Neon Bar SignAt the Sacramento Estate Planning Council’s 2016 Technical Forum on Tuesday an elderly gentleman sitting next to me said “old accountants never die, they just lose their balance” and “old attorneys just lose their appeal(s).”  Sometimes both happen when an unbalanced accounting results in a lost appeal.  The California Court of Appeal issued a rare decision on January 6, 2016 concerning trust accountings, finding in Gray v. Jewish Federation of Palm Springs and Desert Area that Probate Code section 16373 allows a trustee to rob Peter to pay Paul (as long as Peter gets his money back eventually).

Trustee fees are common flash points in the administration of family trusts. Trustees may put in hundreds of hours cleaning out and selling the family home, dealing with accountants, lawyers, and realtors, and otherwise working to distribute assets out to the beneficiaries. A diligent trustee provides a valuable service and should be compensated for his or her time.

From the beneficiary’s perspective, however, it may come as a surprise that Junior has obtained a handsome trustee fee by writing a check to himself. The beneficiary may feel that Junior should act as a volunteer and/or may believe that Junior has acted improperly in trust administration such that he deserves no fee.