Serving as a trustee can involve substantial work and responsibility. A trustee may need to identify assets, manage property, pay expenses, communicate with beneficiaries, coordinate tax filings, and carry out distributions. Trustee compensation pays for that work.
Whether a trustee receives payment depends on the trust’s terms, the applicable law, and whether the trustee chooses to accept compensation.
What does the trust say about payment?
Start by reviewing the trust document. It may establish how trustee compensation is calculated, allow reasonable compensation, or direct that a trustee serve without payment.
If the trust does not specify compensation, Utah law provides that a trustee is entitled to compensation that is reasonable under the circumstances. Silence does not automatically mean the trustee must work for free.
Can a family member receive trustee compensation?
A family relationship does not, by itself, make the work unpaid. A child, sibling, or other relative serving as trustee may receive compensation when permitted by the trust and applicable law.
Some family trustees choose to serve without payment. Others accept compensation because administering the trust requires significant time and effort. Being a beneficiary is also a separate role: an inheritance and payment for trustee services serve different purposes.
Professional trustees generally charge for their services. Before they begin serving, understand their fee arrangement and how it applies to the trust.
How much can a trustee charge?
There is no single amount that fits every trust. Where reasonable compensation is the standard, the payment should be supportable in light of the work and circumstances.
Managing a bank account and making a few distributions can require very different work from administering rental properties, business interests, or a trust that continues for years.
Keep records of the services performed, time spent, and basis for calculating payment. A trustee should be able to explain the compensation rather than simply choose an amount because funds are available.
Is expense reimbursement different from compensation?
Yes. Compensation pays the trustee for services. Reimbursement repays money the trustee personally spent on appropriate trust expenses.
For example, a trustee might advance a recording fee or pay an expense needed to protect trust property. Utah law provides for reimbursement from trust property for expenses properly incurred in administration.
A trustee who chooses to serve without compensation may still be entitled to expense reimbursement. Keep receipts and record reimbursements separately from payment for services.
Trustee compensation and proper administration expenses generally come from trust assets. Clear records help beneficiaries understand what was paid and why.
Cardon Law can help you interpret the trust’s compensation provisions, understand your responsibilities, and establish a documented approach to payment and reimbursement.
