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.
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.
