On an estate with an inventory value of $2,000,000, fees to the personal representative up to $55,000 are reasonable ($30,000 on the first one million dollars and $25,000 on the second one million dollars). Involvement in fiduciary, employee, or attorney compensation disputes. Extraordinary services may include, but are not limited to: Involvement in a trust contest, trust construction, a proceeding for determination of beneficiaries, a contested claim, elective share proceedings, apportionment of estate taxes, or other adversary proceedings or litigation by or against the trust. This becomes especially important if you plan to use a Personal Trustee. For probate estates having less than $75,000 of non-exempt assets, Florida law provides a simplified probate procedure, known as summary administration. In addition to the attorneys fees for ordinary services, the attorney for the trustee shall be allowed further reasonable compensation for any extraordinary service. Normal ranges tend to be somewhere between 1 and 1.5 percent of the estate value. The attorneys participation in tax planning for the estate, the trust, and the trusts beneficiaries and tax return preparation or review and approval. They also might charge an additional percentage based on a Trusts annual income. A trustee is entitled to a fee for administration of the trust, as is the personal representative of an estate. Any interested parties may seek a court order on the reasonableness of the trustees compensation. And with everything that goes into creating your Estate Plan, choosing a Trustee can be one of the most complicated aspects, because its such a complex role and you must truly trust the person you select. Fiduciary duties, avoidance of self-dealing, conflicts of interest, duty of impartiality, and obligations to beneficiaries. But the trustee fees should be reasonable. They must be reasonable given the circumstances and thus 3% may be reasonable for a large and complicated estate requiring years of administration and 1% may be unreasonable for a simpler estate. And it's not uncommon for a personal Trustee to not take any compensation at all. There can be some real benefits to using a trusted person in your life as your Trustee. The obligation of a successor to require a former trustee to provide an accounting. Persons who must or should be served with required notices and the method and timing of such service. The trustee gets two kinds of fees: annual fees and paying out fees. SeeHood v. Marvin and Kay Lichtman Foundation, 832 So.2d 941 (Fla. 3rdDCA 2002). The trustees duty to protect, insure, and manage trust assets and the trustees liability relating to these duties. Should multiple trustees receive a greater amount in total of fees than a single trustee would receive for having done the same job? How Do Multiple Trustees Divide the Fees? From choosing beneficiaries, to detailing all your assets, to asserting your goals for the futurethe list can feel endless. With regard to the allocation of a trustees fee, the first question involves whether the fee should be taken from principal or income. Filing a nontaxable affidavit, if not filed by a personal representative. So, what are the rules for Florida Trustee Compensation? If this return is prepared by the attorney, a fee of one-half of 1 percent up to a value of $10 million and one-fourth of 1 percent on the value in excess of $10 million, of the gross estate as finally determined for federal estate tax purposes, is presumed to be reasonable compensation for the attorney for this service. On an estate with an inventory value of $2,000,000, the attorney for the personal representative would be entitled to $55,000 in fees ($3,000 for the first one hundred thousand dollars of inventory value, plus 3% of the next nine hundred thousand dollars of inventory value, or $27,000, plus 2.5% of the next one million dollars of inventory value, or $25,000). Trustee fee norms can widely vary depending on the state the Trust is held. Extraordinary services may include, but are not limited to: Involvement in a trust contest, trust construction, a proceeding for determination of beneficiaries, a contested claim, elective share proceedings, apportionment of estate taxes, or other adversary proceedings or litigation by or against the trust. (904) 823-3333 (1) If the terms of a trust do not specify the trustee's compensation, a trustee is entitled to compensation that is reasonable under the circumstances. Trustee fees can be affected by state norms, so its beneficial to understand a little bit about the state youre in. On an estate with an inventory value of $500,000, the attorney for the personal representative would be entitled to $15,000 in fees ($3,000 for the first one hundred thousand dollars of inventory value plus 3% of the next four hundred thousand dollars of inventory value, or $12,000). And wonder if the Florida Trustee Compensation is too much? Order of payment of expenses of administration of the trust and order and priority of abatement of trust distributions. Is there a question here we didnt answer? 