When the settlor of a trust (the person who created it) passes away, the named Successor Trustee assumes the responsibility of managing and administering the trust's assets. One of the most frequently asked questions is: How should a Successor Trustee determine reasonable compensation? In California, there is no fixed statutory fee schedule, making it essential to understand the factors that influence these decisions and where to look for guidance.

1. Start with the Trust Document Itself
The very first step is to review the trust document. Often, the trust will include provisions that specify how the trustee should be compensated. This might be:

• A fixed dollar amount
• An hourly rate
• A percentage of the trust's assets

If the trust's language is clear, those terms generally control. Trustees must follow the trust's instructions to fulfill their fiduciary duty.

2. When the Trust Is Silent on Compensation
If the trust does not provide guidance, California law allows for “reasonable” trustee compensation. What constitutes “reasonable” can vary widely based on factors such as:

• Complexity of the Trust Assets:
  More complicated trusts—those that include multiple real estate holdings, diverse investment portfolios, or active businesses—tend to justify higher fees than simpler trusts.

• Trustee's Skill and Experience:
  A trustee with professional expertise (e.g., legal, financial, real estate) may command higher fees than a layperson performing basic administrative tasks.

• Local Practice and Professional Benchmarks:
  Consider the fees charged by private professional trustees or corporate trust departments in your area as a reference point.

3. Typical Compensation Ranges (Only as General Guidelines)
Trustee fees can vary widely. Some general ranges, which should not be considered binding or definitive, might include:

• Percentage of Assets:
  Professional or corporate trustees often charge annual fees ranging from around 1% to 2% of the total trust assets managed. For private individual Trustees this range might be .5 percent to 1 percent.

• Hourly Rates:
  If compensation is based on time spent, private individuals serving as trustees might charge anywhere from $30 to $150+ per hour, depending on their experience and the complexity of tasks involved.

• Flat or Task-Based Fees:
  Some trustees might agree on a flat fee for the entirety of the trust administration or specific tasks, though this is less common. The amount would depend heavily on the trust's complexity and could range from a few thousand dollars to tens of thousands of dollars for more involved administrations.

It is crucial to emphasize that these figures are broad, non-binding ballparks. Each situation is unique, and what may be appropriate for one trust may not be reasonable for another.

4. Maintain Detailed Records and Communicate with Beneficiaries
Keeping meticulous records of your time, services rendered, and expenses incurred is vital. Beneficiaries are more likely to accept a trustee's compensation if they have a clear, transparent breakdown of why certain fees were charged. Regular updates and open communication can prevent misunderstandings and disputes over trustee compensation.

5. Seek Professional Guidance if Needed
If you are uncertain about the appropriateness of your proposed compensation, consult with an experienced estate planning attorney or other qualified professional. In the event of a dispute, the Probate Court can review the fees and determine what is reasonable. Getting professional guidance early can help prevent litigation and ensure you fulfill your fiduciary duties properly.

Conclusion
Determining Successor Trustee compensation in California starts with reviewing the trust document and then looking to factors like complexity, skill level, and local standards if the document is silent. While ranges may help provide a ballpark, each trust is unique, and professional advice is often the best way to ensure that the fees charged are both fair and defensible.

LEGAL DISCLAIMER
This article is intended for general information purposes only. Any legal analysis or other content should not be construed as legal or professional advice or a substitute for such advice. No attorney-client or confidential relationship is formed by the transmission of this information. If you require legal or professional advice, please contact an attorney or other suitable professional advisor. The choice of an attorney or other professional is an important decision and should not be based solely upon advertisements and blog postings.