Trustee
If you function a trustee for a friend or member of the family, you recognize how much work the role can entail. There are meetings with lawyers, accountants and financial advisors, communications with beneficiaries, and possibly even physical assets like real estate to watch. That’s not even counting the constant headaches that include the role and the ever-looming possibility of liability if something goes fallacious.
Being a trustee is a lot work that you need to be paid for it. People are sometimes surprised once I tell them that they could be compensated for his or her role. That can often change the sport. How much you receives a commission, nevertheless, is a complete different matter and is determined by what’s within the trust and the laws that govern the trust. Trustees shouldn’t make up numbers. They must seek the advice of with an attorney who’s accustomed to trust administration. Hether Cahill, a Massachusetts estate litigator, says that “trustee fees are often litigated in court because they seem unreasonable on their face, leaving beneficiaries wondering if the fees are reasonable and justified.”
To make sure the administration runs easily and also you avoid pitfalls related to trustee fees, that you must know the next:
1. Professional trustees, resembling trust firms or banks with trust departments, are sometimes compensated based on a set fee schedule for the assets held within the trust. Lawyers and accountants who act as trustees may use a set fee schedule or bill based on an hourly rate they typically charge of their occupation. If you’re a person acting as trustee for a friend or member of the family, you won’t have a set fee schedule or usual hourly rate.
2. The trust deed may set out the quantity you possibly can charge or offer you guidance on find out how to calculate your fee. You should read the trust deed and seek the advice of a lawyer who will advise you on the fees chances are you’ll be charged. Remember that you would be able to pay your legal fees from the trust assets.
3. If the trust doesn’t disclose trustee fees, you will want to investigate the laws of the state that controls the trust to find out how trustee fees are set. For example, New York has a statutory fee schedule that determines what trustees can charge based on the assets held within the trust.
4. Some state laws regarding trustee fees are based on past cases decided in court. For example, trustee fees in Massachusetts are based on an inexpensive standard. Determining an inexpensive trustee fee in Massachusetts is often based on an hourly rate of actual time spent as a trustee. The amount charged per hour have to be reasonable, and the popular approach to recording the variety of hours spent is to maintain a contemporaneous record of your time. The best practice for determining your trustee fees in Massachusetts is to record the hours you spend as a trustee after which multiply those hours by an inexpensive hourly rate.
In Florida, if there isn’t any agreement on how a trustee shall be paid, they’re entitled to a fee that’s “reasonable under the circumstances.” Michael Wargon, an attorney specializing in Florida trust and estate matters, explains, “As you might expect, a variety of factors are typically considered, including the type of assets, the risk involved, the time spent, etc. Some trustees charge a percentage of the trust assets managed (1% to 2%). Some professionals (such as attorneys) may charge their usual hourly rate to perform trust administration tasks. Flat fees are less common, but may make sense for a trust that does not require ongoing attention.”
5. If you’re concerned concerning the amount of trustee fees you’re charging, you possibly can all the time seek approval from the court or the beneficiaries. This could mean asking the beneficiaries to approve the trustee fees or in search of court approval of the trustee fees.
Working as a trustee is a variety of work. You must be paid for it. Remember that payment on your work is income and you will need to report it in your annual tax return once you’re paid.
