Involvement in fiduciary, employee, or attorney compensation disputes. 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. Based upon these statutes, one-half of the ordinary compensation is to be paid out of trust income, the other from the principal. Even if the trust document lists what compensation a trustee may receive, it can still be open to dispute. In the absence of either, the circuit court has jurisdiction to review and determine a trustees fees. There can be some real benefits to using a trusted person in your life as your Trustee. Similar to the fixing of the compensation for a personal representative, the trustee is also entitled to additional compensation for extraordinary services. Should multiple trustees receive a greater amount in total of fees than a single trustee would receive for having done the same job? 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. What Assets Are Exempt from Medicaid in Florida? Were here to help, and we look forward to guiding you through every aspect of your Trust set up and management. Insights about Florida ProbateContinue, When someone dies owing money to a creditor in Florida, the latter may file a creditor claim in court to pursue the due compensation of the debts owed by the decedent. Generally, compensation of a Trustee may be established in the Trust instrument or by separate agreement with the Trustee. Keep reading to find out. Absent language that specifies the terms of a trustees compensation, the Florida statutes state that the trustee is entitled to reasonable compensation. When a probate procedure is completed, the personal representative must file the Petition for Discharge. And it's not uncommon for a personal Trustee to not take any compensation at all. An attorney serving as a trustee, or a person related to such attorney, is not entitled to compensation for serving as a trustee if the attorney prepared or supervised the execution of the trust instrument that appointed the attorney or person related to the attorney as trustee, unless the attorney or person appointed is related to the settlor or the attorney makes the following disclosures to the settlor before the trust instrument is executed: Unless specifically disqualified by the terms of the trust instrument, any person, regardless of state of residence and including a family member, friend, or corporate fiduciary, is eligible to serve as a trustee; Any person, including an attorney, who serves as a trustee is entitled to receive reasonable compensation for serving as trustee; and. The trustees duty to protect, insure, and manage trust assets and the trustees liability relating to these duties. For probate estates having less than $75,000 of non-exempt assets, Florida law provides a simplified probate procedure, known as summary administration. Several factors are taken into consideration: Despite the Florida Legislatures failure to provide uniform measures for the reasonableness of trustee fees, it is clear that a trustee is entitled to reasonable compensation for his or her services rendered in administering the trust. Committee The lodestar method is often used to calculate attorneys fees by multiplying the number of hours reasonably applied to solve a case by a reasonable hourly rate. Implementation of substitution of the successor trustee. We have previously written about Florida Trustee Compensation. A trust is a legal arrangement in which the trust maker (also referred to as the trustor or settlor) transfers the nominal ownership of assets to a trustee (fiduciary) for the benefit of selected individuals (beneficiaries). Florida trustees are ENTITLED to reasonable compensation. Before executing the trust, I was informed that: 1. If a decedents will provides for the personal representatives compensation to be based upon specific criteria that differs from the statute, then that provision controls. What constitutes an extraordinary service may vary depending on many factors, including the size and complexity of the trust. Upon the trustmaker's death, Florida Statute 736.05055 requires that the successor trustee file a "notice of trust" with the court of the county of the trustmaker's domicile. Normal ranges tend to be somewhere between 1 and 1.5 percent of the estate value. Or will their job be very complex and time-consuming? While it's customary to charge a percentage, this can be problematic for smaller trusts. Publications, Help Searching Some of a Trustee's common responsibilities could include: Filing and paying all taxes. Or interpretation. The obligation of a successor to require a former trustee to provide an accounting. But the trustee fees should be reasonable. It depends. The nature and value of the assets that are affected by the decedents death. 33401, 2023 by Pankauski Lazarus PLLC. Contributions due to the personal representative of the settlors estate for payment of expenses of administration and obligations of the settlors estate. But most experienced expert trust trial lawyers, like John Pankauski, will tell you that the devil is in the details. To see a FREE VIDEO about whether an amendment to a revocable trust is valid, click HERE. SeeHood v. Marvin and Kay Lichtman Foundation, 832 So.2d 941 (Fla. 3rdDCA 2002). If the terms of a trust specify the trustees compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: The duties of the trustee are substantially different from those contemplated when the trust was created; or. Section 736.0708.3 The Foundation then asked the court to determine For a smaller trust, you can hire a professional like a lawyer who may charge an hourly rate. The first is from the Second District Court of Appeal. If the