Can I Charge for My Time as Trustee for My Father?
My father lives in Los Angeles. I live in Canada. I am the trustee of his Health Care Living Trust as he is incapacitated. I am also the POA and sole beneficiary of his will. I fly back and forth every month to LA to see him, the doctors, nurses, physio, banks and accountant. He has approx. $1.2 million in the trust. Am I able to charge a fee to the trust? I am missing a lot of work doing this and it could help out. I am charging the cost of the flights and car rental to the trust as an expense already. If I can, what % should I use?
Yes, you can charge for your services, but it sounds like you’re providing services far beyond what a typical trustee would provide. A typical trustee fee might be 1.0% of the trust assets per year, or about $12,000. You could charge that. Another option would be to value your time and charge per hour for your services. If you go this route, do not charge what you might charge in your professional life, because even though that might be your opportunity cost, you’re not providing the same service nor is there a market that establishes a value to your service. Likewise, don’t charge what a professional care manager might charge since (1) I assume that’s not your training, (2) again, there’s no market to determine the value of your unique services, and (3) your travel time would be inordinate.
All of that said, there are some other issues here. Normally, I would recommend that you work out an arrangement that is acceptable to the other beneficiaries. But if you are the sole beneficiary, you don’t have to worry about any objections, except those of your father. Assuming he’s still competent, make sure he’s on board with whatever you decide. In your case, the tax implications of your choice may be a concern. Whatever you receive for your services, whether as a trustee or as a care provider and manager, you will earn and have to report as taxable income. (I’m assuming that although you live in Canada, since your father lives in Los Angeles, that you’re an American citizen. I know nothing about the Canadian tax system.) You may be in a much better tax situation if you ultimately inherited the money from your father later, rather than earned it now.