How do I determine "reasonable" trustee fees?
I have been named trustee of my parent's estate -- the majority of which is 13 rental properties. What is a reasonable and customary fee for managing this? I am looking for an hourly rate as well as what would be charged if it were done on an annual basis.
Most trusts explicitly provide that a trustee can receive a "reasonable and customary fee" for administering the trust -- and it sounds as if the one you're administering is one of them. The problem with this muzzy language, as you're finding out, is that it doesn't provide any specific help when you're trying to compute how much is to much and how much is not enough.
The statutes and case law don't provide much good guidance, either. So you're left to flail.
Some guidance: Your prime concern in setting the trustee fee is to be attuned to any and all trust beneficiaries. For example, if they all agree in writing that the fee you have requested is acceptable, few courts in the world would disagree.
You can help point up the reason in the reasonable fee by keeping good records of all you do, along with the time it took you to do it. People are less likely to buck if they can see tangible documentation of what went into preserving and maintaining the trust property.
Since your tasks and time in managing the rental property are bound to vary and be unpredictable, you are probably best off sticking with an hourly fee. You can take one of two common approaches:
- Set a minimal hourly rate -- say $25 or so -- on the grounds that that's what it would take to hire someone other than you to roll up his or her sleeves and do the work.
- Use the rough hourly rate for your own career -- and charge that.