If a loved one or friend has asked you to be the trustee or successor trustee of a trust, it’s crucial to find out just what your responsibilities will be. Some trusts are fairly simple to administer. They may only require that you disburse a designated amount or percentage of the assets to the beneficiary on a predetermined schedule or based on specific markers, like age or accomplishment. The assets may be in instruments like bank accounts that require little management.
Other trusts are intended to increase in value to provide lifetime support to a beneficiary. Managing the trust may require regular monitoring and modification to ensure that the assets are earning as much as possible. Often, people rely on professional trustees to manage more complex trusts, but not always.
All trustees have fiduciary duties and responsibilities to the trust and beneficiaries. They’re also typically responsible for tax filings and other regulatory responsibilities.
Like executors and other estate administrators, trustees are entitled to be paid. The fee and the way it’s paid should be listed in the trust document. The grantor who sets up the trust may choose to pay the trustee a percentage of the trust’s asset value (particularly if they expect it to increase) or a set fee paid every year. They may determine that the trustee should be paid based on how many hours they spend on their duties.
What does Kentucky law say?
If a grantor hasn’t addressed the fee in the document, trustees are to be paid based on state law. Kentucky law simply says that a trustee “is entitled to compensation that is reasonable under the circumstances….”
It can be difficult to know just how much time and work will be required to administer a trust until a trustee has to do it – particularly for a successor trustee who takes over from the grantor after they pass away.
If someone believes they deserve greater compensation than was designated by the grantor, or by the probate court if the grantor didn’t address compensation, they have a right to seek a modification. Kentucky law states that a court may modify the compensation if “(a) The duties of the trustee are substantially different from those contemplated when the trust was created; or (b) The compensation specified by the terms of the trust would be unreasonably low or high.”
If you’re seeking a modification to your compensation as a trustee, it’s necessary to make a strong case to the court. Having experienced legal guidance can make all the difference in the outcome.
