If you are called upon to be the trustee of your loved one’s trust after he or she passes away, you may also find that you are serving alongside a professional co-trustee. Professional trustees are typically banks or trust companies. Clearly, professional trustees are entitled to compensation for their services and will certainly be expecting it.
7 Tips for Evaluating Compensation for a Professional Trustee
What is a reasonable fee for a professional trustee to charge? The answer is not always black and white. The following are seven helpful tips:
- A reasonable fee for a professional trustee is determined in the same way that a reasonable fee for a non-professional trustee is assessed.
- One way to evaluate whether a professional trustee’s compensation is reasonable is to compare the fee schedules for various professional trustees in the area.
- In many cases, a professional trustee will charge at least 1% of the total worth of the trust as a fee.
- Often, the fee charged by a trustee for administering a small- to medium-sized trust will be similar to the fee charged by a personal representative of a similar sized estate during the probate administration process.
- Fees may vary depending on the level of skill of the trustee and the complexity of managing the trust.
- The terms of the trust may contain specific instructions with regard to trustee compensation. If so, these instructions must be followed.
- In some cases, under certain specific circumstances, a trustee can petition the court for a higher or lower fee than is called for under the trust instrument.
Having a professional co-trustee is often advantageous for the other trustee. Administering a trust is a lot of work, from preparing and filing tax returns to overseeing the investment of trust assets. A professional trustee can relieve some of this burden. However, you still have an obligation to ensure that trust assets are spent wisely, and that includes trustee compensation. For assistance during the trust administration process, we encourage you to contact us today at (888) 443-6590.
AttorneyThe Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307