When your loved one appoints you to serve as successor trustee, the role comes with significant responsibilities. You will need to prepare and file tax returns, provide notices to the beneficiaries and other interested parties, and oversee the investment of trust assets. The good news is that you are entitled to reasonable compensation for your trustee duties. Reasonable compensation for your trustee duties is not a defined term under the law. If the trust itself dictates how much compensation you should receive, generally, that is the amount that you will be paid. There are limited circumstances, however, where you may be entitled to more.
3 Situations Where You May Be Entitled to Increased Compensation for your Trustee Duties
If any of the below situations applies to the trust you are administering, you may petition the court for a higher fee. The court may allow your compensation for your trustee duties to be higher when the following occur:
- When the duties of the trustee are substantially different from those contemplated when the trust was created. For example, the trust may have had fewer assets when it was set up. If it has more than it did when the administration began, you are likely entitled to an increased compensation. Your loved one may have created the trust twenty years before passing away, when your job as successor trustee takes effect. An investment account held by the trust could have grown substantially in that time. As a result, the size of the job with regard to trust administration has now increased as well.
- When the compensation for your trustee duties outlined in the terms of the trust instrument are inequitable or unreasonably high or low. For example, the person who created the trust may have called for a maximum compensation of $500 per year, while the going rate for similar work is exponentially higher than that amount. In these cases, the court may allow you to petition for a higher fee regardless of what the trust instrument says about compensation.
- When extraordinary circumstances call for equitable relief. For example, the tax laws may have changed significantly. They might have changed from when the trust was created to the time when your work as trustee begins. As a result, there may be substantially more work required with regard to trust administration. In these cases, the court may be willing to grant equitable relief and grant higher compensation for your trustee duties than is called for under the terms of the trust.
We are Here for You:
To obtain an increased amount of compensation for your trustee duties, it is important to take the proper legal steps. For assistance with this process, we encourage you to contact us today at (888) 443-6590. You may also contact us through our quick and easy online form today. It would be our pleasure to further assist you.
- Using a Professional Trustee During Trust Administration
- Determining Reasonable Compensation for Professional Trustees
- Obligations of Co-Trustees
AttorneyThe Grossman Law Firm, APC · 525 B Street, Suite 1500, San Diego, CA 92101 · (951) 523-8307