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ScottyMacEsq
ScottyMacEsq, Attorney
Category: Estate Law
Satisfied Customers: 16370
Experience:  Licensed Texas General Practice Attorney
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FOR SOME BENCHMARK COMPENSATION DATA OUT THERE IN TERMS OF

Customer Question

I AM LOOKING FOR SOME BENCHMARK COMPENSATION DATA OUT THERE IN TERMS OF WHAT WOULD BE FAIR AND REASONABLE COMPENSATION ON AN HOURLY BASIS FOR A FAMILY MEMBER WHO IS MANAGING A COMPLEX FAMILY TRUST. A DAUGHTER OF A COMPLEX FAMILY TRUST IS MANAGING HER MOTHERS AFFAIRS SINCE HER PASSING A YEAR AGO. IT WILL LIKELY TAKE HER TWO YEARS TO CLOSE THE TRUST AND SHE SPENDS NEARLY 30 HOURS OF WEEK OF HER TIME MANAGING THIS TRUST. ANY THOUGHTS ON A FAIR HOURLY COMPENSATION RATE THAT IS ALLOWED BY THE TRUST?
JA: Since estate law varies from place to place, can you tell me what state this is in?
Customer: California
JA: Has anything been filed or reported?
Customer: yes
JA: Anything else you want the lawyer to know before I connect you?
Customer: just looking for some direction on benchmark compensation since section 5.12 of the Marital Trust says, "A trustee, other than the trustor, shall receive reasonable compensation for its services, unless waived...
Submitted: 9 months ago.
Category: Estate Law
Expert:  ScottyMacEsq replied 9 months ago.

Thank you for using JustAnswer.

I'm sorry to hear about your situation. Unfortunately there is no "benchmark compensation data" because every case is different.

The compensation rate for a trustee in which the trust did not specify how much the trustee would be compensated is based on Cal. Prob. Code § 15681. In such a situation, the trustee would be entitled to “reasonable compensation under the circumstances.” Cal. Prob. Code § 15681.

There is no exact value considered reasonable compensation, but rather, the probate court gives the following guidelines if a dispute arises:

1) The gross income of the trust estate;

2) The success or failure of the trustee’s administration;

3) Any unusual skill, expertise, or experience brought to the trustee’s work;

4) The fidelity or disloyalty shown by the trustee;

5) The amount of risk and responsibility assumed by the trustee;

6) The time spent in the performance of the trustee’s duties;

7) The custom in the community where the court is located regarding compensation authorized by settlors, compensation allowed by the court, or charges of corporate trustees for trusts of similar size and complexity; and

8) Whether the work performed was routine, or required more than ordinary skill or judgment. Cal Rules of Ct § 7.776.

One main case discussing this issue is In re McLaughlin’s Estate (1954) 43 Cal.2d 462, 467-68, which gives a general answer and factors to consider. In this case, a beneficiary filed objections against the trustees based on the amount of their compensation. The court stated, “The question of what is a reasonable compensation depends largely upon the circumstances of each particular case. Other factors considered include:

1) the success or failure of the administration of the trustee;

2) any unusual skill or experience which the trustee in question may have brought to his work;

3) the fidelity or disloyalty displayed by the trustee;

4) the amount of risk and responsibility assumed;

5) the time consumed in carrying out the trust;

6) the custom in the community as to allowances to trustees by settlors or courts and as to charges exacted by trust companies and banks;

7) the character of the work done in the course of administration, whether routine or involving skill and judgment; and

8) any estimate which the trustee has given of the value of his own services.”

A reasonable rate for a non-professional trustee would be $25 to $40 per hour. Most professional (non-corporate) trustees charge $65 to $125 per hour and higher. The main reason for this is that a professional trustee with the skills and knowledge spend a lot less time on the matter than a non professional trustee (and also are there to make a profit). So in the end, a trust with a nonprofessional trustee might spend the same amount on trustee fees than a trust with a professional trustee. Again, the professional trustee is generally going to spend a lot less time administering the trust because of the knowledge and skill that he/she has, than someone who is not a professional in that regard.

As far as that $25 to $40 an hour is concerned, those factors above come into play as to what the compensation should be. That is, if there is some additional education, training, knowledge, experience that the trustee has (even though nonprofessional) then it could be moved towards the $40 range. But if there's nothing that really distinguishes this person other than she was willing to step into this role, then it would likely be closer to the $25 range.

Hope that clears things up a bit. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable.

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Thank you, ***** ***** luck to you!

Expert:  ScottyMacEsq replied 9 months ago.

Did you have any other questions before you rate this answer?

Expert:  ScottyMacEsq replied 9 months ago.

Are you there? Please note that I am still here, awaiting your response or rating... (please note that rating closes this question out, so if there's nothing else, please rate it so that I can assist other customers that are waiting for answers to their questions).

If you can't see the stars, you may need to scroll up / down / left / or right to see them. This is where you rate so that the question will close out.

Expert:  ScottyMacEsq replied 9 months ago.

My apologies, but I must assist the other customers that are waiting. If you have any other questions, please let me know. If not, and you have not yet, please rate my answer AND press the "submit" button, if applicable.

Please note that I don't get any credit for the time and effort that I spent on this answer unless and until you rate it positively (3 or more stars). Look for the stars on your screen (★★★★★). You may need to scroll left/right/up/down to see these stars, but note that the rating is what closes out this question, so it is necessary that you do so.

If you feel that I have gone above and beyond in this answer (my average answer is about 10 minutes) bonuses are greatly appreciated. Thank you, ***** ***** luck to you!

▼ RATING REQUIRED! ▼ Please don't forget to Rate my service positively. It's only after you rate that I am credited.

Expert:  ScottyMacEsq replied 9 months ago.

Did you have any other questions before you rate this answer?