A Trustee doesnt have to be a person - you can appoint a bank or professional wealth management company as Trustee if you want to. If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney shall furnish a copy to the trustee prior to commencement of employment and, if employed, shall promptly file and serve a copy on all interested persons. If you decide to appoint a Professional Trustee like a legal firm, Trust Company or bank or other financial institution, theyll likely have their own set fee. 58-5Generally, nonprofessional fiduciaries (that is, for example, persons who serve as executor or administrator in isolated instances, and then as personal representative for the estate of a deceased friend or relative) will not be treated as receiving income from a trade or business unless all of the following conditions The best approach is to consult with an expert attorney for an individual assessment. It is also clear that in seeking compensation for their services, the burden of proof is on the trustee to show that money expended was a proper disbursement and reasonable. Estate Planning can be confusing and feel somewhat overwhelming, but our mission is to make it accessible and easy, so you can feel confident and the choices youre making including deciding on Trustee fees. Unfortunately, there isnt one simple formula or percentage that magically computes a rate. And if an estate is involved, thats important, too. Under the Florida Probate Rules, every personal representative (with little exception) must be represented by an attorney admitted to practice in Florida. A trusted partner like Trust & Will can help you do everything from deciding on a guardian for your children, to setting up your Trust and funding it, to making sure your Trustee fees are reasonable, so there are no issues in the future. The larger and more complex a trust is, the higher the compensation fees are. Even in certain situations in which the trust does specify the trustees compensation, the court may adjust that compensation if the trustees duties are substantially different from those contemplated when the trust was created or if the compensation specified is unreasonably low or high. Florida Irrevocable Trust. If taking a percentage of the trust assets would deplete the trust, non-professional trustees may also charge an hourly rate for their work. That trust case is called West Coast Hospital Association vs. Florida National Bank of Jacksonville. Unless otherwise agreed and subject to subsection (1), compensation based on the value of the trust assets immediately following the settlors death and the income earned by the trust during initial administration at the rate of 75 percent of the schedule provided in s. Subject to subsection (1), an attorney who is retained to render only limited and specifically defined legal services shall be compensated as provided in the retaining agreement. Regardless of who you select, you should expect to have to compensate them financially for the job theyre required to do. Fort Lauderdale, What is this document and why is it vital to ensure a proper probate closing? In the last decades, the state became a hub for retirees and snowbirds, people who migrate temporarily to the Sunshine State, Read More Non-Domiciliary Probate in Florida What You Must KnowContinue, Medicaid is a program jointly funded by the federal and state governments to provide health care assistance for low-income individuals and families. The fundamental criteria arereasonableness, determined in the light of the facts and circumstances of each individual case. A trustee is entitled to a fee for administration of the trust, as is the personal representative of an estate. The first step to determine a trustees compensation is to look at the language used in the trust instrument. The written statement must be in substantially the following form: An attorney is deemed to have prepared, or supervised the execution of, a trust instrument if the preparation, or supervision of the execution, of the trust instrument was performed by an employee or attorney employed by the same firm as the attorney at the time the trust instrument was executed. First and foremost, in seeking compensation for their services, the controlling duty of a trustee is the faithful and efficient conservation of the trust assets. General Considerations. Under Florida case law, calculating trustee fees in Florida involves several factors, including: Calculating a reasonable trustee fee in Florida is not as simple as it may sound. Implementation of substitution of the successor trustee. SeeHood v. Marvin and Kay Lichtman Foundation, 832 So.2d 941 (Fla. 3rdDCA 2002). If he loses his accounts, he must bear any resulting damage. Florida Statutes Definitions Index (2022), Table Tracing Session Laws to Florida Statutes (2022), Index to Special and Local Laws (1971-2022), Index to Special and Local Laws (1845-1970). Unless specifically disqualified by the terms of the trust instrument, any person, regardless of state of residence and including family members, friends, and corporate fiduciaries, is eligible to serve as a trustee. Alternatively, the trustee may request compensation on an hourly basis (which, in our experience, usually is between $30 and $75 per hour). While it's customary to charge a percentage, this can be problematic for smaller trusts. The State law (which rules your non-profit incorporation) and the Internal Revenue System (which controls your tax-exempt status) allow paying reasonable salaries to officers, employees, or agents for services rendered to promote the non-profit, tax-exempt purposes. So, if a trust has $1 million in assets, a corporate trustee would receive between $10,000 and $20,000 in annual fees. Disclaimer: The information on this system is unverified. When are they excessive? The complexity or simplicity of the administration and the novelty of issues presented. Skip to Navigation | Skip to Main Content | Skip to Site Map. The attorney shall obtain the trustees timely signature acknowledging the disclosures. If the amount or method of determining compensation is not provided in the agreement, the