Considerations of special valuation of trust assets, including discounts for blockage, minority interests, lack of marketability, and environmental liability. This becomes especially important if you plan to use a Personal Trustee. v. Florida National Bank of Jacksonville. The trustmaker may not add or remove beneficiaries, nor can they change . The duties of the trustee are substantially different from those contemplated when the trust was created, or, The compensation specified by the terms of the trust would be unreasonably low or high, The standard amount of compensation given to fiduciaries performing similar work in the community, The level of skill and judgment required in the trust administration, Whether administering the trust requires a trustee with unusual skills or experience, The risk and liability assumed by the trustee, The amount of time required to administer the trust, The standard amount of allowances paid to trustees by trustors or courts, The standard amount of charges paid to trust companies and entities serving as trustees, An estimated amount provided by the trustee as compensation for his or her services. Under Florida law, the personal representative of an estate (sometimes also called an executor) and the trustee of a trust are entitled to compensation, as are the attorneys who represent the personal representative and trustee. If the terms of a trust do not specify the trustees compensation, a trustee is entitled to compensation that is reasonable under the circumstances. Another big factor that adds to the complexity stems from the fact that there are Trustee fees involved. Fort Lauderdale, FL 33301. The written statement may be executed before or after the execution of the trust in which the attorney or related person is appointed as the trustee. Should multiple trustees receive a greater amount in total of fees than a single trustee would receive for having done the same job? So, as a general guide to reasonable professional trustee's fees, they are usually around 1%, and sometimes as high as 2%. 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. Copyright 2000- 2023 State of Florida. They must be reasonable given the circumstances and thus 3% may be reasonable for a large and complicated estate requiring years of administration and 1% may be unreasonable for a simpler estate. Unlike the personal representative fees, the statutes do not provide guidance as to what is deemed reasonable compensation. However, Florida case law has established a long list of factors that are to be used in calculating trustee fees, some of which are: Case law further established that the lodestar method of determining fees (i.e., multiplying the number of hours reasonably expended by a reasonable hourly rate) and fees based on the percentage of the trusts value are not to be used when calculating reasonable compensation for a trustee. The first step to determine a trustees compensation is to look at the language used in the trust instrument. If the trustee has rendered other services in connection with the administration of the trust, the trustee shall also be allowed reasonable compensation for the other services rendered in addition to reasonable compensation as trustee. Generally, compensation of a Trustee may be established in the Trust instrument or by separate agreement with the Trustee. Like the personal representative, any compensation that a trustee receives is considered income to the trustee and will be taxed accordingly, and therefore the individual trustee will want to evaluate whether taking a trustee fee is a smart decision. 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. Professional Trustees. But rest assured, it doesnt have to be an overly-complicated process. Can You Own a House and Get Medicaid in Florida? Despite Florida having no statutory schedule for trustees fees, a standard range of trustees fees is generally recognized by corporate or professional Florida fiduciaries. 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 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. 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. Under the Florida Probate Rules, every personal representative (with little exception) must be represented by an attorney admitted to practice in Florida. (1) If the terms of a trust do not specify the trustee's compensation, a trustee is entitled to compensation that is reasonable under the circumstances. All rights reserved. Some firms also charge a minimum annual fee to protect themselves against putting in a lot of work for relatively small estates. No secret fees, no hidden fees says Pankauski. Upon petition of any interested person in a proceeding to review the compensation paid or to be paid to the attorney for the trustee, the court may increase or decrease the compensation for ordinary services of the attorney for the trustee or award compensation for extraordinary services if the facts and circumstances of the particular administration warrant. The Florida Trust Code is a body of statutes created by the legislature for trustees and beneficiaries to follow. 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. 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. Contributions due to the personal representative of the settlors estate for payment of expenses of administration and obligations of the settlors estate. 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). 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. Upon the trustmaker's death, Florida Statute 736.05055 requires that the successor trustee file a "notice of trust" with the court of the county of the trustmaker's domicile. Javascript must be enabled for site search. On an estate with an inventory value of $500,000, the attorney for the personal representative would be entitled to $15,000 in fees ($3,000 for the first one hundred thousand dollars of inventory value plus 3% of the next four hundred thousand dollars of inventory value, or $12,000). Or interpretation. Like the personal representative, the attorney for the personal representative is also entitled to reasonable compensation. Involvement in fiduciary, employee, or attorney compensation disputes. The nature and value of the assets that are affected by the decedents death. Before starting a business, you probably will need to register with the Florida Department of State, the IRS and the Florida Department of Revenue. If you have any questions about the amount of compensation being paid to the trustee of a trust for which you are a beneficiary, please contact a trust litigation attorney to discuss the specific facts of your case and whether such compensation is reasonable. 