How Much Do You Compensate a Trustee?

When setting up a trust as part of your estate plan you may choose a family member to serve as trustee or a professional trustee from a corporation, trust company or law firm. Regardless of your choice of trustee, the trustee should be compensated for their services.

The trustee has a right to compensation under the law because it is not expected for a trustee to administer a trust without being paid. Maryland state law gives the trustee the right to “reasonable compensation”. In most cases the trust document itself will cover the issue of trustee compensation. If the trust agreement fails to mention trustee compensation then the trustee will be compensated based on state law.

In Maryland, the fee is determined by the type of asset managed as well as different commission schedules for income generated by the trust versus the corpus amount managed.

Computation of income commissions is 6% on all income generated from real estate, ground rents and mortgages collected. For other assets it follows this schedule:

• 6.5% on the first $ 10,000 of all other income collected in each year;
• 2. 5% on the next $ 10,000;
• 3. 4% on the next $ 10,000; and
• 4. 3% on any remainder.

Computation of commissions on value of corpus or principal is as follows:

• 0.4% on the first $ 250,000;
• 0.25% on the next $ 250,000;
• 0.15% on the next $ 500,000; and
• 0.1% on any excess.

Reasonable trustee compensation is usually based on factors such as the amount of time required, the complexity of the trust, amount of money managed and skillset or outside resources needed (ex. CPA, attorneys, experts).

If at any time a beneficiary feels like a trustee is receiving more compensation than is justified by the work/time involved, the beneficiary can have the court make a determination as to whether the compensation is reasonable. There is no strict formula for trustee compensation. If you need assistance in determining a trustee’s fee, setting up a trust or advising a truste, contact the estate planning attorneys at Stouffer Legal in the Greater Baltimore area for a consultation.