Serving as a trustee can be a daunting responsibility. One of my clients recently came to my office for help on how to handle his role as trustee for his brother's living trust. My client had agreed to serve as the successor trustee, but he had little idea what to do. He was in charge of managing property sales, maintaining the condition of the estate, paying administrative fees, and, unfortunately, his brother's estate was just brought into a lawsuit.
My client admitted that his trustee duties were becoming time-consuming and overwhelming. The trustee role required significantly more responsibilities than what he had expected.
The good news is that my client, and other successor trustees, can receive payment for trustee duties. Any type of trust can include compensation for trustees. In fact, sometimes this payment is a good idea, especially if the trustee you appoint seems unenthusiastic about his or her responsibilities to your estate, or if the job would require a significant amount of work.
Tennessee Law: Trusts and Trustee Compensation
In the State of Tennessee, a trustee can be paid for his or her work as trustee. Tennessee law outlines two scenarios for compensating trustees:
1. Trustee compensation is stated in the trust document.
Trusts can specifically state how much money the trustee will receive for fulfilling his or her trustee duties. If this is the case, the trustee will receive the compensation stated in the trust document.
When a trust includes trustee compensation, the court will only intervene if the compensation seems inappropriate for the situation, such as the following:
- The trustee's responsibilities take significantly more or less time and counsel than the terms of the trust accounted for.
- The compensation amount stated in the trust seems unreasonably low or high for what is required of the trustee.
2. The Court orders the compensation of the trustee.
If a trustee feels that he should be paid for his trustee duties and the trust does not include anything about trustee compensation, the court can step in to help. The court can require that the trustee be rewarded a sum from the trust as payment for their trustee role.
The amount the trustee receives from the trust depends on several factors, including:
- the size of the estate
- the number of assets include in the estate
- if the trust is involved in litigation, and
- expertise required for the process to run smoothly.
An experienced trust lawyer can help you consider these factors and estimate appropriate payment if you are seeking compensation from the court.
Preparing Your Trustee to Protect Your Estate
The best way to prepare your trustees for their responsibilities is to make sure that they are aware of their trustee role before you pass away. Your trustee wants to know what will be expected of him or her, such as the amount of time required and the difficulty of the trustee duties. When you die, your trustee steps in to manage your trust and to distribute its assets. People generally do not like to be surprised to learn they were appointed as successor trustee, and it is important for you to communicate your intentions beforehand.
Your trust should include a specified monetary amount that the trustee will receive as payment for his or her trustee duties. Payment from the trust holds your trustee accountable and encourages trustees to follow through on their responsibility to the terms of your will.
An estate planning attorney can help you determine an appropriate amount to pay a trustee. Your attorney will review your assets and the complexity of your estate plan and recommend trustee compensation based on the extent of your estate.
Contact a Clarksville Trust Attorney Today
Our firm is available to review or revise your estate plan to make sure your will includes appropriate payment for trustees. For more information on trusts and trustee compensation, contact Clarksville trust attorney John W. Crow. Call our office at 931-218-7800 or schedule an appointment online today.