If you currently serve as a trustee, you know how time-consuming the administration process can be. You must maintain strict documentation regarding trust transactions and, in some cases, appear as the estate’s representative in court.
However, if you are the beneficiary of an estate, you may be questioning your own trustee’s fees. After all, we have often heard of cases where trustees charge exorbitant fees and abuse their power.
By learning how to identify any “red flags” that come with trustee expenses, you can help to prevent a trustee from overcharging and taking advantage of the situation.
A breakdown of trustee compensation in California
The trust document itself typically establishes trustee fees. However, these fees can be challenged before a judge if the trustee or beneficiaries believe that the fees are unreasonable such as if they are too high or too low. When this happens, a judge will determine a trustee’s fees by deciding what they believe would be a reasonable amount in accordance with statute and case law.
The reasonability of fees is based on factors such as:
A trust’s gross income
The extent to which a trustee fulfilled their duties
Unusual characteristics of a trustee involving skills and experiences
The trustee’s responsibilities
The time a trustee devotes to administering the trust
In contrast, corporate trustees, banks and other financial institutions often have set fee schedules for trust administration and courts are not involved.
Keep in mind that friends and family members who serve as trustees may waive their fees altogether.
There is no “one-size-fits-all” answer regarding how much a trustee will be paid for administering the estate. If you have concerns regarding trustee fees, an estate planning attorney can evaluate the trust document and provide you with guidance.