Trustee Fees: How Much is Enough and How Much is Too Much?

I am often amused by the ads and offers I see concerning living trusts.

Almost always, one of the big sales pitches is how a living trust will save th*usands of doll*rs in "nasty" probate fees.

This leads the consumer to believe that you pay for probate, but living trusts are "fr*e." (that is, after you've paid the promoter to set one up for you).

Not so.

Here's an email I received from one of my subscribers (she has given me permission to discuss her question in this article):

Hi Phil, My mom passed away recently and my sister is 1st trustee. She claims she gets 10% of my mom's estate as 1st trustee. Is this true? What is the normal fee for 1st trustee?

Great question. Often one of the biggest, if not the biggest, areas of dispute between children or heirs after a death occurs.

What is a trustee fee? How is it calculated? Are there other fees?

If you have a trust and don't know the answer to these questions, I think the proper thought is "Uh-ohh!"

OK, let's have a quick review of trustee fees.

First let's make a distinction between the times a trustee may be called upon to act.

Remember, one of the best uses of a trust is to manage the assets of someone who is incapacitated. My best friend and his sister have been managing their mother's affairs (as trustees) for the last 10 years. Mom is 95, in decent physical health, but has advanced Alzheimer's).

Let's save the discussion of trustees fees charged for managing an incompetent's estate for a future article. Let's get down to answering the above question.

Here it is again:

Hi Phil, My mom passed away recently and my sister is 1st trustee. She claims she gets 10% of my mom's estate as 1st trustee. Is this true? What is the normal fee for 1st trustee?

Basically, the question is "How much can a trustee charge to handle an estate after a death?"

How do we answer this?

First, we have to look at the trust instrument.

Most competently drawn trust instruments will have a section that deals with trustee fees.

The better ones are fairly specific and make a distinction between acting as trustee while the beneficiary is alive, but incompetent, and acting as trustee after a death has occurred (similar actions to what an executor performs through a probate).

So, first, we look to the trust instrument. Often it will specify a fee. Sometimes it will say .75% to 1.25% of the total value of the assets being managed and transferred (since this is the typical fee charged by the professional trust companies run by many banks).

In fact, let's see what California law tells us about trustee fees (every state will have a statute, go to your county law library and ask the law librarian to help you look it up).

In California, the law of living trusts is contained in the Probate Code. Here is what Probate Code Sections 15680-82 tells us:

15680. (a) Subject to subdivision (b), if the trust instrument provides for the trustee's compensation, the trustee is entitled to be compensated in accordance with the trust instrument.

(b) Upon proper showing, the court may fix or allow greater or lesser compensation than could be allowed under the terms of the trust in any of the following circumstances:

(1) Where the duties of the trustee are substantially different from those contemplated when the trust was created.

(2) Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high.

(3) In extraordinary circumstances calling for equitable relief.

(c) An order fixing or allowing greater or lesser compensation under subdivision (b) applies only prospectively to actions taken in administration of the trust after the order is made.

15681. If the trust instrument does not specify the trustee's compensation, the trustee is entitled to reasonable compensation under the circumstances.

So to answer the question, we have to find out what the trust instrument says. If it is silent, then Section 15681 tells us the compensation is to be "reasonable compensation under the circumstances."

What is reasonable under the circumstances? If it were me, I would gather up the brochures of the various bank trust departments in the area to determine their rates. Where I live, the fee is .75% to 1.20%, depending on the size of the trust and the type of assets. The minimum is $5,000.

So, it looks like the answer to the question is that if the trust instrument says the 1st trustee is entitled to 10% compensation, then she may be. However, if it doesn't then the amount to be charged must be reasonable.

And, even if the trust instrument said 10%, I would seriously consider asking a court to change the compensation per 15680 (b) (2) that allows the court to change compensation "Where the compensation in accordance with the terms of the trust would be inequitable or unreasonably low or high."

This article needs to be continued since we haven't even touched on the big m*ney m*ker for trustees and attorneys, "extraordinary fees."

Good luck and until next time,

Phil Craig

P.S. Feel free to forward this on to any friends.

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Phil Craig, All Rights Reserved

http://www.LivingTrustSecrets.com

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Phil Craig is a licensed attorney and entrepreneur. He started practicing law at age 25 in 1979. He does not take on any more clients, but is advisor to some of the biggest names in the internet world. He shares his knowledge gained over the last 25 years at his Living Trust Secrets newsletter site: click here=========>http://www.LivingTrustSecrets.com

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Test - Chevrolet Captiva

Even if Chevrolet stands drauf, puts under the durable sheet metal dress everything else as a genuine American. The Captiva in with Daewoo in Korea is built, is conceived it for the European market. We tested the multi-cultural SUV.

