I am a trustee of my nephews trust. Total amount 650,000 thousand. I have invested and set up bank accounts and I distribute money as they need. I want to be fair I was wondering what the trustee fee is per year. Thank you Janice
1 Answer from Attorneys
You do not distribute money as needed by the beneficiary unless the trust says that. You distribute money in accordance with the terms of the trust. The same goes for bank accounts.
I am concerned that you obviously have not read the trust instrument and seem to be doing things on your own and you have not sought out the advice of trust counsel to explain this to you.
Firsts, read the trust instrument. What does it say? If properly drafted, it will address your compensation as a trustee. What state was the trust created in and what law governs? Read the trust as it should indicate in there.
Assuming this trust is in PA and governed by PA law, compensation is reasonable compensation as defined in the below statute:
20 Pa.C.S.A. § 7768. Compensation of trustee - UTC 708
(a) If unspecified.--If neither the trust instrument nor a separate written agreement signed by the settlor or anyone who is authorized by the trust instrument to do so specifies the trustee's compensation, the trustee is entitled to compensation that is reasonable under the circumstances. Neither a compensation provision in a trust instrument nor a fee agreement governs compensation payable from trust principal unless it explicitly so provides.
(b) If specified; adjustment.--If a trust instrument or written fee agreement signed by the settlor or anyone who is authorized by the trust instrument to do so specifies a trustee's compensation, the trustee is entitled to the specified compensation. The court may allow reasonable compensation that is more or less than that specified if:
(1) the duties of the trustee have become substantially different from those contemplated when the trust was created or when the fee agreement was executed;
(2) the compensation specified in the trust instrument or fee agreement would be unreasonable; or
(3) the trustee performed extraordinary services, and the trust instrument or fee agreement does not specify the trustee's compensation for those services.
(c) Entitlement not barred.--None of the following shall bar a trustee's entitlement to compensation from the income or principal of the trust:
(1) The trust is perpetual or for any other reason has not yet terminated.
(2) The trustee's term of office has not yet ended.
(3) The trustee of a testamentary trust also acted as a personal representative of the settlor and was or might have been compensated for services as a personal representative from the principal of the settlor's estate.
(d) Court authority.--In determining reasonable compensation, the court may consider, among other facts, the market value of the trust and may determine compensation as a fixed or graduated percentage of the trust's market value. The court may allow compensation from principal, income or both and determine the frequency with which compensation may be collected. Compensation at levels that arise in a competitive market shall be presumed to be reasonable in the absence of compelling evidence to the contrary.
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