I am a Co-Trustee for the estate of my father who is the second decedent of a Living Trust he created with my step mother. The Trust specifies that Gary and I are to be paid a reasonable fee for the work we perform. We are both professionals. The Trust also specifies that personal and real property are to be split 16 ways. Yes Dad and Bev have that many adult children. Fortunately, the 50 grand children and 68 great grandchildren are not included. The attorney who drafted the Trust would only say between $200 and $25 per hour (but closer to $25). HELP!
Unfortunately, this is not an easy question to answer. There is no real guidance in the statute. It simply calls for "reasonable compensation," and "reasonable" is always subjective and a moving target. I have seen judges use an opportunity cost theory. In other words, you are taking time away from your other employment to do this, so you can charge what you would normally charge to do what you do. Essentially, a doctor can charge more than someone who works for minimum wage.
Some other things to keep in mind. You are not required to charge. Even though you are entitled to do so, there is nothing that mandates you charging a fee for your services. Whatever you DO charge is also taxable income to you. What you receive as an inheritance is probably tax free. Also, if you DO charge, then keep VERY careful and meticulous records of what you do, when you did it, and how long it took. Plan on your fees being challenged by the beneficiaries and document accordingly. A judge will be far more likely to approve your fee, if you can clearly demonstrate the work that was done.
As a final thought...you can charge as much as you want, as long as no one challenges your fee. In other words, a trust is only subject to probate jurisdiction, if a beneficiary petitions the court. Doing so will cost the beneficiary time and money. Since there are so many beneficiaries involved in your matter, the share that any individual beneficiary would be paying for your fee is pretty small. That makes it less likely anyone will complain. If your fee is so large that someone challenges it, then you will need to be prepared to defend your fee. That may mean retaining legal counsel to do so. If you do NOT have legal counsel, you can impress upon the beneficiaries that you saved them all of that money by not hiring a lawyer.
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I would only add tto Mr. Frederick's comments that the compensation depends upon what you are doing. For example, if you are cleaning out closets, a $100 per hour fee would be unacceptable, because you could hire a cleaning crew to do that for much less. If you are negotiating sale of real estate, on the other hand, the time and skills require for doing that justify a rate of $100 and maybe more. Seek a legal leader here to usher the Cotrustess from the begininng. WHen the accounting is due a year from now, you want to have all assembled in an orderly and acceptable fashion.
This commentary does not result in any attorney/client relationship nor constitute legal advice as to a particular fact situation or status of a reader. Consult and retain legal counsel in the State of Michigan for pursuit of such a relationship.
Send a certified letter to all the beneficiaries. Tell them you plan to do x, y, and z and that you will be paid so much per hour for doing each. Tell them that you will be hiring an accountant and an attorney to assist you and that their rates are ____ and ____. Tell them that if they have any objection to let you know within 21 days. If no objections, then go ahead. Being a trustee for a trust with this many beneficiaries is really a thankless job. Good Luck!
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