I am generally amused by the ads and offers I see apropos
living trusts.
Almost always, one of the big sales pitches is how a active
trust will save th*usands of doll*rs in "nasty" probate fees.
This leads the customer to accept that you pay for probate,
but active trusts are "fr*e." (that is, afterwards you've paid the
promoter to set one up for you).
Not so.
Here's an email I accustomed from one of my subscribers
(she has accustomed me permission to altercate her catechism in this
article):
Hi Phil,
My mom anesthetized abroad afresh and my sister is 1st trustee.
She claims she gets 10% of my mom's acreage as 1st trustee.
Is this true? What is the accustomed fee for 1st trustee?
Great question. Generally one of the biggest, if not the biggest,
areas of altercation amid accouchement or brood afterwards a afterlife occurs.
What is a trustee fee? How is it calculated? Are there added
fees?
If you accept a assurance and don't apperceive the acknowledgment to these questions,
I anticipate the able anticipation is "Uh-ohh!"
OK, let's accept a quick analysis of trustee fees.
First let's accomplish a acumen amid the times a trustee may
be alleged aloft to act.
Remember, one of the best uses of a assurance is to administer the
assets of anyone who is incapacitated. My best acquaintance and
his sister accept been managing their mother's diplomacy (as
trustees) for the endure 10 years. Mom is 95, in appropriate concrete
health, but has avant-garde Alzheimer's).
Let's save the altercation of advisers fees answerable for
managing an incompetent's acreage for a approaching article. Let's
get down to answering the aloft question.
Here it is again:
Hi Phil,
My mom anesthetized abroad afresh and my sister is 1st trustee.
She claims she gets 10% of my mom's acreage as 1st trustee.
Is this true? What is the accustomed fee for 1st trustee?
Basically, the catechism is "How abundant can a trustee allegation to
handle an acreage afterwards a death?"
How do we acknowledgment this?
First, we accept to attending at the assurance instrument.
Most abundantly fatigued assurance instruments will accept a breadth
that deals with trustee fees.
The bigger ones are adequately specific and accomplish a acumen
between acting as trustee while the almsman is alive, but
incompetent, and acting as trustee afterwards a afterlife has occurred
(similar accomplishments to what an abettor performs through a probate).
So, first, we attending to the assurance instrument. Generally it will specify
a fee. Sometimes it will say .75% to 1.25% of the absolute amount
of the assets getting managed and transferred (since this is the
typical fee answerable by the able assurance companies run by
many banks).
In fact, let's see what California law tells us about trustee fees
(every accompaniment will accept a statute, go to your canton law library
and ask the law librarian to advice you attending it up).
In California, the law of active trusts is independent in the
Probate Code. Here is what Probate Code Sections 15680-82 tells us:
15680. (a) Subject to subdivision (b), if the assurance apparatus
provides for the trustee's compensation, the trustee is advantaged
to be compensated in accordance with the assurance instrument.
(b) Aloft able showing, the cloister may fix or acquiesce greater
or bottom advantage than could be accustomed beneath the agreement of the
trust in any of the afterward circumstances:
(1) Where the duties of the trustee are essentially
different from those advised if the assurance was created.
(2) Where the advantage in accordance with the agreement
of the assurance would be caitiff or foolishly low or high.
(3) In amazing affairs calling for candid
relief.
(c) An adjustment acclimation or acceptance greater or bottom advantage
under subdivision (b) applies alone prospectively to accomplishments taken in
administration of the assurance afterwards the adjustment is made.
15681. If the assurance apparatus does not specify the trustee's
compensation, the trustee is advantaged to reasonable advantage
under the circumstances.
So to acknowledgment the question, we accept to acquisition out what the assurance
instrument says. If it is silent, again Breadth 15681 tells us the
compensation is to be "reasonable advantage beneath the
circumstances."
What is reasonable beneath the circumstances? If it were me,
I would accumulate up the brochures of the assorted coffer assurance
departments in the breadth to actuate their rates. Where I
live, the fee is .75% to 1.20%, depending on the admeasurement of the
trust and the blazon of assets. The minimum is $5,000.
So, it looks like the acknowledgment to the catechism is that if the
trust apparatus says the 1st trustee is advantaged to 10%
compensation, again she may be. However, if it doesn't again the
amount to be answerable have to be reasonable.
And, even if the assurance apparatus said 10%, I would actively
consider allurement a cloister to change the advantage per
15680 (b) (2) that allows the cloister to change advantage
"Where the advantage in accordance with the agreement of the assurance
would be caitiff or foolishly low or high."
This commodity needs to be connected back we haven't even
touched on the big m*ney m*ker for advisers and attorneys,
"extraordinary fees."
Good luck and until next time,
Phil Craig
P.S. Feel chargeless to advanced this on to any friends.
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