The first is from the Second District Court of Appeal. Finally, any compensation that a personal representative receives is considered income to the personal representative and will be taxed accordingly. Generally, the multiple trustees must agree on how the fee will be divided among them, otherwise, the court will do so. Several factors are taken into consideration: Despite the Florida Legislatures failure to provide uniform measures for the reasonableness of trustee fees, it is clear that a trustee is entitled to reasonable compensation for his or her services rendered in administering the trust. If he loses his accounts, he must bear any resulting damage. With regard to the allocation of a trustees fee, the first question involves whether the fee should be taken from principal or income. Trustee fees are the payments thatll be made to your appointed Trustee in exchange for the service theyll provide as they fulfill their duties in the role. Are you the beneficiary of a Florida trust? A lot goes into creating a comprehensive, effective Estate Plan. On a trust with assets of $2,000,000, the attorney for the trustee would be entitle to $41,250 in fees ($2,250 for the first one hundred thousand dollars of trust assets, plus 2.25% of the next nine hundred thousand dollars of trust assets, or $20,250, plus 1.875% of the next one million dollars of trust assets, or $18,750). For income tax purposes the same term is used to mean the person who is taxed on the income . The lodestar method is often used to calculate attorneys fees by multiplying the number of hours reasonably applied to solve a case by a reasonable hourly rate. A percentage is more typical in determining appropriate compensation for a personal Trustee. 2006-217; s. 7, ch. But the trustee fees should be reasonable. Here again, the statutes provide guidance as to what is considered reasonable compensation, and it mirrors that of the reasonable compensation of the personal representatives attorney. What is a standard Trustee fee if you go the professional route? Grantor - (Also called "settlor" or "trustor") An individual who transfers property to a trustee to hold or own subject to the terms of the trust agreement setting forth your wishes. Normal ranges tend to be somewhere between 1 and 1.5 percent of the estate value. Read the factors regarding trustee compensation listed in West Coast Hospital Assoc. On an estate with an inventory value of $80,000, the attorney for the personal representative would be entitled to $3,000 in fees ($1,500 + $750 + $750). But most experienced expert trust trial lawyers, like John Pankauski, will tell you that the devil is in the details. If the amount or method of determining compensation is not provided in the agreement, the attorney is entitled to a reasonable fee, taking into account the factors set forth in subsection (6). Pankauski Lazarus PLLC represents clients throughout Florida, including the cities of West Palm Beach, Boca Raton, Delray Beach, Boynton Beach, Highland Beach, Riviera Beach, North Palm Beach, Abacoa, Wellington, Lake Worth, Palm Beach Gardens, Jupiter, Greenacres, Deerfield Beach, Pompano Beach and Fort Lauderdale, as well as other communities in Palm Beach County, Broward County and Miami Dade County. Theres also the Uniform Trust Code (UTC), which some (but not all) states have adopted in effort to standardize all things related to Trustsincluding Trustee fees! Persons who must or should be served with required notices and the method and timing of such service. ESTATES AND TRUSTS. Trustee's attorney fees. By Jon Alper Updated March 16, 2023. If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney shall furnish a copy to the trustee prior to commencement of employment and, if employed, shall promptly file and serve a copy on all interested persons. 303 and 6166 privileges, deduction of last illness expenses, distribution planning, asset basis considerations, throwback rules, handling income or deductions in respect of a decedent, valuation discounts, special use and other valuation, handling employee benefit or retirement proceeds, prompt assessment request, or request for release from personal liability for payment of tax. 33401, 2023 by Pankauski Lazarus PLLC. And trust expert lawyer John Pankauski has given us a roadmap. The benefits or detriments resulting to the trust or the trusts beneficiaries from the attorneys services. Romy Jurado grew up with the business dream of becoming a lawyer and starting her own business. Tax advice on postmortem tax planning, including, but not limited to, disclaimer, renunciation of fiduciary commission, alternate valuation date, allocation of administrative expenses between tax returns, the QTIP or reverse QTIP election, allocation of GST exemption, qualification for Internal Revenue Code ss. And, that case also cites to an important Florida Supreme Court trust case from 1958. The fundamental criteria arereasonableness, determined in the light of the facts and circumstances of each individual case. (2) If the terms of a trust specify the trustee's compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: But most experienced expert trust trial lawyers, like John Pankauski, will tell you that the devil is in the details. The trustees duty regarding investments imposed by the prudent investor rule. Beneficiaries must be conscious of the amount of compensation a trustee is receiving. A trustee is, after all, a fiduciary, with duties of loyalty and disclosure. Trustee fee norms can widely vary depending on the state the Trust is held. Under the Florida Probate Rules, every personal representative (with little exception) must be represented by an attorney admitted to practice