What Would a Bank Trustee Charge for a Simple Trust with Quarterly Distributions?
What would be the typical cost of a bank administering a trust set up with quarterly distributions that could last 10 years?
The answer depends largely on the amount you will have in the trust. A recent survey of larger banks and trust companies had a big range of charges of between 0.60% and 1.0% annually on the first $1 million of assets. Most also have a minimum annual charge ranging from $100 to $8,000. Clearly, the bank with the highest minimum charge is looking for larger trusts to administer, and most of the minimum fees are in the $3,000 range. One thing that’s not clear from this survey is whether the fees also include investment costs, or simply the cost of administering the trust, with an additional charge for investment management. But I’d assume for your purposes that there would be a minimum trust fee of $3,000 and a higher fee if the trust amount exceeds $500,000.
It sounds like your idea is to limit the duties of the trustee so that rather than having to decide on discretionary distributions they will simply distribute the income for 10 years. In theory, this should mean that the charges will be less, but in practice that’s unlikely to happen. While the work and responsibility may be less, banks are likely to have set systems and fee structures that they won’t alter for a single trust (unless, perhaps, it’s very big).