attorney is entitled to a reasonable fee, taking into account the factors set forth in subsection (6). The journals or printed bills of the respective chambers should be consulted for official purposes. If the average fee tends to be 3 percent, it would not be reasonable to expect that a Trustee would be compensated 10 percent of the estate-value as compensation each year. Florida Trust Law on Trustee Compensation Florida trustees are ENTITLED to reasonable compensation. This initial period is not intended to include continued regular administration of the trust. Instead, if the trust instrument does not specify the trustee's compensation, F.S. With regard to the allocation of a trustees fee, the first question involves whether the fee should be taken from principal or income. A separate agreement or a provision in the trust suggesting or directing the trustee to retain a specific attorney does not obligate the trustee to employ the attorney or obligate the attorney to accept the representation but, if the attorney who is a party to the agreement or who drafted the trust is employed, the compensation paid shall not exceed the compensation provided in the agreement. Florida Trustee Compensation. In most cases, the average amount of fees paid to a trustee in Florida range from 1% to 3% of the value of the trust. Purchase, sale, lease, or encumbrance of real property by the trustee or involvement in zoning, land use, environmental, or other similar matters. Keep reading to find out. 415 South Olive Avenue West Palm Beach, FL. Preparation of decedents federal estate tax return. 736.0708 provides for "compensation that is reasonable under the circumstances." Pankauski Lazarus PLLC represents clients throughout Florida, including the cities of West Palm Beach, Boca Raton, Delray Beach, Boynton Beach, Highland Beach, Riviera Beach, North Palm Beach, Abacoa, Wellington, Lake Worth, Palm Beach Gardens, Jupiter, Greenacres, Deerfield Beach, Pompano Beach and Fort Lauderdale, as well as other communities in Palm Beach County, Broward County and Miami Dade County. After you know a little bit more about it, it should become even easier. This adds yet another layer to the process as you decide on who youll appoint to oversee and manage your Trust for you. On an estate with an inventory value of $500,000, fees to the personal representative up to $15,000 are reasonable. That case dealt with a trust which said nothing about trustee fees. Professional Trustees. And a lot think that their trustees take too much in trustee fees. You can read that case for free by clicking HERE. We will contact you as soon as possible. The IRS also reclassified as fiduciary fees $302,400 in trustee fees that the trust had deducted against rental income. No secret fees, no hidden fees says Pankauski. Florida Trust Code Statute 736.0708 tells you about reasonable compensation. Generally, compensation of a Trustee may be established in the Trust instrument or by separate agreement with the Trustee. Once again, there may be two (or more) trustees acting at the same time. If this return is prepared by the attorney, a fee of one-half of 1 percent up to a value of $10 million and one-fourth of 1 percent on the value in excess of $10 million, of the gross estate as finally determined for federal estate tax purposes, is presumed to be reasonable compensation for the attorney for this service. Review of an estate tax return and preparation or review of other tax returns required to be filed by the trustee. A typical fee might be a quarter of what the professional trustee charges, or .25 percent (often referred to by financial professionals as 25 basis points). Handling a Trust Does not Need to be Overwhelming - Immediately Contact Your Florida Probate Lawyer Joint Administrative Procedures Committee (JAPC), Joint Committee on Public Counsel Oversight(JCPO), Joint Legislative Auditing Committee (JLAC), Joint Legislative Budget Commission (JLBC), Joint Select Committee on Collective Bargaining (JSCB), Office of Program Policy Analysis & Government Accountability (OPPAGA), Florida Legislative Committee on Intergovernmental Relations (LCIR), Joint Legislative Committee on Everglades Oversight (JCEO), Joint Legislative Sunset Committee (JCSC), Copyright 1995-2023 The Florida Legislature . The responsibilities assumed by, and potential liabilities of, the attorney. If you're creating a trust, it helps to know what is and isn't deductible when managing taxes in your estate . The obligation of a successor to require a former trustee to provide an accounting. Preparation of any legal documents required to effect distribution. A trust is a legal arrangement in which the trust maker (also referred to as the trustor or settlor) transfers the nominal ownership of assets to a trustee (fiduciary) for the benefit of selected individuals (beneficiaries). The attorney for the trustee may receive additional compensation for extraordinary services, which may include the involvement in a trust contest, postmortem tax planning, review or preparation of an estate tax return, the purchase or sale of real property by the trustee, and other services. Committee Chapter 736 FLORIDA TRUST CODE Entire Chapter. Each trustee compensation case is so fact specific says Pankauski. I have designated my attorney, an attorney employed in the same law firm as my attorney, or a person related to my attorney as a trustee in my trust instrument dated (insert date). Since there are state-to-state variances in Trustee fees, its important to look at your specific state if you plan to spell out what your Trustee should be compensated in your Trust. A person is related to an individual if, at the time the attorney prepared or supervised the execution of the trust instrument, the person is: A lineal ascendant or descendant of the individual; A relative of the individual or of the individuals spouse with whom the attorney maintains a close, familial relationship; A spouse of a person described in sub-subparagraphs b.