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Home » Wills and Trusts » Does a Trustee Get Paid?

Does a Trustee Get Paid?

July 9, 2019 by Larry Parman, Attorney at Law

Oklahoma City trust administration

While a Last Will and Testament remains the most common estate planning document, trusts are not far behind given how many estate planning goals can be furthered using a trust. All trusts must have a Trustee whose responsibility it is to administer the trust. If you recently learned that you have been appointed as the Trustee of a trust, you probably have a number of questions, starting with whether or not you will be compensated or your service. To answer that question, an Oklahoma City trust administration lawyer at Parman & Easterday explains how a Trustee gets paid.

What You Need to Know about Trusts

A trust is a legal relationship where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the “Settlor”, “Trustor” or “Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries, also named by the Settlor. The overall job of a Trustee is to protect and invest trust assets and to administer the trust terms found in the trust agreement. Trusts all fall into one of two categories – testamentary or living trusts. A testamentary trust is activated by a provision in the Settlor’s Will at the time of death whereas a living trust activates once all formalities of creation are in place and the trust is funded. Living trusts can be further divided into revocable and irrevocable living trusts. Because a testamentary trust is activated by a provision in the Settlor’s Will, and a Will can always be revoked up to the time of the Testator’s death, a testamentary trust is also revocable up to that point.

The Duties and Responsibilities of a Trustee

The overall job of a Trustee is to manage trust assets and administer the trust. Specifically, a Trustee’s duties and responsibilities include:

  • Manage and protect trust assets
  • Abide by the trust terms unless they are impossible, illegal, or unconscionable
  • Invest trust funds using the “Prudent Investor Standard”
  • Monitor trust investments
  • Communicate with trust beneficiaries
  • Resolve conflicts among beneficiaries
  • Make discretionary decisions
  • Distribute trust funds to beneficiaries
  • Approve or deny distributions if given discretionary authority
  • Keep trust records
  • Prepare and pay trust taxes

Is a Trustee Paid for His/Her Service?

Ideally, the Settlor of a trust discusses the job of Trustee with a potential Trustee before actually appointing that person in the trust agreement. Doing so decreases the likelihood of confusion or conflict when the time comes to actually administer the trust. Keep in mind that the Trustee of a trust will contribute immensely to the success, or failure, of the trust. Given the importance of the Trustee, and the time a Trustee must dedicate to his/her duties and responsibilities, it is only fair that the Trustee is compensated. How much a Trustee is paid will depend on several factors, chief among those being the terms of the trust agreement itself. The Settlor may include terms that address the Trustee’s compensation. If the Trustee is a professional, such as a CPA or attorney, the trust agreement may authorize payment at the Trustee’s normal hourly rate. If the Trustee is a corporation, compensation may be a percentage of the value of the trust assets. If the trust agreement is silent on the issue of compensation, the Trustee must be paid a “reasonable fee.” That fee is considered a yearly trust expense, meaning it is paid out of the trust assets. If there is ever a dispute regarding Trustee compensation, a probate judge may review the trust agreement and the Trustee’s records to determine if the Trustee is being overpaid or underpaid.

Contact an Oklahoma City Trust Administration Lawyer

For additional information, please join us for an upcoming FREE seminar. If you have additional questions or concerns about Trustee compensation, contact an experienced Oklahoma City trust administration lawyer at Parman & Easterday by calling 405-843-6100 or 913-385-9400 to schedule your appointment today.

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Filed Under: Wills and Trusts

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