When implementing an estate plan in California, it is essential to ensure that you receive the proper compensation for the amount of time and work you are putting in. The probate court will look through the amount you charge to see if it is reasonable, especially if the beneficiaries object. Take a look at how you can set a reasonable fee.
Trustee compensation in California
Given that trustees take responsibility for all the assets that the deceased left behind for their beneficiaries as well as act in the best interest of their wishes, it is only fitting that they be compensated fairly. This is because besides managing the trust estate, they also attend to taxes, investment decisions and distribute assets as stipulated by the grantor.
Rule 7.776 of the California Rules of Court says that the grantor should consider certain factors when coming up with the trustee fees. They include:
- The technicality of the work the trustee will do
- The hours the trustee will spend in performing the grantor’s wishes
- The number of responsibilities and risks associated with their assigned duties
- The loyalty or fidelity showed by the trustee toward the grantor’s wishes
- Experience, expertise or unusual skills brought about by the trustee in doing their work
- The outcome of the trustee’s administration, like their success or failure
- The gross income of the state being managed
There is no exact amount you will receive for your work as a trustee because every trust is different in regard to the size, the obligations, the beneficiaries’ conduct, your specific skills or experience, etc. Generally, fiduciaries charge a fee based on a fixed percentage of the property they are managing or charge an hourly rate for their work. You can go with whichever plan suits you best.
Disputing the amount you are receiving
If you feel like the amount you are receiving is low compared to the amount of work you are doing for the beneficiaries, you can head to the court and file a motion to change the agreement terms. Similarly, you can be financially penalized if you make a misstep or fail at your fiduciary duties.