If you've been appointed to serve as the Successor Trustee of a Revocable Living Trust after the Trustmaker has died, then in most cases you'll be entitled to get paid for the services you provide on behalf of the trust. How much you'll get paid and when you'll receive it depends on many factors.
Did the Trustmaker address Trustee fees in the trust agreement?Check the provisions of the Revocable Living Trust to determine if the Trustmaker left any guidance as to what the Successor Trustee should be paid. Some people choose to limit the fees to a specific dollar amount, while others opt for allowing the payment of reasonable fees based on services rendered and applicable state law. Still others leave their Successor Trustee a specific bequest instead of allowing them to collect a fee, which provides an income tax benefit for the Successor Trustee since a bequest is nontaxable but fees are taxed as ordinary income.
What type of Trustee fee does state law provide for?If the Revocable Living Trust is silent on fees or provides for the payment of "reasonable" fees, then applicable state law will provide guidance as to what a reasonable fee should be for the services rendered by a Successor Trustee. This will include looking at how complex the trust is to adminster and settle, whether the Trustmaker's estate is taxable, and whether the validity of the trust or the choice of Successor Trustee is challenged by the trust beneficiaries.
Is there more than one Successor Trustee?If the Trustmaker has named Co-Trustees as the successors and the Revocable Living Trust is silent as to how each is to be paid, then state law will dictate the fees paid to each fiduciary. In some states the laws require that multiple fiduciaries must divide the fee equally, while in other states each fiduciary can collect the full fee that one fiduciary would be entitled to receive.
Is the Successor Trustee an institution?If the Successor Trustee is an institution such as a bank or a trust company, look to see if the Revocable Living Trust specifies that an institutional fiduciary is entitled to receive compensation in accordance with it's published fee schedule in effect on the date of the Trustmaker's death. These fee schedules are similar to state laws that calculate a Personal Representative's fee as a percentage of the value of the gross estate. If the Revocable Living Trust is silent on this issue, then state law will dictate the institution's fee.
Is the Successor Trustee also the attorney for the trust?In these situations, look to see if the Revocable Living Trust addresses the fees to be paid to the attorney who is also acting as the Successor Trustee. Sometimes the Trustmaker and the attorney will enter into a written agreement when the trust document is signed as to what compensation the attorney will be entitled to receive. If the Revocable Living Trust is silent on this issue, then state law will dictate whether or not the attorney can collect fees as both the Successor Trustee and as the attorney for the trust.
What has the Successor Trustee paid out of pocket?If the Successor Trustee has paid for anything out of his or her own pocket, then the Successor Trustee will be entitled to be reimbursed for these expenses. Out of pocket expenses may include expenses that had to be paid before the Successor Trustee could take over the trust assets, such as doctor and funeral bills, utilities, property taxes, insurance, and storage fees. Aside from this, travel expenses, mileage, and office supplies and postage that are necessary expenses for administering the trust will also be reimbursed to the Successor Trustee.
When will the Successor Trustee receive payment?Out of pocket expenses and reasonable Trustee fees will be paid periodically throughout the course of the trust administration. But note that the beneficiaries of the trust can challenge the fees paid by filing a lawsuit against the successor Trustee if the trust beneficiaries believe that the fees are unreasonable.