trustee has rendered other services in connection with the administration of the trust, the trustee shall also be allowed reasonable compensation for the other services rendered in addition to reasonable compensation as trustee. The Florida Supreme Court has set forth factors to be considered for trustee fees. Knowing the difference between reasonable fees and excessive trustee fees is key. The trustee may be a professional trustee (such as a bank trust department or a lawyer), or may be a family This 2016 trust appeal is called Robert Rauschenberg Foundation v. Gutman. How Long Do You Have to File Probate After Death? Trustees are not entitled to compensation simply by virtue of their appointment as a trustee but must provide a service and/or benefit that is supported by adequate proof. (1) (a) Except as provided in paragraph (d), if the trustee of a revocable trust retains an attorney to render legal services in connection with the initial administration of the trust, the attorney is entitled to reasonable compensation for those legal services, payable from the assets of the trust, subject to s. 736.0802 (10), without court Any delay in payment of the compensation after the services were furnished. Identifying tax returns required to be filed by the trustee, the trustees liability for payment of taxes, and the due date of returns. Before starting a business, you probably will need to register with the Florida Department of State, the IRS and the Florida Department of Revenue. And, as Pankauski reminds us, the trustee has to play by the rules. In making its decision, whatever elements of proof are acceptable to a court in awarding trustee compensation, it is fundamental that the compensation must be supported by evidence, be it testimony, documentation, or both. The citation for the West Coast Hospital case is 100 So. Under Florida law, the personal representative of an estate (sometimes also called an executor) and the trustee of a trust are entitled to compensation, as are the attorneys who represent the personal representative and trustee. (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. With regard to the principal and income question the trust controls and absent language in the trust addressing this issue then Florida Statute 738.701 and 738.702 govern. Each trustee compensation case is so fact specific says Pankauski. Review of an estate tax return and preparation or review of other tax returns required to be filed by the trustee. Remember, you can (and probably should) outline compensation clearly as a defined detail inside the Trust - this way, there are no questions. The fee is subject to negotiation between the trustee and the attorney. From choosing beneficiaries, to detailing all your assets, to asserting your goals for the futurethe list can feel endless. Posted in Asset Protection,Probate,Tax Law & IRS Defense,Wills, Trusts & Estate Planning. 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. Fort Lauderdale, FL 33301. ESTATES AND TRUSTS. In 1958, the Florida Supreme Court issued a trustee fee opinion. 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. Virtually no beneficiary likes to pay their trustee compensation. Procedures for the trustees discharge from liability for administration of the trust on termination or resignation. Suite 1050, These fees shall include services for routine audit of the return, not beyond the examining agent level, if required. If the trust instrument has no language specifying the trustees compensation, Florida law states that the trustee is entitled to reasonable compensation. However, the statutes do not provide a specific threshold to define which percentages are deemed reasonable.. This information is not intended to create, and receipt Who Determines the Trustee Fee? A trustee is, after all, a fiduciary, with duties of loyalty and disclosure. what trustee fee factors are to be considered. Handling a Trust Does not Need to be Overwhelming - Immediately Contact Your Florida Probate Lawyer Are you the beneficiary of a Florida trust? If the corporate trustee actually manages the assets, the fee can range anywhere from 30 basis points to 100 basis points depending on the size of the trust, the expertise required, and the risk involved. Distribution of income or principal to beneficiaries or funding of further trusts provided in the governing instrument. If the terms of a trust do not specify the trustees compensation, a trustee is entitled to compensation that is reasonable under the circumstances. We will contact you as soon as possible. Florida Trust Law on Trustee Compensation Florida trustees are ENTITLED to reasonable compensation. eficiary, petitioned the Florida Court to "review the Trustees' fee issue and determine a reasonable fee," alleging that the trust agreement is silent as to the trustees' fee and that the trustees are entitled to a "reasonable fee" under Fla. Stat. But rest assured, it doesnt have to be an overly-complicated process. As a trust litigator who also handles Trust Appeals, John Pankauski knows that opinions from appeals courts are important. What does it say about compensation? And today, she is living proof that dreams really do come true. The written statement must be in a separate writing from the trust instrument but may be annexed to the trust instrument. Thats why you should consider reading 2 important trustee compensation cases. Implementation of substitution of the successor trustee. Fill out this form for a complimentary case evaluation. The Florida Trust Code is a body of statutes created by the legislature for trustees and beneficiaries to follow. 