We have written before about trustee fees and trustee removal. There can be some real benefits to using a trusted person in your life as your Trustee. Thats why you should consider reading 2 important trustee compensation cases. what trustee fee factors are to be considered. According to Rev. ESTATES AND TRUSTS. Ordinary services of the attorney in an initial trust administration include legal advice and representation concerning the trustees duties relating to: Review of the trust instrument and each amendment for legal sufficiency and interpretation. St. Augustine, Florida 32080, Jackson Law Group 2007-2023 All Rights Reserved An irrevocable trust is an agreement among a settlor, trustee, and beneficiaries that cannot be revoked or amended. In the end, a trustee is entitled to compensation for serving as trustee. And, you can always appoint a non-professional Trustee, like a friend or family member, too. eficiary, petitioned the Florida Court to "review the Trustees' fee issue and determine a reasonable fee," alleging that the trust agreement is silent as to the trustees' fee and that the trustees are entitled to a "reasonable fee" under Fla. Stat. (904) 823-3333 Despite the absence of a statutory fee schedule, certain factors are applicable despite factual differences in each case. Considerations of special valuation of trust assets, including discounts for blockage, minority interests, lack of marketability, and environmental liability. 736.0708 provides for "compensation that is reasonable under the circumstances." Should multiple trustees receive a greater amount in total of fees than a single trustee would receive for having done the same job? The written statement must be in a separate writing from the trust instrument but may be annexed to the trust instrument. The journals or printed bills of the respective chambers should be consulted for official purposes. REQUIRED. On a trust with assets of $500,000, the attorney for the trustee would be entitled to $11,250 in fees ($2,250 for the first one hundred thousand dollars of trust assets plus 2.25% of the next four hundred thousand dollars of trust assets, or $9,000). Any person, including an attorney, who serves as a trustee is entitled to receive reasonable compensation for serving as trustee. The nature of the trust assets, the expenses of administration, and the claims payable by the trust and the compensation paid to other professionals and fiduciaries. Ordinary services of the attorney in an initial trust administration include legal advice and representation concerning the trustees duties relating to: Review of the trust instrument and each amendment for legal sufficiency and interpretation. Trustee Fee Structure. If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney must provide a copy to the trustee prior to commencement of employment. (2) If the terms of a trust specify the trustee's compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: As a result of the lack of a statutory guideline for determining the reasonableness of trustee fees, the court is left with the task of determining the reasonableness of the trustees compensation and in doing so will often look to the duties and responsibilities of the trustee under the particular trust at issue. Legal advice regarding homestead status of trust real property or proceedings involving the status. The Rauschenberg case addresses the important issue of calculating trustee fees if the trust is silent. If the terms of a trust do not specify the trustees compensation, a trustee is entitled to compensation that is reasonable under the circumstances. The IRS also reclassified as fiduciary fees $302,400 in trustee fees that the trust had deducted against rental income. The responsibilities assumed by, and potential liabilities of, the attorney. Preparation of decedents federal estate tax return. In planning your estate, it may be necessary to name a Trustee, which means you'll also need to understand Trustee fees. Publications, Help Searching s. 10, ch. Are they just doing normal paperwork thats routine, easy to understand and explicit? Who Determines the Trustee Fee? Trustee fees are allowed by state law and range from about 1% to 3% of the trust assets. The fundamental criteria arereasonableness, determined in the light of the facts and circumstances of each individual case. Professional Trustees. F.S. If this return is prepared by the attorney, a fee of one-half of 1 percent up to a value of $10 million and one-fourth of 1 percent on the value in excess of $10 million, of the gross estate as finally determined for federal estate tax purposes, is presumed to be reasonable compensation for the attorney for this service. The larger and more complex a trust is, the higher the compensation fees are. By Jon Alper Updated March 16, 2023. But most experienced expert trust trial lawyers, like John Pankauski, will tell you that the devil is in the details. Romy Jurado grew up with the business dream of becoming a lawyer and starting her own business. And its not uncommon for a personal Trustee to not take any compensation at all. (2) If the terms of a trust specify the trustee's compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney shall furnish a copy to the trustee prior to commencement of employment and, if employed, shall promptly file and serve a copy on all interested persons. In this legal commentary, Florida trust litigator John Pankauski will provide insight. Implementation of substitution of the successor trustee. I have designated my attorney, an attorney employed in the same law firm as my attorney, or a person related to my attorney as a trustee in my trust instrument dated (insert date). 2021-145. On a trust with assets of $80,000, the attorney for the trustee would be entitled to $2,250 in fees ($1,125 + $562.50 + $562.50). Pankauski Lazarus PLLC represents clients throughout Florida, including the cities of West Palm Beach, Boca Raton, Delray Beach, Boynton Beach, Highland Beach, Riviera Beach, North Palm Beach, Abacoa, Wellington, Lake Worth, Palm Beach Gardens, Jupiter, Greenacres, Deerfield Beach, Pompano Beach and Fort Lauderdale, as well as other communities in Palm Beach County, Broward County and Miami Dade County. If you need an attorney to calculate non-professional trustee fees, we at the Law Offices of Albert Goodwin are here for you. Were here to help, and we look forward to guiding you through every aspect of your Trust set up and management. A percentage is more typical in determining appropriate compensation for a personal Trustee. 