As a trustee, one of the questions you may have is about your compensation for fulfilling your duties. Whether you’re a surviving spouse, a sole beneficiary, or someone entrusted with administering a trust, understanding the rules and considerations surrounding trustee compensation is essential. In California, several factors come into play when determining compensation, ensuring fairness and transparency in the process.
Compensation as Stipulated in the Trust Instrument
Trustees are entitled to compensation as specified in the trust instrument. However, if the trust document states that there shall be no compensation for the trustee, the court lacks the authority to set compensation. Therefore, it’s crucial to review the trust instrument thoroughly to understand the terms regarding compensation.
Determining Reasonable Compensation
In cases where the trust instrument doesn’t specify compensation, the trustee’s fee should be reasonable under the circumstances. California Rules of Court outline various criteria the court may consider in determining compensation, including trust income, trustee expertise, time required, and local customs. For example, some counties, like Contra Costa County, have local rules setting compensation guidelines for non-professional trustees.
Extraordinary Compensation
If the trustee intends to charge additional fees for extraordinary services, such as complex legal matters or significant time commitments, proper notice must be given to beneficiaries and other relevant parties. The Probate Code mandates a 60-day advance notice period to ensure transparency and fairness in the fee assessment process.
Trustee’s Expenses
Trustees have the authority to pay reasonable compensation to employees, agents, and other expenses incurred during trust administration. This includes hiring professionals like attorneys to provide legal advice and assistance. However, it’s essential to ensure that expenses incurred are directly related to trust administration and not for tasks typically performed by the trustee alone.
Multiple Trustees
In cases where multiple trustees are involved, the compensation is determined either by the trust instrument or based on the services provided by each trustee. It’s crucial to establish clear agreements regarding fee allocation, especially when serving alongside a corporate trustee.
Fees for Attorney Trustees
Attorneys acting as trustees may receive compensation either as a trustee or as an attorney for the trust, but not both simultaneously. Full disclosure and proper notice must be provided to all parties involved, and any objections raised must be addressed through legal channels. Additionally, there are restrictions on legal fees for certain individuals or entities related to the trustee, ensuring transparency and fairness in the compensation process.
Conclusion
Navigating trustee compensation requires a thorough understanding of the legal framework and considerations involved. Whether you’re a trustee seeking fair compensation or a beneficiary ensuring transparency in trust administration, it’s essential to work with experienced legal professionals to protect your rights and interests. At OC Trial Group, APC, we specialize in trust law and are here to provide guidance and support throughout the process. Contact us today to learn more about your rights and responsibilities as a trustee in California.