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. BENEFICIARYthe person for whose benet the trust is established. The trustee holds nominal ownership over, Read More When Should You Choose a Successor Trustee in Florida?Continue, Florida is a popular destination for out-of-state residents who want to buy real estate. 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. Before executing the trust, I was informed that: 1. Welcome to your new club ! Based upon these statutes, one-half of the ordinary compensation is to be paid out of trust income, the other from the principal. The obligation of a successor to require a former trustee to provide an accounting. With regard to the principal and income question the trust controls and absent language in the trust addressing this issue then Florida Statute 738.701 and 738.702 govern. 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). Extraordinary services may include, but are not limited to: Involvement in a trust contest, trust construction, a proceeding for determination of beneficiaries, a contested claim, elective share proceedings, apportionment of estate taxes, or other adversary proceedings or litigation by or against the trust. 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). Looking for help or guidance in determining reasonable Trustee fees? Knowing the difference between reasonable fees and excessive trustee fees is key. Overseeing various business interests. SeeWestcoast Hospital Association v. Florida National Bank of Jacksonville, 100 So.2d 807 (Fla. 1958). 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). F.S. The summary shall be provided by counsel and shall consist of the total hours devoted to the representation or a detailed summary of the services performed during the representation. 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. Order of payment of expenses of administration of the trust and order and priority of abatement of trust distributions. The grantor(s) may also be the trustee(s) in some cases. You can read it for free. There can be some real benefits to using a trusted person in your life as your Trustee. 736.0708 provides for "compensation that is reasonable under the circumstances." Distribution of income or principal to beneficiaries or funding of further trusts provided in the governing instrument. The trustees obligation to inform and account to beneficiaries and the method of satisfaction of such obligations, the liability of the trust and trustee to the settlors creditors, and the advisability or necessity for probate proceedings to bar creditors. In planning your estate, it may be necessary to name a Trustee, which means you'll also need to understand Trustee fees. Normal ranges tend to be somewhere between 1 and 1.5 percent of the estate value. 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. Review of an estate tax return and preparation or review of other tax returns required to be filed by the trustee. As a result of the lack of a statutory guideline for determining the reasonableness of trustee fees, the court is left with the task of determining the reasonableness of the trustees compensation and in doing so will often look to the duties and responsibilities of the trustee under the particular trust at issue. The IRS also reclassified as fiduciary fees $302,400 in trustee fees that the trust had deducted against rental income. There is a significant amount of competition currently existing in the fees for services charged by trust departments, and rates generally decrease as the value of the trust assets increase. s. 10, ch. Furthermore, if no such separate agreement exists, the personal representative and the attorney can enter a different fee arrangement than outlined above, such as an hourly rate or a fixed fee, which may work out to be less than the statutory rate. If the trust instrument has no language specifying the trustees compensation, Florida law states that the trustee is entitled to reasonable compensation. However, the statutes do not provide a specific threshold to define which percentages are deemed reasonable.. A lot goes into creating a comprehensive, effective Estate Plan. 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. As the founder of Jurado & Associates, PA, a specialty business, real estate, and immigration law firm, Romy's practice focuses primarily on domestic and international business transactions, with a strong emphasis on company formation, stock sales, and assets, contract drafting, and business immigration. Whats reasonable? 415 South Olive Avenue West Palm Beach, FL. s. 10, ch. Many times, a person will have a POUR OVER WILL which leaves everything to their Revocable Trust. It depends. Ironically, the larger the estate, the lower the percentage typically is. Suite 1050, An attorney serving as a trustee, or a person related to such attorney, is not entitled to compensation for serving as a trustee if the attorney prepared or supervised the execution of the trust instrument that appointed the attorney or person related to the attorney as trustee, unless the attorney or person appointed is related to the settlor or the attorney makes the following disclosures to the settlor before the trust instrument is executed: Unless specifically disqualified by the terms of the trust instrument, any person, regardless of state of residence and including a family member, friend, or corporate fiduciary, is eligible to serve as a trustee; Any person, including an attorney, who serves as a trustee is entitled to receive reasonable compensation for serving as trustee; and.
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