When the time comes to divide a Trust, what would be fair and adequate compensation for a trustee for performing their duties?

I have been managing a Trust for 11 years. It’s current value is $1.2 million. The earnings of the Trust go to my stepmother, who is 92 years old. When she passes on, the Trust will be divided. My duties are to handle taxes, pay monthly interest and dividends to my step-mother, and provide detail of interest/payments every month.

Asked on August 12, 2013 under Estate Planning, California

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 7 years ago | Contributor

Generally speaking, the Trust instrument itself sometimes states what the compensation should be for the Trustee.  That can be altered under the law and by the Court should the duties of the Trustee had been more complicated that originally anticipated upon its creation.  If the trust does not state the amount of the compensation then California law states that it should be "reasonable."  I will copy and paste a copy of the law here for you to review.  This is only a few of the statutes involved. Good luck.

PROBATE CODE 
SECTION 15680-15688 

 

15680.  (a) Subject to subdivision (b), and except as provided inSection 15688, if the trust instrument provides for the trustee'scompensation, the trustee is entitled to be compensated in accordancewith the trust instrument.   (b) Upon proper showing, the court may fix or allow greater orlesser compensation than could be allowed under the terms of thetrust in any of the following circumstances:   (1) Where the duties of the trustee are substantially differentfrom those contemplated when the trust was created.   (2) Where the compensation in accordance with the terms of thetrust would be inequitable or unreasonably low or high.   (3) In extraordinary circumstances calling for equitable relief.   (c) An order fixing or allowing greater or lesser compensationunder subdivision (b) applies only prospectively to actions taken inadministration of the trust after the order is made.15681.  If the trust instrument does not specify the trustee'scompensation, the trustee is entitled to reasonable compensationunder the circumstances.

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