Badge tightness Institution of Electrical Engineers ring is called the magic word, if it concerns to lower development and production costs of an automobile. For the Chevrolet Captiva means: He is not only the twin brother of the OPEL Antara, no, he also still divides the underbody with Chevrolet Equinox, Saturn Vue and Pontiac Torrent - all three SUVs for the US market.

Obligingly/pleasingly

The high front of the Captiva makes properly which ago, the large radiator grille and air intakes in the front apron symbolizes Kraft. A Unterfahrschutz from silver plastic and the roof railing provide for Offroad feelings, the simple tail against it work rather good and inconspicuously. The Captiva is offered alternatively with a four or a six cylinder Benziner as well as a four-cylinder diesel engine. While OPEL shifted the market start of the Antara Selbstznders because of its striking starting weakness on February 2007, Chevrolet already delivers the Dieselmodel.

No weakness

Coupled with a gently switching five-course mechanism however much is not to be felt by the starting weakness of the 150-PS-Aggregats. With 2.000 routes the Captiva gets 320 Newtonmeters from its two litres combustion chamber.

One distributes Kraft fully automatic to all four wheels - under standard conditions 100 per cent of the torque go to the front axle. Only if the system states the fact that emergency does more traction is sent up to 50 per cent to the rear wheels.

Good twelve seconds gnnt itself the Chevy for reaching the 100 km/h mark. The handswitched models create the Sprint in only 10.6 seconds. Starting from speed 140' s in the interior, with 180 km/h becomes clearly louder ends certainly, after some approach, the forward urge. During moderate travel the Captiva is content with approximately nine litres of Diesel, goes one more quickly to the work, may it already times twelve litres be.

Cosiness

During the chassis tuning engineers measured highest priority to the comfort out. The soft suspension irons unevenness well out, also short impacts fits itself with springs the Captiva cleanly for off completely like it for a SUV belonged. Sporty driving is not taken into account against it, but also the long translated steering element is too inaccurate. While on highways rather the curves stop order (ESP is standard with all models), are it to the Chevrolet on the motorway the Spurrillen and the cross-wind. From both the Captiva can be enticed only too gladly to leaving the given course.

In the hand turning

When desired the Captiva with seven seats is available. If the third row is not needed, the seats disappear concisely in the baggage compartment floor. For setting up both the armchair is sufficient a handle. The Hinterbnkler enjoys comfort only conditionally, but it sits itself in the second row the better. A reason for the good space offer in the rear are the short seat tracks of the first row. Some large driver would continue to push his armchair surely gladly to the rear. Apart from the fact it can be borne on the comfortably padded seats even on longer distances.

Strongly

The cockpit of the Captiva is arranged solid, which works green instrument lights however old-bakes. The steering wheel keys at the handy Volant must get along completely without lighting. The operation of radio and ventilation, which are on board computer with compass and other Schnickschnack against it hopelessly overloaded, is simple. Whose overflow bags before mobile phones, purses and keys, open and closed fan can be pleased about a multiplicity. The actual Gepckabteil offers litres of volume up to 930 (with turned down back bank). Deficiency: The low-friction rear flap opens not very far. But the disk can be opened unfold separately.

For each taste

Three equipments are for the Diesel Captiva in the offer: LS, LT and LT exclusive one. Always also on board are six Airbags, electrical window lifters, rain sensor, air conditioning system and a CD radio. Also the all-wheel drive is included with the self fuzes in the price. The Toplinie supplemental by 18-Zller, a MP3-fhiges radio with CD change-over switch, the electrically adjustable driver's seat and leather equipment. However also 34,890 euro become due for the high-quality LT exclusive equipment. As extras only the mechanism for 1.200 euro remains, a glass sun roof for 850 euro as well as the 490 euro expensive metal IC lacquer finish. The basis Captiva 2,0 LS (only as Fnfsitzer available) stands starting from 29.390 euro in the price lists.

Result

Compared to the brother Antara receive Chevy buyer more car for fewer moneys - the OPEL is available only as Fnfsitzer. Whom do not disturb the soft tuning and the indirect steering element, a solid SUV gets. Its play the trump card plays the Captiva as comfortable travelmobilely out, during moderate travel recompences it his driver with moderate consumption.

auto

Automotive Talks Blog

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