Deciding to use trusts as part of their estate plans can help numerous California residents more effectively express their management wishes for certain assets. Of course, trust preparation takes a lot of consideration, and one aspect to consider is how much to pay the trustee. Trustee fees are essentially the compensation paid to the person for managing the trust. How much should a trustee receive?
The grantor, or person creating the trust, has the opportunity to indicate how much a trustee will receive and how the fees will be distributed. For instance, a trust that generates a regular income and contains valuable assets may warrant an annual fee set as a percentage of the trust assets. If a percentage does not seem applicable, a flat fee could also apply.
If a grantor chooses to utilize a flat fee, he or she can also determine how that fee is paid. For example, if the trust will need continual attention and management, setting a flat yearly salary may be wise. On the other hand, if the trust is relatively simple and will not require much work, the grantor could set an hourly flat fee for the trustee to collect.
Taking advantage of the ability to make such decisions is important during trust preparation. If grantors do not indicate how much compensation a trustee should receive, California state law will likely dictate the fee amount. Exploring their options for setting a fee that would best benefit their estate while also properly compensating the trustee may be useful when making such an important choice.