in Florida. Tax advice on postmortem tax planning, including, but not limited to, disclaimer, renunciation of fiduciary commission, alternate valuation date, allocation of administrative expenses between tax returns, the QTIP or reverse QTIP election, allocation of GST exemption, qualification for Internal Revenue Code ss. Or will their job be very complex and time-consuming? Skip to Navigation | Skip to Main Content | Skip to Site Map. With regard to the principal and income question the trust controls and absent language in the trust addressing this issue then Florida Statute 738.701 and 738.702 govern. Statutes, Video Broadcast If the trust document explains what the trustee fees should be, then read Florida Trust Code Section 736.108. An attorney serving as a trustee, or a person related to such attorney, is not entitled to compensation for serving as a trustee if the attorney prepared or supervised the execution of the trust instrument that appointed the attorney or person related to the attorney as trustee, unless the attorney or person appointed is related to the settlor or the attorney makes the following disclosures to the settlor before the trust instrument is executed: Unless specifically disqualified by the terms of the trust instrument, any person, regardless of state of residence and including a family member, friend, or corporate fiduciary, is eligible to serve as a trustee; Any person, including an attorney, who serves as a trustee is entitled to receive reasonable compensation for serving as trustee; and. Any delay in payment of the compensation after the services were furnished. That case dealt with a trust which said nothing about trustee fees. Joint Administrative Procedures Committee (JAPC), Joint Committee on Public Counsel Oversight(JCPO), Joint Legislative Auditing Committee (JLAC), Joint Legislative Budget Commission (JLBC), Joint Select Committee on Collective Bargaining (JSCB), Office of Program Policy Analysis & Government Accountability (OPPAGA), Florida Legislative Committee on Intergovernmental Relations (LCIR), Joint Legislative Committee on Everglades Oversight (JCEO), Joint Legislative Sunset Committee (JCSC), Copyright 1995-2023 The Florida Legislature . This initial period is not intended to include continued regular administration of the trust. The Florida Supreme Court has set forth factors to be considered for trustee fees. An irrevocable trust is an agreement among a settlor, trustee, and beneficiaries that cannot be revoked or amended. The written statement must be in a separate writing from the trust instrument but may be annexed to the trust instrument. Keeping assets safe and distributing them. Once again, there may be two (or more) trustees acting at the same time. For example, a 1% fee for a trust that holds $100,000 would be $1,000 annually, and if the trust isn't producing income then paying the trustee that much a year could make operating the trust unfeasible. If taking a percentage of the trust assets would deplete the trust, non-professional trustees may also charge an hourly rate for their work. 2. Typically, you'd specify the terms of payment for a trustee in the trust document itself when you're creating it. So, as a general guide to reasonable professional trustee's fees, they are usually around 1%, and sometimes as high as 2%. The Rauschenberg case addresses the important issue of calculating trustee fees if the trust is silent. Schedule. But rest assured, it doesnt have to be an overly-complicated process. This 2016 trust appeal is called Robert Rauschenberg Foundation v. Gutman. Therefore, any compensation to be paid to a trustee must be contained within trust accountings, unless waived by all interested parties. Should multiple trustees receive a greater amount in total of fees than a single trustee would receive for having done the same job? In making its decision, whatever elements of proof are acceptable to a court in awarding trustee compensation, it is fundamental that the compensation must be supported by evidence, be it testimony, documentation, or both. s. 10, ch. Some of the factors to be considered for trustee fees in Florida are: amount of money in the trust; comparable fees for trustees in the community; success or failure of trustee at her job; whether unique or unusual skills which the trustee had were used or helped the trust; the loyalty or dis-loyalty of the trustee; risk and responsibility; Preparation of decedents federal estate tax return. As used in this section, the term initial trust administration means administration of a revocable trust during the period that begins with the death of the settlor and ends on the final distribution of trust assets outright or to continuing trusts created under the trust agreement but, if an estate tax return is required, not until after issuance of an estate tax closing letter or other evidence of termination of the estate tax proceeding. The nature and value of the assets that are affected by the decedents death. If youre still unsure about how to calculate Trustee fees, its OK - thats normal. And, as Pankauski reminds us, the trustee has to play by the rules. St. Augustine, Florida 32080, Jackson Law Group 2007-2023 All Rights Reserved If the terms of a trust specify the trustees compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: The duties of the trustee are substantially different from those contemplated when the trust was created; or. You can read that case for free by clicking HERE. Purchase, sale, lease, or encumbrance of real property by the trustee or involvement in zoning, land use, environmental, or other similar matters. Florida Trust Code Statute 736.0708 tells you about reasonable compensation.