2006-217; s. 7, ch. The Rauschenberg case addresses the important issue of calculating trustee fees if the trust is silent. But if youre appointing a Personal Trustee, looking at your state is a good place to start. They also might charge an additional percentage based on a Trusts annual income. If the trustee of a trust retains an attorney to render legal services in connection with the initial administration of the trust, the attorney is entitled to reasonable compensation. Under the Florida Trust Code, A Trustee is entitled to compensation that is reasonable under the circumstances. F.S. 415 South Olive Avenue West Palm Beach, FL. Fiduciary duties, avoidance of self-dealing, conflicts of interest, duty of impartiality, and obligations to beneficiaries. The compensation specified by the terms of the trust would be unreasonably low or high. In determining reasonable compensation, the court shall consider all of the following factors giving such weight to each as the court may determine to be appropriate: The promptness, efficiency, and skill with which the initial administration was handled by the attorney. The settlor must execute a written statement acknowledging that the disclosures required under paragraph (a) were made prior to the execution of the trust instrument. All rights reserved. If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming virtual Estate Planning Essentials workshops by clicking here or calling 214-720-0102. Purchase, sale, lease, or encumbrance of real property by the trustee or involvement in zoning, land use, environmental, or other similar matters. Just CLICK HERE. Generally, the multiple trustees must agree on how the fee will be divided among them, otherwise, the court will do so. With regard to the allocation of a trustees fee, the first question involves whether the fee should be taken from principal or income. Because non-professional Trustee fees are not standardized, knowing how much to expect can be a little bit less certain. If the Florida trust document says nothing about fees, then we know to follow the West Coast Hospital case factors. The trustee holds nominal ownership over, Read More When Should You Choose a Successor Trustee in Florida?Continue, Florida is a popular destination for out-of-state residents who want to buy real estate. 736.0708(1). The trustee may be a professional trustee (such as a bank trust department or a lawyer), or may be a family member or trusted adviser though it may be difcult to qualify a non-professional to serve as trustee. First, you want to look at the size of the Trust. If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney shall furnish a copy to the trustee prior to commencement of employment and, if employed, shall promptly file and serve a copy on all interested persons. For example, a 3% fee can be considered a reasonable fee for large and complex assets that can take years to administer. . I have designated my attorney, an attorney employed in the same law firm as my attorney, or a person related to my attorney as a trustee in my trust instrument dated (insert date). 736.0201(4)(c), (4)(g). Disclaimer: The information on this system is unverified. In Florida, a notice of trust is the formal notice that a trustee provides to the public that the trustmaker has deceased. 2010-122; s. 7, ch. Grantor - (Also called "settlor" or "trustor") An individual who transfers property to a trustee to hold or own subject to the terms of the trust agreement setting forth your wishes. He tries cases involving trustee fees and trustee compensation. An irrevocable trust is an agreement among a settlor, trustee, and beneficiaries that cannot be revoked or amended. A typical fee might be a quarter of what the professional trustee charges, or .25 percent (often referred to by financial professionals as 25 basis points). And a lot think that their trustees take too much in trustee fees. For this reason, it may make sense for the personal representative to forego the compensation, especially if that personal representative is also a beneficiary. Professional Trustees do much of the same duties as any other Trustee would. Florida Statutes 736.0708 (2) adds that if the terms of a trust specify the trustees compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: If the trustee was responsible for any additional services involved in the arrangements administration, he or she is allowed to receive further compensation in addition to the trustees reasonable compensation. This becomes especially important if you plan to use a Personal Trustee. The larger and more complex a trust is, the higher the compensation fees are. During probate, the court will determine the validity of the decedents will and oversee the distribution, Read More How Long Do You Have to File Probate After Death?Continue, 10800 Biscayne BoulevardSuite 850 Miami, Florida 33161, 2023 Jurado & Associates, P.A. 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). Professional trustees also have to pay self-employment tax on the fees they receive. Theres also the Uniform Trust Code (UTC), which some (but not all) states have adopted in effort to standardize all things related to Trustsincluding Trustee fees! The benefits or detriments resulting to the trust or the trusts beneficiaries from the attorneys services. Ordinary services of the attorney in an initial trust administration include legal advice and representation concerning the trustees duties relating to: Review of the trust instrument and each amendment for legal sufficiency and interpretation. (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 The information on this website is for general information purposes only. The complexity or simplicity of the administration and the novelty of issues presented. The trustees duty to protect, insure, and manage trust assets and the trustees liability relating to these duties. 