If your estate planning strategy will include a trust, it’s important to know that trustees are typically compensated for their work. If you’re wondering how much, there’s no specific number, but the courts state that it should be reasonable. This will vary depending on how complex the trust is and how much time it will take to administer it. Your Minneapolis estate planning lawyer can guide you toward a reasonable compensation plan, but in the meantime, keep reading to get an idea of what to pay your trustee.
What Are Common Fee Structures for Trustees?
When you make your trust, you should state the payment terms for the trustee, which means you will need to figure out how to compensate them before you’re done setting up the trust. In most cases, trustees are paid a percentage of the value of the assets. This is most common when dealing with a large trust.
If you have a smaller trust, you might choose to pay the trustee a flat fee or hourly rate. This way, you can ensure they get a reasonable amount that fairly compensates them for the work they put into administering the trust. If you’re worried about this fee getting too high when you’re paying hourly, you might consider setting the maximum amount you will pay the trustee.
How Much Are Trustees Compensated on Average?
If you are considering paying the trustee a percentage of the assets in the trust, you should know that the average fee is about 1% to 2% per year. This is especially the case for corporate trustees, such as banks and investment firms, as well as professional trustees.
When administering small trusts, some trustees will expect a flat fee or an hourly rate, such as about $100 per hour. On the other hand, if you choose a family member or friend as a trustee, they often accept lower fees or even no payment at all, especially if the trust is not very large or complicated to administer. For example, they might accept 0.25% of the value of the assets or $35 per hour if you choose an hourly rate.
How Do Trustees Get Paid?
When your trustee gets paid, the money will come from the trust’s assets, not your checking account. You can determine ahead of time how often they’re paid, such as annually, quarterly, or biannually. You should also know that any expenses your trustee pays for will need to be reimbursed. So, if the trustee has to travel to administer your trust, their travel expenses will be reimbursed by your estate.
If you have questions about paying your trustee or are ready to set up a trust with skilled Minneapolis estate planning lawyers, contact our law firm at 612-448-9653 today.