1. Trustee Compensation

2. Common Law
No compensation unless settlor provided for compensation in the trust.
Policy – fear that trustee would act to increase compensation even if not in trust’s best interests.

3. Modern Law Assuming trust instrument is silent: 1. Court Determination
Trustee petitions court for compensation approval.

4. Modern Law 2. Trustee Determination
Trustee determines trustee’s own “reasonable compensation.”
Trustee takes from trust.
Interested persons may sue trustee for taking excessive compensation.

5. Modern Law 3. Schedule or Scale Based on, for example, Value of trust
Amount of trust income

6. Texas -- § 114.061 Presumption = reasonable compensation Exceptions:
Settlor provides otherwise
No compensation
Exact amount
Method
Court may deny compensation if trustee breaches the trust. §

7. Compensation Issues Should settlor waive compensation?
Should settlor provided a fixed fee?
Should settlor “shop around” for fees if using corporate trustee?

8. Factors to Determine Reasonable Fee
1. Gross income of trust

9. Factors to Determine Reasonable Fee
2. Success or failure of trust administration

10. Factors to Determine Reasonable Fee
3. Trustee’s skill and experience

11. Factors to Determine Reasonable Fee
4. Trustee’s fidelity or disloyalty

12. Factors to Determine Reasonable Fee
5. Amount of trustee’s liability exposure and responsibilities assumed

13. Factors to Determine Reasonable Fee
6. Time spent

14. Factors to Determine Reasonable Fee
7. Custom in the community

15. Factors to Determine Reasonable Fee
8. Character of work
Skill and judgment, or
Routine

16. Factors to Determine Reasonable Fee
9. Trustee’s estimate of value of services