If you include any kind of trust in your estate plan, one important consideration is whether you would like to compensate the person you name as trustee. A recent article discusses the “when and how” of trustee compensation.
Not all trustees need or expect to be compensated for their services. Trusts that do provide trustee compensation may provide for reasonable compensation, a fixed amount of compensation, or may dictate a formula through which compensation may be determined. Generally, in situations where the trust is silent as to compensation, the trustee may request and receive reasonable compensation.
Reasonable compensation is determined based on a variety of factors including the trustee’s experience and qualifications, the hours he or she spent administering the trust, and the value and complexity of the trust. Typically, a trustee will not be paid until he or she has completed distributing the trust assets.
If you would like to be sure that your trustee is compensated for his or her services, it is important to include how you would like him or her to be compensated in your trust documents. Specify your wishes as to how and when he or she will be compensated. Finally, speak with your trustee upfront about whether and how they will be compensated for their services.