| |
| |
|
yourmoolah.com
|
|
|
|
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. =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= © Phil Craig, All Rights Reserved http://www.LivingTrustSecrets.com =-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-= 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 isadvisor to some of the biggest names in the internetworld. He shares his knowledge gained over thelast 25 years at his Living Trust Secrets newsletter site:click here=========>http://www.LivingTrustSecrets.com ** Attn Ezine editors / Site owners ** If you do use the material please send us a noteso we can take a look. Thanks.
MORE RESOURCES:
Business and Motivation Seminar, Seize the Day, Launches in Columbus on ... - PR Web (press release)
Google News |
|
|
|
RELATED ARTICLES
The TRAP Behind Websites With INSTANT Searches for Unclaimed Money There is no questioning that the amount of unclaimed money or property being held by both State and Federal agencies is staggering and growing each year - current estimate is believed to be in excess of $40 BILLION.On the prowl for new sources of revenue, cash-strapped States are pouncing on UNCLAIMED PROPERTY by shortening the 'dormancy' period of most abandoned property and strictly enforcing their statues for holders or companies to transfer over these funds to the State's custody. Get Rich Slowly Is it hard to get rich? If you're young, not really.Its fun to play with financial calculators and see whatmight happen. The 11 Best Money Saving Ideas of All Time - Part 4 At any time in history, no matter what the current state of the economy, no matter what the current trends, no matter what the unemployment rate is or where interest rates lurk, some money-saving ideas stay true.Some of you may have heard of these ideas before, others may be entirely new to you. Self Improvement and Financial Security for the Future Any successful person, or any anyone interested in self improvement and making a better life for themselves must be prepared to take responsibility for every aspect of their lives and their future.To many people, financial planning may well be one of the most uninspiring of all subjects. Its High Time for Lifetime Savings Accounts I'm constantly reading articles on the internet and in financial magazines in which so-called financial planning experts express perplexity as to why about 30% of employees do not participate in their employers' 401(k) plans. These writers don't seem to have clue. A College Degree or an MBA is NOT NEEDED to be Financially Free Look at Forbes' top 10 United States wealthiest people. Notice the top five "self made" billionaires (excludes the Waltons who's net worth is due to inheritance) are college dropouts. Before There Was Wall Street, There Was Gold.. & when Wall Street is gone, there will still be Gold Paper burns and large companies can go bankrupt, but if you want a piece of the solid rock, go for Gold. Financial experts agree that the rising value of gold, which has climbed since 2001 to a 16 year high of $456 (U. 3 Steps To Increasing Your Income Most accountants, financial planners and wealth-building experts agree that there are really only three ways to increase your income. You can either:1. Is Your Money Keeping Up With Inflation? In today's unpredictable global economy, you obviously never know what is going to happen next. Uncertainties and concerns regarding the Iraqi threat, North Korean crisis, and hidden terrorist cells and networks continue to loom in the back of the minds of consumers. What is Your Creative Retirement Plan? The idle are a peculiar kind of dead that cannot be buried."Oriental proverbOne thing is certain - when you do not have a creative challenge during your retirement years, the idleness and its accompanying despondency blots out any chance for happiness and contentment and can even encourage an early death. The One Important Secret of Making More Money Easily If you're reading this article, it means you are a person who wants to make more money in life.Who doesn't? Money is not everything in life, but it sure helps to decrease problems if it is used correctly. Four Pillars of Creating Wealth Some people in this world are thinking that their poor financial condition today is their destiny. They keep telling themselves that they'll never get rich in this lifetime. Your Wealth Cycle Foundation The four main steps in building a wealth cycle foundation are:· Pay yourself first· Understand the legal entities available to you and the tax implications of each· Determine whether to be an active or passive investor and using the appropriate strategies · Develop and commit to your money rulesPAYING YOURSELF FIRSTPaying yourself first is a money rule. Can you imagine how much you would be worth if, from an early age, you had been conditioned to pay yourself first by depositing a portion of your earnings in a wealth account? Even if you only put in $1 per week, today you would probably be sitting pretty. Money Myths Of The Poor From tender age, we were exposed to myths about money and myths of being rich. Be it from our parents, brothers, sisters, relatives, or friends. Money Mastery Money can be your servant or it can be your master. The choice is yours to make. Residual Income - The Myth "Join our program and retire in 3 months.. Investors - What Separates the Good Traders from the Bad Traders? There are many forms of investing online. While I can give you a list that is a mile long, these are the most common forms of successful investments. Business Ownership, Cash in Your Pocket - Today! Yesterday we learned that 74% of all wealth is created by people who own their own business. Below are a few facts about owning your own business, specifically a home-based business that you may not be aware of. How To Be A Millionaire - The Top Secret Of Wealth Creation Have you any idea how many people search Google every single day for terms such as, "make fast money" or "get rich quick"?Intelligent, motivated people, just like you and me? It's veritably FRIGHTENING.Some do it for a laugh. Cost Averaging - It Makes Sense (Dollars & Cents) It's no secret that the market goes UP..
|
|
Powered By: Free Google Adsense Websites! |
| © 2006 |
