Can Trust Beneficiaries Deny Compensation to Trustees?

 In Trustee
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Question:

My mom and dad’s trust states that the only way trustees can be compensated is if all beneficiaries agree with doing so. Is that binding?

Response:

That’s an interesting question. On the one hand, the trust is akin to a contract. So the trustees agreed to this limitation when they took on the role of trustee. If they didn’t want to be subject to the beneficiaries all agreeing, they didn’t have to sign on as trustee.

On the other hand, trustees generally are entitled to “reasonable” compensation. What’s “reasonable” can be in the eye of the beholder. I think the trustees in your case have a strong argument that not only must their compensation be reasonable, but that in awarding it, the beneficiaries must be reasonable as well. In other words, they can’t just refuse any compensation, but can have a say in what’s appropriate under the circumstances.

The provision in your trust is unusual enough that there may be no established law in your state that provides a definitive answer.

 

Related Articles:

Is a Trustee Entitled to Compensation?

Is My Trustee Overcharging?

Can a Neglectful Trustee be Denied his Fees?

When are Trustee Fees Paid?

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