Legal Question in Wills and Trusts in California

The executor of a living trust is usually the beneficiary, so there is no fee.

One percent (1%) of the fair market value of assets per annum is what

I have discovered as reasonable compensation for a trustee fee in

California. Please read on.

First, basic info on trustee compensation in California:

"TRUSTEE COMPENSATION

"If the trust instrument provides for the trustee's compensation, the

trustee is entitled to be compensated in accordance with the trust

instrument. The court may fix or allow greater or lesser compensation

than could be allowed under the terms of the trust in certain

circumstances. Cal. Prob. Code � 15680 (West 2000). If the trust

instrument does not specify the trustee's compensation, the trustee is

entitled to reasonable compensation under the circumstances. Cal.

Prob. Code � 15681 (West 2000)."

http://home.pon.net/jmt/law/twol/ep/epn/trusts.htm

Read the California Probate Code � 15681

http://caselaw.lp.findlaw.com/cacodes/prob/15680-15688.html

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Second, a suggested percentage from two sources:

"Trustees are entitled to reasonable compensation for the services

performed for the trust. Often the trust document will specify an

amount or a limitation. If it does not, a Trustee is entitled to

compensation in the same manner as would anyone else performing

similar management or investment services. This usually depends upon

the time involved, the responsibilities undertaken, the results

achieved and the magnitude of the problems encountered. ***A good rule

of thumb, generally used by corporate trustees in California in

estimating Trustees' fees, is one percent of the principal balance of

the trust per annum."***

http://www.tdoyle.com/newarticlestest4.htm

Also, see section 14.110, page 206, "Compensation Guidelines for

Management of the Estate," a San Francisco Superior Court document at

http://sfgov.org/site/uploadedfiles/courts/rule_14.pdf where it reads,

"Ordinarily, annual fees for guardians, conservators and trustee shall

not exceed the following: One percent (1%) of the fair market value of

assets at the end of the accounting period."

One percent seems reasonable and an accepted standard in lieu of a stated fee.

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And finally, just in case you're also the Executor, some helpful tax info:

"The Executor is entitled to reasonable compensation, often limited to

a certain percentage (e.g., 5%) of the property in the probate estate.

(Extra compensation, related to handling some special matter, may be

allowed by the court.) That does not mean the Executor automatically

gets that much....F.Y.I. Common Question: "I've recently been

appointed as Executor, and also a beneficiary under Grampa?s Will. Am

I better off, tax-wise, taking my fee or not?" The answer will vary,

but the factors to consider are as follows:

"From the beneficiary's standpoint, inheritance money is free from

federal income tax. (The federal levy - if any - is an estate tax,

taken "off the top" before the beneficiary gets his/her share.) The

fee to an Executor, however, is ordinary, taxable income to him. These

facts weigh in favor of the beneficiary/Executor not taking his fee,

and obtaining a slightly larger (income tax free) inheritance. So if

the only beneficiaries are you and your spouse, for example, then it

makes sense to skip the fee, for this reason."

http://www.robinestes.com/trusts.html

www,michielawfirm.com