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Why are the legal fees for a ‘revocable trust’ based on the estate asset value if a ‘living trust’ is designed to avoid probate?

Alexandria, VA |

I was told that “a living trust” avoids probate because title to the various assets is transferred to the trust. Yet according to the 2010 Florida statutes on estates and trusts, chpt 733.6171, attorneys fees are compensated (without court order) on (a percentage basis of) the inventory value of the probated estate assets. But if the ‘living trust’ avoids probate, how can attorney’s fees be charged on the total estate assets? In the probate filing (Broward County) of the deceased, the lawyer stated that “The nature and approximate value of the assets in this estate are (Tangible personal Property) $ 1,000. I'm a trustee of a Florida 'revocable trust' and I can't understand why the attorney handling the probate is entitled to a ‘fixed fee’ based on the estate’s assets.

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Attorney answers 3

Posted

I am not a Florida attorney, but I think that you are mixing up the statutes. When you are talking about "estate assets", you are talking about probate. As you know, most trusts allow people to avoid probate. In many cases, it is possible to administer a trust with little or no attorney involvement.
From what I understand, there IS no fee schedule for Trustee fees in Florida. Trustees are entitled to "reasonable compensation" for the services performed. This is not tied to a percentage of the assets of the trust, although the size of the trust will likely have a bearing on the services required.
The applicable statute appears to be:
736.0708 Compensation of trustee.—
(1) If the terms of a trust do not specify the trustee’s compensation, a trustee is entitled to compensation that is reasonable under the circumstances.
(2) If the terms of a trust specify the trustee’s compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if:
(a) The duties of the trustee are substantially different from those contemplated when the trust was created; or
(b) The compensation specified by the terms of the trust would be unreasonably low or high.
(3) If the trustee has rendered other services in connection with the administration of the trust, the trustee shall also be allowed reasonable compensation for the other services rendered in addition to reasonable compensation as trustee.

For more information on trustee fees, see here: http://www.florida-probate-lawyer.com/probate/trustees-fee/

James Frederick

*** LEGAL DISCLAIMER I am licensed to practice law in the State of Michigan and have offices in Wayne and Ingham Counties. My practice is focused in the areas of estate planning and probate administration. I am ethically required to state that the above answer does not create an attorney/client relationship. These responses should be considered general legal education and are intended to provide general information about the question asked. Frequently, the question does not include important facts that, if known, could significantly change the answer. Information provided on this site should not be used as a substitute for competent legal advice from a licensed attorney that practices in your state. The law changes frequently and varies from state to state. If I refer to your state's laws, you should not rely on what I say; I just did a quick Internet search and found something that looked relevant that I hoped you would find helpful. You should verify and confirm any information provided with an attorney licensed in your state.

Asker

Posted

Sorry, but my question was about attorney fees, not trustee fees.

James P. Frederick

James P. Frederick

Posted

Sorry I misunderstood. In MANY cases, it is not necessary to have an attorney handle trust administration. In cases where it is, my understanding is that this is a negotiated fee and not subject to any mandatory fee schedule. In cases where there IS a fee schedule, it is often the case that the percentage charge ends up working out in the favor of the trust. In most states, Florida included, (as far as I know), the fee is required to be reasonable, in light of the work performed. If it turns out that the fee is excessive, the beneficiaries can always object in court.

Posted

Your question is confusing. First-the fees can be negoiated if you are the PR. The statutes offer guidelines for reasonable fees. Most attorneys charge the statutory recommended fee if not negotiated. Assets in a trust are not part of the probate estate and not part of the probate fee.
Attorneys can be hired to administer the trust and the recommended fee for that is 2.25%.
That fee can also be negotiated.

The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.

Asker

Posted

Sorry about the confusion. You state that “Most attorneys charge the statutory recommended fee if not negotiated. Assets in a trust are not part of the probate estate and not part of the probate fee. ” So what would that fee would be based on? The $1000 he specified in the Tangible personal Property? In our case, the attorney was hired as resident agent. He submitted papers to Broward County FL probate division (notice to creditors, notice of trust, of administration, . . .) Yet he requested a huge fee from the estate administrator, the fee based on a percentage of the full assets of the revocable trust. That’s what seems ‘out-of-line.’The attorney was hired only to submit

Joseph Franklin Pippen Jr.

Joseph Franklin Pippen Jr.

Posted

Assets in a trust are not subject to probate. You can object to fee or hire an attorney to object to fee.

Posted

You ask why legal fees are based on assets. Sometimes they are and sometimes they aren't, depending on the agreement between the trustee or personal representative and the lawyer.

There is logic to charging legal fees based on estate size. First, larger estates are usually more complicated than smaller estates: More assets, more types of assets, more complex planning documents, more claimants trying to get their piece of the pie, more complex tax returns, etc. Second, hourly billing has never been a good idea because clients don't understand why we need to charge $200 to $500 per hour for our services (lots of overhead), it takes time to keep time records and turn them into invoices and clients never believe how long it takes to do things. Third, we must carry expensive malpractice policies and the larger the estate is, the more likely it is that a mistake can be made that would require the attorney to file a malpractice claim with his or her insurance carrier.

That being said, an estate with a single beneficiary and a million dollars in cash is much easier to administer than an estate half that size with multiple beneficiaries, a bunch of crappy real estate and a bunch of debt.

Mr. Huddleston is an Ohio-Certified Specialist in Estate Planning, Trust & Probate Law, with offices in Columbus and Dayton, serving client families throughout Ohio. He may be contacted directly by phone toll-free at 888.488.7878 or by email CLH@HUDDLAW.COM. Mr. Huddleston responds to Avvo questions as a public service to help educate and provide general guidance to questioners, but his responses are not legal advice and do not create an attorney-client relationship.

Asker

Posted

I’m sorry if I wasn’t clear, but the attorney was hired as resident agent. He submitted papers to Broward County FL probate division (notice to creditors, notice of trust, of administration, . . .) Yet he requested a huge fee from the estate administrator, who is managing the trust’s assets. The attorney told the administrator that he was entitled (by statute above) to a fee based on a percentage of the full assets of the revocable trust. That’s what seems ‘out-of-line.’

CL Huddleston III

CL Huddleston III

Posted

Many states--even some counties in Ohio--have "fee schedules" applicable to attorney services in estates. It has been this way forever, although the number of "fixed attorney fee" statutes and rules is diminishing. I suggest you re-post your question, focusing on the jurisdictions. Is it an Ohio case with ancillary jurisdiction, or is it a Florida-only probate? Are there two attorneys involved, one in Ohio and one in FL? And which counties? These things are so state (and even county) specific that your question needs to be equally specific.

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