-d.; A person who cohabitates with the individual; or. Distribution of income or principal to beneficiaries or funding of further trusts provided in the governing instrument. The complexity or simplicity of the administration and the novelty of issues presented. Trustee Fee Structure. Fortunately, you dont necessarily need to come up with a rate or compensation amount to be included in your Trust. There can be some real benefits to using a trusted person in your life as your Trustee. For a formal probate administration, the following table sets forth what amount is deemed to be reasonable compensation: In addition to the above table, a personal representative can receive additional compensation for extraordinary services, which includes tasks such as selling real property, participating in litigation on behalf of the estate, and carrying on the decedents business. They also might charge an additional percentage based on a Trusts annual income. and ultimately distribute the trust estate. FL When a probate procedure is completed, the personal representative must file the Petition for Discharge. Avoid costly mistakes contact Attorneys Romy B. Jurado and Diana C. Collazos by calling (305) 921-0976 or emailing Romy@juradolawfirm.com to schedule a consultation. All rights reserved. The settlor must execute a written statement acknowledging that the disclosures required under paragraph (a) were made prior to the execution of the trust instrument. 33401, 2023 by Pankauski Lazarus PLLC. Florida Statutes 736.0708 (2) adds that if the terms of a trust specify the trustees compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: If the trustee was responsible for any additional services involved in the arrangements administration, he or she is allowed to receive further compensation in addition to the trustees reasonable compensation. TRUSTEEthe person who manages trust assets and administers the trust provisions. Non-professional trustees should use the above-mentioned guidelines before taking a fee. As used in this section, the term initial trust administration means administration of a revocable trust during the period that begins with the death of the settlor and ends on the final distribution of trust assets outright or to continuing trusts created under the trust agreement but, if an estate tax return is required, not until after issuance of an estate tax closing letter or other evidence of termination of the estate tax proceeding. The nature and value of the assets that are affected by the decedents death. 736.0708(1). (904) 823-3333 On a trust with assets of $500,000, the attorney for the trustee would be entitled to $11,250 in fees ($2,250 for the first one hundred thousand dollars of trust assets plus 2.25% of the next four hundred thousand dollars of trust assets, or $9,000). Involvement in fiduciary, employee, or attorney compensation disputes. The Florida Trust Code is a body of statutes created by the legislature for trustees and beneficiaries to follow. Tax advice on postmortem tax planning, including, but not limited to, disclaimer, renunciation of fiduciary commission, alternate valuation date, allocation of administrative expenses between tax returns, the QTIP or reverse QTIP election, allocation of GST exemption, qualification for Internal Revenue Code ss. The trustees duty to protect, insure, and manage trust assets and the trustees liability relating to these duties. Non-professional trustee fees, on the other hand, generally fall between 0.5% to 1% of the value of trust assets per year. Compensation of Attorney for Personal Representative. Javascript must be enabled for site search. Bank, 74 So.2d 779 (Fla. 1954). So, what are the rules for Florida Trustee Compensation? Persons who must or should be served with required notices and the method and timing of such service. The journals or printed bills of the respective chambers should be consulted for official purposes. On an estate with an inventory value of $80,000, the attorney for the personal representative would be entitled to $3,000 in fees ($1,500 + $750 + $750). If a decedents will provides for the personal representatives compensation to be based upon specific criteria that differs from the statute, then that provision controls. While there are numerous variations stated by corporate trustees in their fee schedules, there is a common range. Legal advice regarding claims for damage to the environment or related procedures. Remember, you can (and probably should) outline compensation clearly as a defined detail inside the Trust - this way, there are no questions. Any delay in payment of the compensation after the services were furnished. The second issue becomes whether a particular beneficiary should pay more than other beneficiaries. Additional issues complicating the decision on the reasonable compensation of trustees also arise when there are multiple trustees, and in determining the allocation of a trustees fee from principal versus income. Considerations of special valuation of trust assets, including discounts for blockage, minority interests, lack of marketability, and environmental liability. If the trustor appoints a trust company to administer the trust or if you as the individual trustee decide to hire a trust company or other professional advisor, the fees that the company will charge include several categories: A percentage of the assets in the trust (perhaps 1.0% to 1.5% of the trust's assets annually, and the percentage can . In Florida, a notice of trust is the formal notice that a trustee provides to the public that the trustmaker has deceased. Some of the factors to be considered for trustee fees in Florida are: amount of money in the trust; comparable fees for trustees in the community; success or failure of trustee at her job; whether unique or unusual skills which the trustee had were used or helped the trust; the loyalty or dis-loyalty of the trustee; risk and responsibility; If the trustee of a trust retains an attorney to render legal services in connection with the initial administration of the trust, the attorney is entitled to reasonable compensation. In the end, a trustee is entitled to compensation for serving as trustee. How Long Do You Have to File Probate After Death? Rul. comparable fees for trustees in