Trustees are critical to trust administration – and under California Probate Code 15681, are entitled to reasonable compensation for their efforts. However, these fees aren’t always paid out on an hourly basis. Depending on the type of trustee you’ve hired, and the pay arrangements specified in the trust itself, California trustee fees will differ.
Gain an understanding of how California trustee fees are calculated, not only for an idea of administration costs, but also for protection in case your trustee is charging exorbitant fees.
Determining California Trustee Fees
Private trustees are usually a family member, or close friend of the trust maker, who’s appointed as the trust’s administrator. Private trustees are rarely paid through a percentage fee structure – rather, they typically work on an hourly rate. These rates are usually between $25 and $35 per hour. On the other hand, some private trustees may choose to carry out their services pro bono, especially when handling their own family’s trust.
Otherwise known as private professional fiduciaries, professional trustees manage trusts and carry out other fiduciary tasks for a living. Since it’s their career, professional trustees are more easily trusted than private trustees who hold the power to self-deal. These individuals are most often paid an hourly rate of $100+, though they may also opt for a percentage of the trust’s assets, which is a common route for corporate trustees.
Rather than an individual who carries out trust administration, corporate trustees are banks or investment firms hired by beneficiaries to administer their trust. For the most part, corporate trustees are compensated through a percentage of the trust’s assets, typically between 1% and 2% per year. In other words, if a trust has $2 million in assets, a corporate trustee would receive annual fees between $20,000 and $40,000.
How Are Trustees Paid?
When a trustee is paid, they’re most commonly paid with assets out of the trust unless it’s a private trustee with an hourly rate. If their compensation is trust assets, they’re paid out on a quarterly basis, though the trust could instruct otherwise. Oftentimes, trustees are paid bi-annually (twice per year). On top of these fees, trustees are also entitled to reimbursement for any trust-related expenses that they pay for out of pocket. These can include travel expenses, insurance premiums, storage fees, and taxes, though the trustee is required to maintain accurate records of such expenses, such as receipts, if they seek reimbursement.
Are Your Trustee’s Fees Too High?
If you feel that your trustee is charging ridiculous fees for their administrative services, it could be time to contact an Orange County trust attorney. Under California Probate Code 17200, beneficiaries may submit petitions to probate court to review how reasonable their trustee’s fees are. Contest your trustee’s outlandish fees with the help of an experienced attorney, and gain insight into your best course of action with Gokal Law Group.
Gokal Law Group is your go-to law firm for help navigating trust litigation and estate administration. We flaunt a track record of successful verdicts and settlements, especially when confronted with highly combative estate disputes. When you consult us, you can rest easy knowing our attorneys are tried and tested in helping trustees administer their estates and trusts, as well as litigation if negligence or self-dealing is at play.
Each attorney has a specific practice area for which they are tried, tested, and battle-ready. Each has vast years of experience in their practice area, providing them the knowledge, skills, and vision to fight and win. Learn more about Gokal Law Group, and reach out to our offices for assistance in enforcing or invalidating changes to trusts.
The post How Are Annual California Trustee Fees Calculated? first appeared on Gokal Law.