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Don’t forget to consider trustee fees when estate planning

| Aug 19, 2020 | Firm News

Using a trust as part of your estate plan is a wise option to consider. After all, trusts can provide more protection for assets, allow you to have more control over those assets and better protect your privacy. When creating a trust, you become the grantor, and you can name a trustee to manage the trust and handle its administration.

When considering a potential trustee, you will certainly want to choose someone responsible, trustworthy and knowledgeable. Some people choose to name friends or family members as trustees, but professional trustees are also an option. In either case, trustee fees will apply that allow the named individual or company to obtain compensation for their services.

How much should a trustee receive?

The amount of compensation a trustee receives can depend on various circumstances. For example, if you choose to use a professional trust company to manage your account, the company will likely have set fees that it charges. On the other hand, if you appoint a friend or family member as trustee, you could name the fee amount as part of the trust details. Two common options for trust fees include the following:

  • A percentage of the trust’s income: If your trust will likely generate a continual income during its existence or holds valuable assets, you could set a percentage amount for the trustee to receive annually.
  • A flat fee for services: Some grantors choose to use a flat fee for compensating their trustees. This fee could be a set amount paid as an annual salary if the trust needs continual attention and work or as an hourly fee if the trust does not need much management effort.

In the event that you do not choose the fee amount and manner of compensation for your trustee, California state law will likely determine how much your trustee earns.

Making your wishes known

Having the ability to manage these details is a valuable part of planning ahead. You certainly do not want the fee your trustee collects left up to chance. Fortunately, as you work with an experienced attorney to create your trust, you can go over your options for instructing the amount of compensation the trustee could receive. Having this information in a legally binding document can better ensure that no one will unjustly take advantage of the situation.