the community; success or failure of trustee at her job; whether unique or unusual skills which the trustee had were used or helped the trust; the loyalty or dis-loyalty of the trustee; how much time was required to administer the trust and deal with trust beneficiaries; the character of the work done complex and sophisticated or meat and potatoes routine trust administration; the trustees own view as to the value of her services. Furthermore, if no such separate agreement exists, the trustee and attorney may agree to compensation that is determined in a manner other than provided for above, such as an hourly rate or a fixed fee, which may cost less than the statutory rate. F.S. Taking a closer look at case law, it is possible to find cases in which courts determined that the lodestar method is not appropriate to calculate trustees fees. What is a standard Trustee fee if you go the professional route? Should multiple trustees receive a greater amount in total of fees than a single trustee would receive for having done the same job? Read the factors regarding trustee compensation listed in West Coast Hospital Assoc. Disclaimer: The information on this system is unverified. 736.0708(2). For example, a 3% fee can be considered a reasonable fee for large and complex assets that can take years to administer. What constitutes an extraordinary service may vary depending on many factors, including the size of the trust. Thats why you should consider reading 2 important trustee compensation cases. According to IRS Publication 525-Taxable and Nontaxable Income, if the personal representative (trustee) is acting in a non-professional capacity, they will include such fees as income on Schedule 1, Line 8z (other income), of their tax return. Fill out this form for a complimentary case evaluation. The nature and value of the assets that are affected by the decedents death. The attorney fee is not required to be based on the size of the trust, and the presumed reasonable fee provided in subsection (2) may not be appropriate in all trust administrations. Except as provided in paragraph (d), if the trustee of a revocable trust retains an attorney to render legal services in connection with the initial administration of the trust, the attorney is entitled to reasonable compensation for those legal services, payable from the assets of the trust, subject to s. An attorney representing a trustee in the initial administration of the trust who intends to charge a fee based upon the schedule set forth in subsection (2) shall make the following disclosures in writing to the trustee: There is not a mandatory statutory attorney fee for trust administration. Complete the standard steps required to start any business in the State of Florida. Professional Trustees do much of the same duties as any other Trustee would. Trustee fees are the payments thatll be made to your appointed Trustee in exchange for the service theyll provide as they fulfill their duties in the role. s. 10, ch. The trustees duty to protect, insure, and manage trust assets and the trustees liability relating to these duties. An employee or attorney employed by the same firm as the attorney at the time the trust instrument is executed. Ordinary services of the attorney in an initial trust administration include legal advice and representation concerning the trustees duties relating to: Review of the trust instrument and each amendment for legal sufficiency and interpretation. The information on this website is for general information purposes only. The trustees duty regarding investments imposed by the prudent investor rule. A trust holding $200,000 and paying a fee of 1.5% would pay an annual fee of $3,000, which may or may not cover the trustee's costs. Compensation payable to the trustee is in addition to any attorney fees payable to the attorney or the attorneys firm for legal services rendered to the trustee. In determining reasonable compensation, the court shall consider all of the following factors giving such weight to each as the court may determine to be appropriate: The promptness, efficiency, and skill with which the initial administration was handled by the attorney. Professional trustees also have to pay self-employment tax on the fees they receive. All rights reserved. Statutes, Video Broadcast For example, a3% fee can be considereda reasonable fee for large and complex assetsthat can take years to administer. Considerations of special valuation of trust assets, including discounts for blockage, minority interests, lack of marketability, and environmental liability. . He tries cases involving trustee fees and trustee compensation. On a trust with assets of $80,000, the attorney for the trustee would be entitled to $2,250 in fees ($1,125 + $562.50 + $562.50). An irrevocable trust is an agreement among a settlor, trustee, and beneficiaries that cannot be revoked or amended. The trust instrument is the legal document that creates the trust and provides all details regarding the arrangement. Keeping assets safe and distributing them. The trustmaker may not add or remove beneficiaries, nor can they change . Ordinary services of the attorney in an initial trust administration include legal advice and representation concerning the trustees duties relating to: Review of the trust instrument and each amendment for legal sufficiency and interpretation. If the estates size is greater than $100,000 and there are more than two personal representatives serving, the compensation to which two personal representatives would be entitled must be divided among all personal representatives. What Assets Are Exempt from Medicaid in Florida? But most experienced expert trust trial lawyers, like John Pankauski, will tell you that the devil is in the details. Romy Jurado grew up with the business dream of becoming a lawyer and starting her own business. If you administering a will, you are the personal representative (PR), not the trustee. If a separate written agreement regarding compensation exists between the attorney and the decedent, the attorney must provide a copy to the personal representative prior to commencement of employment.