This blog post views a trustee’s fee from the beneficiary’s perspective. Under California law, a trustee generally can set his or her own fee and collect it without prior disclosure to the beneficiaries. What can a beneficiary, who sees a hand reaching too greedily in the trust cookie jar, do in response?
We discussed best practices for a trustee when claiming a fee in a prior post and now consider how a beneficiary can monitor, evaluate and object to a trustee’s fee.
What is a reasonable trustee’s fee in California for a family member who acts as trustee? We see a high degree of conflict over this issue even when the amount of the claimed fee is small compared to value of the trust estate. Our blog analytics show that our post of a few years ago on the fee issue continues to draw a high number of hits. If you found this post in a Google search, you are probably grappling with a fee dispute in your family’s trust.
California Probate Code section 15681 generally permits a “reasonable” fee, but the term is hazy in practice. Most California Superior Courts do not have fee guidelines in their local rules. While California Rule of Court 7.776 lists factors a court may consider in reviewing trustee compensation, the trustee and the beneficiaries are likely to apply those factors differently. Accordingly, fee disputes are common in California trust litigation.
Here we’ll discuss best practices for a trustee with respect to claiming a fee. Let’s use the common situation where Mom and Dad have picked one of their several children to act as successor trustee when they die or become incapacitated. When Larry becomes the trustee, siblings Moe and Curley may be resentful and thus disinclined to go along with any fee.