The job might be somewhat finite in the first scenario. They’ll disburse the trust’s assets to its beneficiaries and close it. But it can be an ongoing, open-ended job if the grantor is incapacitated. The successor trustee is entitled to be paid for the services they provide on behalf of the trust, but how much and when can depend on this distinction and many other factors. Some general guidelines can shed light on how much compensation is suitable. Some grantors choose to limit the fees to a specific dollar amount, while others opt for allowing the payment of reasonable fees based on services rendered and applicable state law. Still others leave their successor trustee a specific bequest instead of a fee. This provides an income tax benefit for the successor trustee because bequests aren’t taxable, but fees are taxed as ordinary income. A court might have to consider how complex the trust will be to administer or settle, whether the grantor’s estate is likely subject to an estate tax, and whether the validity of the trust or the choice of successor trustee is likely to be challenged by trust beneficiaries. All these factors could result in more compensation under state law. The laws in some states require that multiple fiduciaries divide the fee equally between them, while each fiduciary can collect the full fee that one fiduciary would be entitled in other jurisdictions. Find out if the revocable living trust specifies that an institutional fiduciary is entitled to receive compensation in accordance with its published fee schedule. These fee schedules are similar to the state laws that calculate an executor’s or personal representative’s fee as a percentage of the value of the gross estate. State law will dictate the institution’s fee if the revocable living trust is silent on this issue. Check to find out if the trust addresses the fees that are to be paid to an attorney who’s also acting as the successor trustee. Sometimes the grantor and the attorney will enter into a written agreement as to what compensation the attorney will be entitled to receive in this case. Again, state law will dictate whether the attorney can collect fees as both the successor trustee and as the attorney for the trust if the revocable living trust is silent on this issue.
