Serving as a trustee in California comes with significant responsibilities, including managing trust assets, distributing funds to beneficiaries, and ensuring compliance with legal and fiduciary duties. Given the complexity of these tasks, trustees are often entitled to compensation for their time and efforts. However, understanding how to take a trustee fee in California requires knowledge of legal guidelines, trust terms, and best practices to avoid disputes.
Are Trustees Entitled to Compensation?
Yes, trustees are entitled to reasonable compensation for their services under California law. Unless the trust document specifies otherwise, trustees can claim a fee that reflects the level of work required to manage the trust properly.
Ways Trustee Fees Are Determined in California
There are several methods for calculating trustee compensation in California:
1. Trust Terms – The trust document may outline a specific formula or amount for trustee compensation. If such provisions exist, they generally control unless deemed unreasonable.
2. Agreement Among Beneficiaries and Trustees – If the trust is silent on compensation, the trustee and beneficiaries can negotiate and agree upon a reasonable fee.
3. Reasonable Compensation Standard – If no compensation is specified, California Probate Code §15681 allows trustees to take a "reasonable" fee based on various factors, including:
The size and complexity of the trust
The amount of time and effort involved
The trustee’s level of skill and expertise
Fees customarily charged by professionals for similar services
4. Court Approval – If disputes arise over trustee fees, the probate court may determine what constitutes reasonable compensation.
Steps to Take a Trustee Fee in California
If you are a trustee looking to receive compensation, follow these steps:
1. Review the Trust Document – Check whether the trust provides specific guidelines for trustee compensation.
2. Keep Detailed Records – Maintain accurate records of all trustee activities, including time spent managing the trust, financial transactions, and administrative duties.
3. Determine a Reasonable Fee – If the trust is silent on fees, calculate a fair amount based on the complexity of the trust and customary rates for similar work.
4. Notify Beneficiaries – Trustees should be transparent about their fees and provide an accounting to beneficiaries, helping to prevent conflicts or objections.
5. Seek Court Approval if Necessary – If there is a disagreement over fees, the trustee may petition the probate court for approval.
Avoiding Disputes Over Trustee Fees
To minimize disputes:
Communicate with beneficiaries early to explain the basis for trustee fees.
Stay within reasonable fee limits based on customary industry standards.
Consider professional guidance from a California estate attorney or accountant if handling a complex trust.
Conclusion
Taking a trustee fee in California requires understanding trust terms, legal standards, and best practices to ensure fairness and transparency. By following the correct procedures and maintaining open communication with beneficiaries, trustees can receive fair compensation while fulfilling their fiduciary duties effectively.
Contact the top-rated California trust and probate attorneys Moravec, Varga & Mooney today to schedule a telephonic consultation. Have questions, call (626) 460-1763 or email LV@MoravecsLaw.com.
Southern California Probate Lawyer Serving all counties in California, including Los Angeles, Riverside, San Bernardino, Sacramento, Santa Cruz & Beyond.
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