actual travel time itself generally allowed by the courts? The travel time for the trips is over 40 hours.
    I thank you for all your posts that have been greatly benefical.
    Sandi

    • Sandi,

      I would tend to charge an hourly rate plus out-of-pocket costs and see where you end up. A fee equal to a percentage of the trust does not work well for small estates The time involved in administering an estate is often not commensurate with the value of the estate, and I have seen very small estates (primarily with creditor issues) that are incredibly time-consuming. Travel time is a wild card. I suspect most courts allow an hourly trustee fee for travel time, so long as the hourly rate is modest, which $50 probably is. Your mother wanted you to serve as trustee even though she knew you lived in Idaho, so she presumably was comfortable with paying for the extra time it takes for you to visit. I have not seen a court allow a fee equal to lost salary (especially if a trustee fee is paid for the same lost hours), although perhaps it has happened.

      The bigger question is whether there are complaining parties. If all of the interested parties are in agreement with your fee, the analysis stops there.

      Dave

      • Dave,
        Thank you for your response. The time lost from work was 40 hours over the course of one week. There were 20 hours of destination travel for that week.
        Would it still be considered a “reasonable fee” to charge 3% of the assets instead of hourly since the time/work involved was extensive and the assets were low.
        Thanks again,
        Sandi

        • Sandi,

          Perhaps. Some states provide for an executor fee equal to a percentage of the probate estate. For example, Oregon’s percentage is 2%, and an executor can ask for more if extraordinary circumstances can be demonstrated. If the statutory fee is miniscule because the estate is very small, I think most courts would approve a larger percentage. Since you are administering a trust, the statutory executor fees are not controlling, although they are a meaningful benchmark. I am not sure what state you are in, or the statutory executor fee in your state. In all events, 3% is probably reasonable, since you have probably done the same amount of work as is necessary for most estates two or three times that size.

          Dave

  15. Dave,
    I recently became a trustee of an Oregon Trust. This trust is going to take quite a bit of time due to real estate sells one in Oregon and one out of state now going through “The Heggstad Petition” the out of state real estate, was not put into the Trust, but was meant to be… Anyway, My question is I am going to charge the 1% or 2% fee due to the Real Estates having to sell and I have to go through each home and sell the items and the monies go back into the Trust, “Several” Annuities, IRA, Stocks, etc. I’ve had to fill out all paperwork to disburse the invested funds, etc. to be put into the Trust to disburse to the beneficiaries. When and how do I determine the 1% / 2% fee? For example, some money is in the bank accounts, the invested funds are being sent to the Trust at different times, the Real Estate’s haven’t been sold, etc. So, the monies in the Trust can range from $80K up till the Real Estate is sold up to $1 million? So how is one to determine the value of the Trust to take the fee? Because it varies all the time.

    • Jan,

      As a threshold comment, the trustee fee is based on the value of all trust assets, not just the cash. Thus, if the trust holds cash of $100k and real estate of $800k, a 2% fee would be $18,000. It does not matter whether the real estate is sold.

      Since annuities and IRAs are not trust assets, they don’t figure into the trustee fee.

      I would not claim a trustee fee for items subject to a probate proceeding, unless you decline an executor fee in the probate proceeding. No double fees. Thus, if the out of state real estate must go through a probate proceeding, and you claim an executor fee for the probate, I would not also claim a trustee fee, and vice versa.

      I hope this is helpful.

      Dave

  16. I am trustee of my sister in laws trust her lawyer was named co trustee successor. Do’s she take a fee for co trustee.how do I get a answer.

    • Gladys,

      If you and the lawyer are co-trustees, the two of you would probably split the normal trustee fee. If the lawyer is merely a successor trustee to you (i.e., will serve only if you are unable to do so), the lawyer does not get a fee unless he or she actually serves.

      As a practical matter, I would ask the lawyer (tactfully) to step aside and decline to serve. You can hire the lawyer to coach you (if you want), but injecting the lawyer as a co-trustee is overkill and costly.

      Dave

  17. My mom and dad created a revocable trust in 2005.My step brother was listed as successor trustee,and my step nephew was listed as second trustee.I was only listed by name only,as a beneficiary.My dad passed away in 2006.In 2013,my mom restated the trust.She removed my nephews name all together,and stated that my step brother was only to receive a cash amount of 30,000.She named me first successor trustee.She also listed her best friend as second successor and my sister as third.My mom passed away a month ago.My brother was sent a release letter,to sign agreeing if so to have no further actions against the trust,to receive payment.No word back,so I think he want’s to contest.Does he have cause?.He was told of these changes by my mom over the phone ,but not in writing.Could this be a problem to?HELP

    • Mike,

      Are you currently serving as trustee? Your email says your mother named you “first successor trustee,” presumably to her. The reason I ask is that I cannot respond directly to individuals who are represented by an attorney. It is considered unethical. I am going to assume you are not represented by a lawyer. Please contact me immediately if I am wrong.

      It is common for a trustee to ask a beneficiary to sign a release before making a distribution. The reasoning is that the trustee wants to have funds to defend a challenge to the trust, and no funds would be available if the beneficiary sues after all of the funds are distributed. Since the step brother is only getting $30,000, this reasoning is less persuasive. It sounds like the trustee wants to bully (albeit legally) your step brother — sign the release or you don’t get your money. The fact that he has not signed the release does not mean he will file a challenge to the trust. He is probably angry at the leverage being directed at him. You can force the issue by giving the step brother four months notice of his right to contest the trust. It is hard to say whether that will make matters better or worse.

      If your mother restated the trust and then died shortly thereafter, there is some risk that her mental capacity was lacking or that she was under undue influence, both of which are grounds to challenge the trust. But I have insufficient facts to predict whether the step brother has grounds to challenge the trust.

