Trustees manage trusts and ensure they distribute assets according to the terms set by the trust creator. One common question that arises during trust administration is whether a trustee can charge fees for their services. While the answer depends on the trust’s terms, California law offers clear guidelines to help define what is allowed in these situations.
Trustee compensation in California
California law allows trustees to charge compensation for their services. The state provides guidelines based on the complexity and value of the trust. Trustees can charge fees for performing duties such as managing investments, paying bills, and distributing assets. The trust document may specify the fees, or the law may dictate a fee based on the trust’s value.
If the trust document does not address fees, California law permits trustees to charge a percentage of the trust’s value. This fee typically decreases as the value of the trust increases. Trustees may also receive reimbursement for reasonable expenses related to trust administration, such as legal or accounting costs, or asset management services. It’s important for trustees to keep detailed records of these expenses to maintain transparency throughout the process.
The trustee’s duty to be fair
Although trustees can charge fees, they must act in the best interest of the beneficiaries. Fees must be reasonable and reflect the work required. If beneficiaries believe the fees are excessive, they can challenge them in court. California courts have the authority to reduce trustee fees if they are found to be unreasonable. Trustees should aim to be transparent and communicate openly with beneficiaries to prevent any disputes from arising over fee amounts.
When to review trustee fees
If you are a beneficiary or trustee, reviewing the trust’s terms and the work involved before determining fees can help prevent misunderstandings. This review ensures you understand what is expected and what the trust allows for compensation. Documenting all fees and expenses related to trust administration ensures transparency and accountability throughout the process. Keeping these records is not only helpful for trust management but can also serve as protection in case of future disputes.
Trustee compensation requires careful handling. Open communication and transparency can keep the process smooth and reduce conflict, benefiting both the trustee and the beneficiaries involved.