Being a trustee for a friend or family member is a demanding role that involves meetings with professionals, communications with beneficiaries, and overseeing assets. While it can be a challenging responsibility, trustees can be compensated for their work. However, determining how much to charge can be complicated and depends on the trust document and state laws. Trustees should consult with an attorney to ensure their fees are appropriate and justified. Hether Cahill, a probate litigator in Massachusetts, notes that trustee fees are often litigated due to potential questions of reasonableness.
Professional fiduciaries such as trust companies or banks with trust departments typically have set fee schedules, while individual trustees may not. The trust document may outline how fees should be calculated or paid, and legal fees can be covered by the trust assets. In states like New York, trustee fees are determined based on a statutory fee schedule, while in Massachusetts, fees are based on a reasonable standard. Keeping accurate records of time spent as a trustee is crucial in determining reasonable fees.
In Florida, trustees are entitled to compensation that is deemed reasonable under the circumstances, taking into account factors such as the nature of assets, risk assumed, and time involved. Different methods of charging fees, such as a percentage of assets under management or hourly rates, are common. Seeking approval from beneficiaries or the court for trustee fees is an option if concerns arise about the amount being charged. It’s also important for trustees to remember that payment for their work is considered income and must be reported on yearly tax returns.
Overall, serving as a trustee is a significant responsibility that deserves compensation. Trustees should carefully review the trust document, consult with legal professionals, and adhere to state laws when determining their fees. By keeping accurate records of time spent and seeking approval when needed, trustees can ensure smooth trust administration and avoid potential disputes over fees. Ultimately, trustees should be fairly compensated for their time and effort while also fulfilling their fiduciary duties to beneficiaries.
