Can I pay myself a salary from the family trust?

3 answers | Last updated: Dec 02, 2016
A fellow caregiver asked...

I take care of my mother 16 hours a day and she lives in my house. Can I pay myself a salary from the family trust?

Expert Answers

Liza Hanks is the founder and owner of FamilyWorks Estate Planning, a law firm with offices in Campbell and Los Altos, California, and the author of The Busy Family's Guide to Estate Planning (Nolo, 2007).

It depends on what the trust itself says about how the assets can be used for your mother's benefit, and on who the trustee is.

Typically, such trusts will specify that the assets can be used for the "health, maintenance, and support" of the beneficiary; sometimes for their "comfort, welfare, and happiness." You need to review the trust and see what the one controlling your situation says.

Caregiving costs should be covered under either one of the standards described. Still, not all trusts are so general. Some can be specific about what is, and is not, covered.

Another thing to be aware of: Who is the trustee? Is it your mother? Is it you? Is it another sibling?

Ideally, someone other than you is the trustee. That way, if you are paid a reasonable salary -- what a third-party would receive for the same work - wouldn't look like a conflict of interest.

If you are the trustee, be very careful to avoid anything that looks like such a conflict. As a first step, send out a notice to all the other beneficiaries, informing them that you intend to pay yourself a salary, and stating what it would be. Such a notice should give them time to object to such a move; if you learn of no complaints within that time period, go ahead and start with the payments.

Finally, you should check with the local probate court to see whether it enforces a standard time limit for such an action.

Community Answers

1000 yard wadcutter answered...
I have a PhD in Finance/Econ, and I can absolutely state that this question CANNOT BE ANSWERED; Without total access to the trust document! So that validity of the document can be established; and so a reasonable person could ascertain the intent of the party(s). In many states the Trust document must be correct as to form and formatted. Further, in some jurisdictions the identy of the witnesses must be determinable. BS/BA Accounting, M.B.A. in Finance, and a Harvard PhD. adjunct faculity the University of Wisconsin Post Graduate Programs (Madison, WI)

Dwinpdx answered...

i am just a family member of a person in an assisted care home. If I were you I would do some research and itemize for the trust officer or those who need to make the okay to your request just how much it would cost to be in an assisted care home or nursing home so you have justification for your request.