Pricing
Trustee Fees
The first consideration for the Trustee’s fee is the amount stated in the trust instrument. Our professionals will determine on a case-by-case basis whether to accept the role of Trustee under the stated provisions of the trust. Most trust agreements state that the trustee is entitled to a “reasonable fee” — without further explanation. Most state trust codes hold that if the terms of a trust do not specify the trustee’s compensation, a trustee is entitled to compensation that is reasonable under the circumstances.
What is reasonable? Our first benchmark 1% of the trust assets per year to administer the trust. This percentage is a sliding scale which applies to the first five million dollars, and then .75% of the trust assets applying to the assets between $5M and $10M, and then .6% applying to the balance in excess of $10M. Our fee covers trustee duties including regular payments to beneficiaries, required notices to beneficiaries, and strategic planning meetings with beneficiaries. We also offer services for managing farm properties long-term to allow the property to remain in the family while producing an income stream to benefit the owners.
Post-Death Administration of Revocable Trust. Finally, there is the trustee of a revocable trust engaged in post-death administration. The assets of the decedent must be inventoried and liquidated; the house must be cleaned up and sold; scores of bills must be paid; tax returns must be filed; and there will be a steady dialog with numerous beneficiaries. The post-death administration process will usually last a year or longer. During this period, a reasonable trustee fee will be the same as the 2% fee allowed to court appointed executor, as discussed below, plus reasonable expenses incurred in handling the estate administration.
Executor/Personal Representative Fees
A court appointed executor is automatically entitled to a fee of roughly 2% of the probate estate. An additional fee of 1% is allowed for non-probate assets, such as IRAs, life insurance, and joint bank or brokerage accounts. If the probate estate is a $1M brokerage account and there are only a couple of beneficiaries, a 2% fee may be a windfall to the executor. On the other hand, a 2% fee may be inadequate if the executor must maintain and sell real property, liquidate multiple assets, settle creditor claims, file multiple years of tax returns, deal with contentious beneficiaries, wind down a closely-held business, etc. In these cases, an executor can apply for fees in excess of the 2% statutory fee. A court is likely to approve an additional fee if none of the beneficiaries object.
Guardian/Conservator Fees
The fees for acting as Guardian/Conservator are the same sliding scale as applicable to Trust administration as listed above.
Conclusion
It is common for lawyers to state that trustee fees and executor fees are roughly 1% and 2%, respectively. However, as described above, the services to be provided must be evaluated on a case-by-case basis, and the fee should be adjusted commensurately. About the only generalization that can be made is that the 1% and 2% thresholds are usually the “floor” when determining the reasonableness of the fee.