Here’s a podcast that could get him started: The Duties of Trustees with Attorney Joseph Imbriani Three years is a long time to administer an estate and costs always increase when estate take longer to administer. At an annual fee of 75 basis points, this suggests that a trust really needs to have more than around $533,000 in it to “earn out” that $4,000 minimum fee. But I’d check with a New Hampshire attorney to be sure. Trusts can be classified as public or private, and as revocable or irrevocable. Your son-in-law can either resign or serve as trustee and receive a reasonable fee. Note that if an estate trustee retains any professionals, such as an accountant, the professional fees should be deducted from the estate trustee compensation. For the most part, these fees seem not to include investment management, which would then be an additional cost. The cost may be relatively low, just what it costs for the attorney’s time to review the trust and advise you on whether she would recommend any changes. I understand that Harry may not be able to respond to my question at all, but if it does he will do so in a general matter on which I cannot rely as legal advice. You can choose to base it on a small percentage of the market value of the assets plus a percentage of the income earned by the trust. Response: There’s no hard and fast rule, but often trustee fees are paid semiannually.For instance, if the fee is 1 percent of the assets in the trust, it might be paid half on January 1st based on the December 31st value and half on July 1st based on the June 30th value. And do I have to get the fee approved by the courts in NH where it is an irrevocable trust? She needed more oversight such that it was almost that some one needed to be living with her and it took a year and a half with a weeklong visit for me to know that. While I was willing to do what needed to be done to take care of her trust to ensure she had money until she reached the age of 80, I never considered taking a fee for doing so. The IRS does not consider non-professional fees to be earned income. https://ttlc.intuit.com/questions/4118674-received-1099-misc-for-fiduciary-fees-turbotax-home-busine... Premier investment & rental property taxes. The other choice is to name a family member to serve as trustee, such as a sibling of the trust beneficiary or some other trusted family member. My concern as I come to after all, is to protect myself from charges of mishandling money. I’m hesitant to ask a friend to administer my trust. It doesn’t have to be an actual office. While percentage fees are standard, this can be problematic for smaller trusts. Executive Summary • Many people are asked to serve as a trustee by a friend, relative or business acquaintance. Where the trust property is simple, such as a bank account at the Bank of Stockton, the family home in Elk Grove, and an automobile, it is unlikely the trust estate would generate income justifying higher trustee compensation. A trustee’s fee is the amount the trust pays to compensate the trustee for his or her time. Mike, The beneficiaries, on the other hand, might argue that you don’t need to travel so much. That’s an important issue and perhaps a question to ask any potential professional trustee: What are the total costs, including investment costs? On the other hand, if you hired someone else, you would still have to supervise and communicate with that person. Depending on where you live, this may be a bank trust department, a trust company, or a law firm. There is no hard and fast rule on an appropriate executor’s fee. The figure that comes to mind for me given everything you’ve said is $10,000. Or you’re doing your work as trustee from home, so you should be able to deduct a proportion of your house costs against your income as trustee? I have place her trust money with a financial advisor and it has done well. In that case, yes it’s possible, but the IRS rules are very strict. Question to be answered: Do the fees stem from a personal relationship with the decedent that is not based on particular expertise or special qualities? Get the response in writing. No, family member trustees usually don’t take fees. If the corporate trustee actually manages the assets, the fee can range anywhere from 30 basis points to 100 basis points depending on the size of the trust, the expertise required, and the risk involved. My wife’s family trust said no fees Fees are less standard when a non-professional acts as trustee, either on her own or in conjunction with a professional trustee. These are different than lay trustee fees. I want to address professional trustee’s fees. Typical Trustee Fees. I have been managing my sister’s trust with POA for 2years now and for some reason only now looking at charging some kind of fee because other siblings are encouraging it. The trustee is entitled to a “reasonable” fee unless it agreed not to take one. It is very important to read and understand the will or trust so that you will know who the beneficiaries are, what they are to receive and when, and who, if any, your