2006-217; s. 7, ch. Procedures for the trustees discharge from liability for administration of the trust on termination or resignation. Absent language that specifies the terms of a trustees compensation, the Florida statutes state that the trustee is entitled to reasonable compensation. Disclaimer: The information on this system is unverified. The complexity or simplicity of the administration and the novelty of issues presented. Despite Florida having no statutory schedule for trustees fees, a standard range of trustees fees is generally recognized by corporate or professional Florida fiduciaries. If youre at the very beginning of the process, and just starting to set up your Trust or other Estate Plans, youre probably dealing with a lot of moving pieces. If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming virtual Estate Planning Essentials workshops by clicking here or calling 214-720-0102. And, knowing how to calculate Trustee fees isnt as simple as you may think. Learn all this and more about what to expect when it comes to Trustee fees, including what are normal Trustee fees, how you can navigate them, and most importantly, how you can avoid overpaying them. According to IRS Publication 525-Taxable and Nontaxable Income, if the personal representative (trustee) is acting in a non-professional capacity, they will include such fees as income on Schedule 1, Line 8z (other income), of their tax return. Non-professional trustee fees, on the other hand, generally fall between 0.5% to 1% of the value of trust assets per year. Contributions due to the personal representative of the settlors estate for payment of expenses of administration and obligations of the settlors estate. A separate agreement or a provision in the trust suggesting or directing the trustee to retain a specific attorney does not obligate the trustee to employ the attorney or obligate the attorney to accept the representation but, if the attorney who is a party to the agreement or who drafted the trust is employed, the compensation paid shall not exceed the compensation provided in the agreement. First, read the trust document! Preparation of any legal documents required to effect distribution. , Read More What Is a Petition for Discharge? The nature and value of the assets that are affected by the decedents death. Instead, if the trust instrument does not specify the trustee's compensation, F.S. Amended by a resident of this state on or after October 1, 2020, if the trust agreement nominates the attorney who prepared or supervised the execution of the amendment or a person related to such attorney as trustee. And, that case also cites to an important Florida Supreme Court trust case from 1958. v. Florida National Bank of Jacksonville. Is there a question here we didnt answer? After you know a little bit more about it, it should become even easier. Looking for help or guidance in determining reasonable Trustee fees? But most experienced expert trust trial lawyers, like John Pankauski, will tell you that the devil is in the details. Publications, Help Searching How Long Do You Have to File Probate After Death? (1) (a) Except as provided in paragraph (d), if the trustee of a revocable trust retains an attorney to render legal services in connection with the initial administration of the trust, the attorney is entitled to reasonable compensation for those legal services, payable from the assets of the trust, subject to s. 736.0802 (10), without court F.S. A trust is a legal arrangement in which the trust maker (also referred to as the trustor or settlor) transfers the nominal ownership of assets to a trustee (fiduciary) for the benefit of selected individuals (beneficiaries). The second issue becomes whether a particular beneficiary should pay more than other beneficiaries. Disclaimer: The information on this system is unverified. Procedures for the trustees discharge from liability for administration of the trust on termination or resignation. The attorney shall obtain the trustees timely signature acknowledging the disclosures. Florida trustees are ENTITLED to reasonable compensation. A state where estate values tend to be smaller could be reflected in smaller compensation (even if the percentage is the same as somewhere like California). Filing a nontaxable affidavit, if not filed by a personal representative. Any agreement relating to the attorneys compensation and whether written disclosures were made to the trustee in a timely manner under the circumstances pursuant to paragraph (1)(b). Professional trustees, also known as private professional fiduciaries, are individuals who manage trusts and conduct other fiduciary tasks as their profession. The grantor(s) may also be the trustee(s) in some cases. Knowing the difference between reasonable fees and excessive trustee fees is key. Legal advice regarding carrying on of decedents business or conducting other commercial activity by the trustee. Florida Statutes Definitions Index (2022), Table Tracing Session Laws to Florida Statutes (2022), Index to Special and Local Laws (1971-2022), Index to Special and Local Laws (1845-1970). As used in this section, the term initial trust administration means administration of a revocable trust during the period that begins with the death of the settlor and ends on the final distribution of trust assets outright or to continuing trusts created under the trust agreement but, if an estate tax return is required, not until after issuance of an estate tax closing letter or other evidence of termination of the estate tax proceeding. Under Florida case law, calculating trustee fees in Florida involves several factors, including: Calculating a reasonable trustee fee in Florida is not as simple as it may sound. Committee We have previously written about Florida Trustee Compensation. If there is a conflict of interest between a trustee who is a beneficiary and other beneficiaries of the trust, advice to the trustee on limitations of certain authority of the trustee regarding discretionary distributions or exercise of certain powers and alternatives for appointment of an independent trustee and appropriate procedures. Upon petition of any interested person in a proceeding to review the compensation paid or to be paid to the attorney for the trustee, the court may increase or decrease the compensation for ordinary services of the attorney for the trustee or award compensation for extraordinary services if the facts and circumstances of the particular administration warrant. The obligation of a successor to require a former trustee to provide an accounting. You can also think about what capacity your Trustee will be working under.
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