What is a "reasonable hourly fee" for a trustee of an irrevocable trust in Imperial County, CA

Asked 6 months ago - El Centro, CA

The trust dollars are managed by an investment firm. The trustee makes trips to courthouse to file documents, etc. Trustee works for a law firm, so gets gratuitous legal counsel on issues for the trust. Trustee is not a "professional trustee", but a family member.

Attorney answers (3)

  1. Michael Raymond Daymude

    Pro

    Contributor Level 20

    3

    Lawyers agree

    Answered . What do the terms of trust say? They govern. If they say reasonable, the fees are typically based on a percentage of the trust corpus under management: for example, 1% per year may be appropriate. The trustee and beneficiaries should work out reasonable compensation for the trustee so litigation is not necessary.

    The trustee is entitled to employ attorneys to represent the trustee in managing the affairs of the trust. If those services are free of charge, they should be free to the trust.

    I doubt a court would approve trustee fees for "filing documents" with the court. That can be accomplished by mail or attorney service. If the trustee is also a beneficiary, many times the trustee will waive fees because they are taxable.

    SINCE 1974. My answers are for general information only. They are not legal advice. Answers assume California law.... more
  2. John Christopher Martin

    Contributor Level 3

    3

    Lawyers agree

    Answered . In the absence of a specific provision in the trust, compensation must be "reasonable". There is no bright line test for defining reasonable compensation. It is a facts and circumstances test that looks at the particular skills of the trustee, the success (or failure) of the Trust administration, the type of asset being administered, and the difficulty of administration. There are also circumstances where "extraordinary compensation" may be paid, for instance if the trustee is in litigation or needs to make special tax filings.

    Sometimes, the trustee will charge a percentage of the total assets, but this is not always proper. For example, when there are rental properties in the trust, it may be more appropriate to charge a percentage of gross rents, similar to a property manager. In other cases, it may be proper to charge an hourly fee, for instance where the trustee is performing minimal work in maintaining a residence. In your case, it appears that the management of assets is delegated to a third party manager, and that the trustee makes trips to the courthouse. Unfortunately, these are not enough facts to determine an appropriate fee.

    While it appears at first glance that the work of the Trustee is minimal, it may be that the court filings are quite involved, or that there are other assets in the trust requiring oversight by the Trustee. Speak to a trusts and estates lawyer in your area who can advise you on a reasonable fee after reviewing all of the facts.

  3. Michael Leo Potter

    Contributor Level 19

    1

    Lawyer agrees

    Answered . Honestly it depends on the trust document itself. What does it SAY about compensation? I normally discuss this with clients when drafting the document. A rule of thumb might be not an hourly rate but a percentage of value such as 'One Percent of assets under management.' Discuss with counsel. Best of Luck.

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