The short answer to your question is YES. This however can be impacted by language in the trust document. Most well designed trusts will provide for "reasonable" compensation which translates into what is the market value of such services. Professionals will normally charge a flat fee on a percentages of assets basis; this percentage can range from 1/2% to 1% or more, depending upon the size and complexity of the asset base. I have, however, seen trusts where it is specifically stated that a trustee who is also a beneficiary cannot received trustee compensation. The court can also impact this question if it is asked to do so. Hope that helps.
Mr. Greenwood's response is right on the mark. The answer is in the trust document(s), the method of compensation can be structured either way, and a court can intervene in serious issues of wasting assets throught over-compensation.
The above is general legal and business analysis. It is not "legal advise" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.
A trustee almost always has a right to charge for compensation. In Michigan, they are entitled to "reasonable compensation," but there is nothing in the statute about what is "reasonable."
What is reasonable, of course, varies from one situation to the next. An trustee that has relatively little to do in terms of administration should not be allowed to charge the same amount as the trustee for a large, complicated situation.
It is also true that there may be a financial disincentive for the trustee to charge. Anything charged by the trustee as compensation is taxable as ordinary income to the trustee. Anything received by the trustee as the beneficiary is likely tax free. So it is often not advantageous for the trustee to charge for services, (particularly in the the case where there is only 2 beneficiaries, for example), because the trustee is converting money that they would receive tax free into taxable compensation. They are also paying for that compensation out of their own pocket, because the trustee would otherwise be entitled to a portion of that money, anyway.
Whether it makes sense to charge compensation and how much to charge are good questions for the attorney of the trustee, if there is one. If there is not one, then there should be. Acting as trustee is not a simple thing and there is potential personal liability if administration is not done properly.
*** 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.
The other attorneys answered it correctly:
1. First and foremost, the trust document dictates whether or not they can charge.
2. Fee must be reasonable.
3. It must be in the best interest of the trust beneficiaries.
I would add that it becomes even more confusing when an attorney is named as trustee. Can the Attorney charge to be the Trustee and the Trustee's counsel? In most jurisdictions the answer is only if the total fee is reasonable in light of the dual roles. Usually a double fee is not reasonable.
Disclaimer: The foregoing answer does not constitute legal advice, is provided for informational and educational purposes only for persons interested in the subject matter. Each situation is fact specific and may be subject to state specific laws. Without a comprehensive consultation and review of all the facts and documents at issue it is impossible to evaluate a legal problem fully. This answer does not create an attorney-client relationship. No Tax Advice - Circular 230 Disclaimer - Any information in this comment is not intended to constitute a comprehensive and complete tax consideration analysis, and may not be used by the taxpayer to eliminate or reduce penalties by the IRS or any other governmental agency, nor for the purpose of promoting, marketing or making recommendations to other persons on any tax-related matters.
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