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. Absent language that specifies the terms of a trustees compensation, the Florida statutes state that the trustee is entitled to reasonable compensation. Taking a closer look at case law, it is possible to find cases in which courts determined that the lodestar method is not appropriate to calculate trustees fees. Generally, compensation of a Trustee may be established in the Trust instrument or by separate agreement with the Trustee. In the absence of either, the circuit court has jurisdiction to review and determine a trustees fees. Whats reasonable? Accordingly, the following table sets forth the amount of compensation that is presumed to be reasonable: Ordinary services during the initial trust administration include review of the trust instrument, implementation of the successor trustee, serving of notices, and other services. While states dont have Trustee compensation mandates, they generally do have guidelines for Executor compensation, which you absolutely could use as a reference. REQUIRED. Trustee's attorney fees. Distribution of income or principal to beneficiaries or funding of further trusts provided in the governing instrument. First, you want to look at the size of the Trust. We will consider the factors under Florida law. The duties of the trustee are substantially different from those contemplated when the trust was created, or, The compensation specified by the terms of the trust would be unreasonably low or high, The standard amount of compensation given to fiduciaries performing similar work in the community, The level of skill and judgment required in the trust administration, Whether administering the trust requires a trustee with unusual skills or experience, The risk and liability assumed by the trustee, The amount of time required to administer the trust, The standard amount of allowances paid to trustees by trustors or courts, The standard amount of charges paid to trust companies and entities serving as trustees, An estimated amount provided by the trustee as compensation for his or her services. Each trustee compensation case is so fact specific says Pankauski. (1) If the terms of a trust do not specify the trustee's compensation, a trustee is entitled to compensation that is reasonable under the circumstances. Fiduciary duties, avoidance of self-dealing, conflicts of interest, duty of impartiality, and obligations to beneficiaries. Read the factors regarding trustee compensation listed in West Coast Hospital Assoc. Professional Trustees. Copyright 2000- 2023 State of Florida. The nature and value of the assets that are affected by the decedents death. If there is a conflict of interest between a trustee who is a beneficiary and other beneficiaries of the trust, advice to the trustee on limitations of certain authority of the trustee regarding discretionary distributions or exercise of certain powers and alternatives for appointment of an independent trustee and appropriate procedures. What is a standard Trustee fee if you go the professional route? Avoid costly mistakes contact Attorneys Romy B. Jurado and Diana C. Collazos by calling (305) 921-0976 or emailing Romy@juradolawfirm.com to schedule a consultation. (From left to right) Martin M. Shenkman is an attorney in private practice in Fort Lee, N.J. and New York City, Gail E. Cohen is chairman and general trust counsel at Fiduciary Trust Company International in Boca Raton, Fla. and New York City, and Gerard F. Joyce, Jr. is national head of trust & estates at Fiduciary Trust In planning your estate, it may be necessary to name a Trustee, which means you'll also need to understand Trustee fees. The failure to obtain an acknowledgment from the settlor under this subsection does not disqualify a trustee from serving and does not affect the validity of a trust instrument. Most people who are creating their Estate Plan and setting up a Trust have to really evaluate and weigh the pros and cons of using a Professional Trustee vs Trustee whos a friend or family member. Identifying tax returns required to be filed by the trustee, the trustees liability for payment of taxes, and the due date of returns. For example, a 3% fee can be considered a reasonable fee for large and complex assets that can take years to administer. Even in certain situations in which the trust does specify the trustees compensation, the court may adjust that compensation if the trustees duties are substantially different from those contemplated when the trust was created or if the compensation specified is unreasonably low or high. Upon petition of any interested person in a proceeding to review the compensation paid or to be paid to the attorney for the trustee, the court may increase or decrease the compensation for ordinary services of the attorney for the trustee or award compensation for extraordinary services if the facts and circumstances of the particular administration warrant. Legal advice regarding carrying on of decedents business or conducting other commercial activity by the trustee. A trust holding $200,000 and paying a fee of 1.5% would pay an annual fee of $3,000, which may or may not cover the trustee's costs. We will contact you as soon as possible. If this return is prepared by the attorney, a fee of one-half of 1 percent up to a value of $10 million and one-fourth of 1 percent on the value in excess of $10 million, of the gross estate as finally determined for federal estate tax purposes, is presumed to be reasonable compensation for the attorney for this service. In this legal commentary, Florida trust litigator John Pankauski will provide insight. Even if the trust document lists what compensation a trustee may receive, it can still be open to dispute. See. Under the Florida Probate Rules, every personal representative (with little exception) must be represented by an attorney admitted to practice in Florida. West Coast Hospital Association vs. Florida National Bank of Jacksonville.
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