Can Trust Beneficiaries Deny Compensation to Trustees?

 In Trustee
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Photo by Austin Distel on Unsplash

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?

Showing 2 comments
  • Brian Ros
    Reply

    I am managing a trust for my sister trust estate can I charge a fee per year the trust is a sizeable number asset ?

      • Harry Margolis
        Reply

        Brian,
        Yes, you are entitled to a fee. The amount is more difficult to determine and depends on a number of factors: the size of the trust, the amount of time you spend in the role, and whether there are any other trustee-related expenses. For instance, are you paying anyone else to manage investments or rental property, depending on what the trust holds. The total cost should be within the parameters of what professional trustees normally receive.

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