Does a Trustee Get Paid for His or Her Duties?

Does a Trustee Get Paid f…

The trustee of a trust is a fiduciary, which means that he or she has a strict duty to follow the instructions of the decedent as outlined in the trust document. He or she also must comply with the law and place the interests of the trust’s beneficiaries above his or her own interests. These duties are extensive; they are often complex and quite time-consuming, depending on the amount and nature of the assets contained in the trust and other issues that may arise during the trust administration process.

In general, trustees, or any fiduciaries, such as personal representatives of estates, are entitled to “reasonable compensation” for their activities. In order to qualify as compensable activities, the trustee’s services must be necessary in terms of the furtherance of their duties as trustee, as well as unrelated to any detrimental breach of duty or other wrongdoing. All of these activities must be beneficial to the trust assets and the trust beneficiaries. As a result, any activities that are detrimental to the trust assets or the trust beneficiaries in any way are not compensable.

The amount of compensation for a trustee is not fixed by law, although a trust document may give some guidance on amounts. What counts as reasonable compensation depends on the nature of the duties involved, the required expertise of the trustee, and the type and amount of assets held in the trust. Whatever compensation the trustee receives is taxable as income to him or her.

Designating a trustee for your trust is only one aspect of the estate planning process. When you are drafting a trust, a will, or any type of estate planning document, you must ensure that the document both achieves your goals and protects your assets to the greatest degree possible. If you are in need of assistance with your estate plan, no matter your situation, we have the knowledge and resources to assist you. Call Legacy Law Center today and learn how our Michigan estate planning attorneys can advocate on your behalf.

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