California trustee fees can vary depending on various factors, including the size and complexity of the trust, the level of responsibility involved, and the amount of time and effort required to administer the trust. As a trustee, you have a legal obligation to act in the best interests of the beneficiaries, which includes ensuring that your compensation is reasonable and not excessive. In this article, we will explore what percentage a trustee should get paid in California.
What Is a Trustee Fee?
A trustee fee is compensation paid to a trustee for managing a trust. It is typically a percentage of the value of the assets in the trust, and it covers the trustee’s time, effort, and expertise in managing the trust.
What Is Reasonable Compensation for a Trustee in California?
In most cases, a trustee does not need to obtain a court order before paying himself — he simply pays himself for the work performed. Although some trusts state the amount of the trustee’s fee, most trust instruments provide that a trustee is entitled to “reasonable compensation.” What, then, is reasonable? While there are no strict rules, some Bay Area courts provide “guidelines.” For example, in Contra Costa County, the court’s guidelines allow a $40 per hour fee for non-professional trustees. San Francisco County, on the other hand, considers nine “applicable criteria” in determining fees, as explained in the case of Estate of Nazro, 15 Cal.App.3d 218 (1971).
In some cases what is “reasonable” is determined by an unscrupulous trustee. One Bay Area attorney is known to include a ten percent trustee fee in some of his trusts. Another trustee bought himself a new pickup truck, fully loaded, and claimed it was his trustee’s fee.
In California, private trustees are usually paid hourly rates between $25-$35, professional trustees charge an average hourly rate of $100+, while corporate trustees are often paid a percentage of the trust’s assets, which averages between 1%-2% per year.
Can a Trustee Be Denied Compensation?
Even if the trustee’s fee is plainly reasonable, it is sometimes prudent to seek court approval when the trustee has had a contentious relationship with the beneficiaries. The court’s order approving the compensation usually includes a finding that the fee was authorized and proper for the services performed. Once the beneficiaries have been notified of the order and the time to appeal expires, the fees are no longer open to challenge by the beneficiaries. One important exception is that any details concerning compensation and services that are not disclosed in the fee petition remain subject to challenge by the beneficiaries.
Consult California experienced legal team at Barr & Young Attorneys, to ensure that the trustee fees are fair and reasonable for both the trustee and the beneficiaries.