This series of three posts examines fiduciary compensation in California. Fiduciaries in California are generally entitled to compensation for their efforts. (By “fiduciaries” we mean executors, conservators, guardians, and trustees.) However, the Probate Code contains myriad rules governing compensation, and in Northern California different counties (Alameda County and Contra Costa County, for example) have widely different local rules regarding compensation. Without proper guidance, non-professional fiduciaries risk violating these rules, and too often the fiduciary’s fees themselves become the cause of costly litigation. Accordingly, fiduciaries should know how and when they will be compensated before they begin serving.
Fiduciaries appointed by the court, such as executors of estates and conservators, can typically only pay themselves out of the funds under their control after the court approves their compensation. Court approval of compensation is obtained by filing a fee petition, with notice given to all the parties involved in the court proceeding. In some situations, the request for compensation must be supported by a factual showing of the number of hours worked, the compensation rate requested, the nature of the services performed, and an explanation of what benefit the fiduciary conferred on the estate. Some courts may also require itemized billing records as evidence in support of the requested compensation.
While trustees are often compensated from trust funds without court involvement, they may seek court approval of their compensation in certain situations, especially if they have clashed with trust beneficiaries during the course of administration.
Thus, even when not required, it is usually advisable to keep detailed records regarding time spent and tasks accomplished. In subsequent posts, we will consider the compensation of executors (administering a decedent’s estate) and trustees (administering a decedent’s trust).