      Dave

  18. Hello, my cousin, in active military, appointed me trustee of his estate for his 5 year old daughter and I was not aware until he passed away two days ago. The daughter is not able to access the trust until she is 30 years old. There is property in 3 states that I will have to manage, distribution of a monthly stipend that she receives, retirement accounts to monitor, etc. What is reasonable compensation for the work that will be involved to administer this trust?

    • Lynn,

      First of all, I am very sorry that you lost your cousin.

      A “floor” for the fee is about 1%, which is what a trustee would normally charge if the assets were liquid. If he has real estate in several states, a reasonable fee is probably more, depending on how much time you spend. I would hire a property manager to take care of the rentals, so that your time drain in minimized. I would probably charge $25 – $50 hour (depending on your background and skills) for time you spend on the rental properties.

      It is not necessary for you to get consent or approval from the daughter’s mother on the amount or timing of trustee fees. Having said that, she is the key person who might be a complaining party. Depending on your relationship, you may want to tell her that you will be claiming a fee, as disclosing this up front is probably better than giving her the impression that you will be working for free. I gather that your cousin did not appoint the mother as trustee because they are divorced or estranged?

      Dave

  19. Hello Dave,

    I am attorney-in-fact for my mother as well as co-trustee with her for her two trusts. I’ve been co-trustee since my father resigned 10 years ago due to illness and have spent lots of time learning all there is to know about the trusts, and managed all the changes needed when Dad passed away a couple of years ago. Basically I’ve handled everything since Dad’s death because Mom has no capacity for it. Although I recently appointed a successor trustee to myself in the event I die before Mom (not likely), now I mostly just pay the bills, keep the accounts, and pay the taxes. I’ve never been paid for any of this activity, though Mom and Dad were always reasonably generous with gifts to me.

    Now, however, I need some yearly earned income, only about $5k. So starting next year I’d like to be paid for my time. I estimate the trust assets to be between $500k and $800k. Is it proper to begin to pay myself 1% a year under these circumstances, even though I’ve not sought payment for 10 years? If so, will the Trust need to issue a W-2 to me at the end of each future year for my salary?

    A few years ago Mom signed a delegation of powers to me stating that I can act alone on behalf of both of us on trust matters. I also remain attorney-in-fact. Mom is now experiencing dementia so I am alone facing this now, but it would seem I have the authority to do this. Do you have some advice?

    • Max,

      You can pay yourself a trustee fee, although I would not (at least without talking to your siblings) pay yourself fees for prior years. A 1% fee per year is customary. The income would be reported on a 1099, not W-2.

      Dave

  20. I do not have anyone to be the executor of my will and estate, or manage my ashes after cremation. Can I hire an attorney to do this in full?

    • Sally,

      Yes you can. The only downside is that your estate will be paying attorney rates for some low tech tasks, such as paying bills. But it may be a good alternative for you.

      Dave

  21. My father was the trustee of my grandfathers estate, the trust includes a contest clause that states:
    “If any person, including a beneficiary, other then one of us, shall in any manner, directly or indirectly, attempt to contest or oppose the validity of this agreement, including any amendment’s thereto, or commences or prosecutes any legal proceeding to set this agreement aside, then in such event such person shall forfeit his or her share, cease to have any right or interest in the trust property, and shall be deemed to have predeceased both of us.”

    My fathers sibling sued him as trustee and he was removed as trustee and POA by the court without any notice or hearing. The Trust authorized my father to take a fee, a gift, and to deposit annuities into the trust accounts, and this is what the sibling sued him for. My question is this; since the trust(agreement) agreed that he could do all these things, and she is commencing a legal proceeding to stop those actions(or set the agreement aside), is she violating the contest clause? I think she is, but I would like your thoughts on this too.
    Even if the court thought she was justified in suing my father (which she definitely was not, my father acted well within the bounds of the trust), would the contest clause still disinherit her?

    • Kyle,

      As a very general comment, a no contest clause discourages challenges to the validity of the trust. For example, the no contest clause might be triggered if a plaintiff does not prevail in a suit contending that the grandfather either lacked capacity or signed the agreement as a result of undue influence. If either of these allegations were proven, the trust would be invalid.

      On the other hand, a no contest clause usually is not triggered by challenges to the manner in which the trustee administers the trust. For example, the no contest clause probably doesn’t apply if someone files suit because the trustee keeps sloppy records, takes an excessive fee, or fails to make the distributions called for in the trust agreement. The foregoing items do not concern the validity of the trust; rather, they concern how the trust is administered.

      Based on your brief summary of the trust proceedings, it sounds as if the sibling sued to cure alleged defects in administering the trust, which would normally not trigger a no contest clause.

      Dave

  22. Dave,
    I would like to make a comment on trustee’s fees. Here is one thing that I that I wish I would have known when we started to act as the trustee.
    It is a very good idea to have a hearing with a judge and ask the court what you may take as a fee. This way you protect yourself by getting the courts approval of whatever fee you then charge. In addition, if you are then challenged over the fee by the other beneficiaries you will have the courts prior approval of your fee to fall back on.
    Most trusts allow the court costs to be paid for by the trust when a trustee has questions concerning the administration of the trust, so it doesn’t cost you anything out of pocket. This can save you untold number of headaches. Just take your questions to the court.

    • Kyle,

      If the beneficiaries are contentious, court approval of the fee is an option. In general, I require beneficiaries to sign a release prior to the final distribution, and this extinguishes any claim that the fee is excessive. By getting releases, I avoid the delay and expense of a court proceeding. If a beneficiary won’t sign the release, I typically file a petition with the court requesting approval of the fee, and force the complaining beneficiary to hire an attorney to file an objection.

      Dave

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