Trust expenses and trustee fees can come as a shock to those receiving assets from a trust. Many beneficiaries wrongly believe that the person creating the trust has already paid for all trust costs.
This lack of knowledge can cause problems among family members. To prevent this and properly manage expectations, it’s important to ensure everyone knows the trustee’s responsibilities and compensation.
Most states allow trustees, whether corporate, professional, or personal, to receive compensation for their time and efforts in managing the trust. The fee varies but is typically 1-3% of the trust’s value.
In addition to the fee, the trustee is entitled to reimbursement for expenses incurred in performing their duties. An annual trust accounting should be provided to each beneficiary to show all income and expenses and to ensure that assets are properly managed and distributed.
To give your family peace of mind and avoid conflicts, it’s important to plan in advance and ensure everyone is on the same page. Upon your passing, emotions will be high, and a clear understanding of the trust can provide comfort during a difficult time.