What are reasonable trustee fees?
Here are some answers to frequently asked questions about trustee fees. If your particular question isn't answered, use the Free Case Review form below to submit your question to me personally. I check my email frequently, so you could get a free answer within minutes--any time of the day, any day of the week.
Generally speaking all trustees are entitled to payment from the trust for their trust administrators services. The amount of pay must be reasonable for the services performed. Some trusts specify the amount of trustee fees, but most do not. This doesn't change the fact that all trustees are entitled to reasonable fees, and only reasonable fees. If a trust provides for unreasonably high fees, beneficiaries should consider immediately asking the court to make an order for reasonable trustee fees right away because court ordered fees will likely only take effect after the order is entered, not before. As such, any fees taken pursuant to trust terms before an order is entered will likely remain with the trustee. Trustees do not need court approval to take their fees, although seeking such approval is a good idea especially if fees are not specified in the trust and they are concerned that some beneficiaries will be upset with how much they plan to take.
The California Probate Code is the primary authority on trustee fees. Here are two sections you must know about:
(a) Subject to subdivision (b), if the trust instrument provides for the trustee's compensation, the trustee is entitled to be compensated in accordance with the trust instrument.
(b) Upon proper showing, the court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in any of the following circumstances:
(1) Where the duties of the trustee are substantially different from those contemplated when the trust was created;
(2) Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high; and
(3) In extraordinary circumstances calling for equitable relief.
(c) An order fixing or allowing greater or lesser compensation under subdivision (b) applies only prospectively to actions taken in administration of the trust after the order is made.
15681. If the trust instrument does not specify the trustee's compensation, the trustee is entitled to reasonable compensation under the circumstances.
The amount of a trustee's fee depends on many factors. How much work was done; how much skill, knowledge and ability it took; how much time was spent; your level of efficiency; which judge makes the order; how much you saved or cost the trust; did you also manage real property, a business, or stocks; did you have problems communicating with beneficiaries; did you take extraordinary action to increase the trust value; this list can go on and on. What I am trying to say is that reasonable fees are based on the facts and circumstances of each case. I know, however, you're not satisfied with that answer so I'll go out on a limb and suggest that some laymen trustees earn from $25 to $50 an hour and some professional trustees earn as much as $250 an hour or 5% of the trust's value every year. If you have further questions or would like to retain us to assist with a trustee fee dispute call now. (714) 840-1998.