303 and 6166 privileges, deduction of last illness expenses, distribution planning, asset basis considerations, throwback rules, handling income or deductions in respect of a decedent, valuation discounts, special use and other valuation, handling employee benefit or retirement proceeds, prompt assessment request, or request for release from personal liability for payment of tax. This subsection applies to all appointments made pursuant to a trust agreement: Executed by a resident of this state on or after October 1, 2020; or. Non-professional trustees should use the above-mentioned guidelines before taking a fee. If taking a percentage of the trust assets would deplete the trust, non-professional trustees may also charge an hourly rate for their work. We will consider the factors under Florida law. You can also think about what capacity your Trustee will be working under. Think about: How much money will be involved that the Trustee must manage? The obligation of a successor to require a former trustee to provide an accounting. For a formal probate administration, the following table sets forth what amount is deemed to be reasonable compensation: In addition to the above table, a personal representative can receive additional compensation for extraordinary services, which includes tasks such as selling real property, participating in litigation on behalf of the estate, and carrying on the decedents business. There is a huge difference. Legal advice regarding carrying on of decedents business or conducting other commercial activity by the trustee. 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. (See commentary below about the Robert Rauschenberg Foundation case.). or viewing does not constitute, an attorney-client relationship. 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. Some professional trustees charge a minimum of $5,000 a year. Unfortunately, the statutes are devoid of any reference to what amounts to reasonable compensation or how to determine whether fees sought by a trustee are per se reasonable. If you administering a will, you are the personal representative (PR), not the trustee. In most cases, the average amount of fees paid to a trustee in Florida range from 1% to 3% of the value of the trust. Its a job. Skip to Navigation | Skip to Main Content | Skip to Site Map. In this legal commentary, Florida trust litigator John Pankauski will provide insight. Want to know what trustee fee factors are to be considered? What is a reasonable trustee fee in Florida? When are they excessive? When Should You Choose a Successor Trustee in Florida? St. Augustine, Florida 32080, Jackson Law Group 2007-2023 All Rights Reserved And, knowing how to calculate Trustee fees isnt as simple as you may think. and ultimately distribute the trust estate. Legal advice regarding homestead status of trust real property or proceedings involving the status. First and foremost, in seeking compensation for their services, the controlling duty of a trustee is the faithful and efficient conservation of the trust assets. We have written before about trustee fees and trustee removal. On a trust with assets of $80,000, the attorney for the trustee would be entitled to $2,250 in fees ($1,125 + $562.50 + $562.50). Trustee fees can be affected by state norms, so its beneficial to understand a little bit about the state youre in. If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney shall furnish a copy to the trustee prior to commencement of employment and, if employed, shall promptly file and serve a copy on all interested persons. Persons who must or should be served with required notices and the method and timing of such service. Also like the personal representative, the statutes once again provide guidance as to what is considered reasonable compensation. For ordinary services of attorneys in formal estate administration, the following table sets forth the amount of compensation that is presumed to be reasonable based on the inventory value of the probate estate assets and the income earned during administration: The personal representatives attorney may receive additional compensation for extraordinary services, which may include the involvement in a will contest, postmortem tax planning, review or preparation of an estate tax return, the purchase or sale of real property by the estate, and other services. Legal advice regarding homestead status of trust real property or proceedings involving the status. All rights reserved. How Do Multiple Trustees Divide the Fees? Despite them being a normal part of any Estate Plan involving a Trust, there still are a lot of questions surrounding what reasonable Trustee fees actually are. Trustee fee norms can widely vary depending on the state the Trust is held. Non-professional trustee fees, on the other hand, generally fall between 0.5% to 1% of the value of trust assets per year. Whats reasonable? Despite Florida having no statutory schedule for trustees fees, a standard range of trustees fees is generally recognized by corporate or professional Florida fiduciaries. No secret fees, no hidden fees says Pankauski. As a result, whether or not the trust instrument provides for the basis, amount, and form of compensation, the amount or rate of a trustees compensation or commission is not determined by any inflexible rule, but rests within the sole discretion of the appropriate court in which discretion is to be recognized in accordance with certain established principles as set forth in prior case law.