co-fiduciaries are. The IRS makes one exception to the general requirement that nonprofessional fiduciaries report fees on IRS Form 1040, line 21. I don’t know what the financial advisor is charging, but I’d limit your combined fees to 1.5%. Determine whether the grantor has made any mention of estate trustee fees. In the meantime, they would provide professional investment assistance and could pay your bills whether all the time or if you were traveling for fell ill. Jill, My dad died a couple of years ago. My mother has passed away. Can a Trustee Use Trust Funds to Defend Herself? What can i do about this? On the other hand, fees for individual trustees are usually negotiated and agreed upon. And of course to enhance the potential proceeds for her children. I am not a professional trustee and have only one trust from which a receive an annual commission. Dealing with revocable living trust. Can he immediately resign as a trustee? If they do object, try to work it out. You may opt to calculate the number of hours you spend and bill by the hour. Is the compensation taxable? The story you describe is very typical of elder care. For a trust holding $200,000, for instance, this would entail an extra charge of $1,000 a year. Anything else you take on is really a separate matter. You probably can’t press criminal charges, but based on what you say you should be able to have the trustee removed and replaced by someone who follows out the obligations of trustee. The fact that nothing has been distributed in three years, including the stock which shouldn’t be complicated, seems like evidence that your brother is not working efficiently and should receive a lesser rather than a greater fee. If the trustee is not following the trust,and is profiting from the trust by living on land that’s part of the trust and not paying into the trust while living on the land. Third, you could begin charging a fee. Trustees have a Fiduciary Duty of Loyalty to the Beneficiaries - not to themselves. I am taking on more duties now than when I agreed to handle the trust and I have my own business to run. You must have a home office dedicated primarily to this purpose and then you can measure the square footage of the office as a percentage of the entire square footage of the house. My brother is its administering my mothers estate which includes 500k in real estate and 400 in stocks left in trust. The compensation rate for a trustee in which the trust did not specify how much the trustee would be compensated is based on Cal. Of course, professional trustees charge fees, and many banks and trust companies have a minimum trust balance requirement in order to serve as trustee. It needed it badly. I think the best approach would be to determine what the most cost effective way to carry out your duties as trustee would be, whether that’s by you traveling and being paid for your time or you hiring someone else to do whatever brings you to Washington. Our trustee should receive a fee for his or her services in accord with the hourly rate that a private professional fiduciary would charge.” Professional fiduciaries, licensed by California’s Professional Fiduciaries Bureau , charge in the neighborhood of $100 to $150 per hour. Many states have variants; California codified such trustees in 2008. My in-law was notified by his grandfather also his legal father that he would be the trustee. If I want a specific legal response and guidance, I will seek independent legal counsel from an attorney duly licensed in my state. An exception to this might be where the Trust owns real property that stays within the … Why not hire someone local to do what you’re traveling to do, especially in this time when everyone is doing more remotely? The court will often frown on paying a non professional a percentage of the estate as a fee and often reserves that for professional fiduciaries. non-standard tax return preparation, real estate and closely-held business interests, estate or trust estate settlement and legal matters will be charged at the trustee’s published fee schedules and professional time rates plus out-of-pocket expenses. It doesn’t sound like you need to get get court approval since there’s not court involved. If it’s left to you to come up with a "reasonable" fee, here are a couple of ways you might go about the task: 1. August 7, 2018 by Pete Finch. For instance, a trust might provide that all of the income be paid to a surviving spouse but that the principal be preserved to pass on to the children upon the spouse’s death. Because you do not have a business or trade as a non-professional, you do not have to pay self employment taxes but it also means your income is not earned income. Her son and friend helped tremendously to clear out the place and expose some major work to be done. They have worked out so far, but might not in a falling market. Yes, any compensation that an estate trustee accepts is treated as income and so is taxable. The IRS summarizes its position on fees received by nonprofessional executors or personal representatives in, also see