They also might charge an additional percentage based on a Trusts annual income. Furthermore, if no such separate agreement exists, the trustee and attorney may agree to compensation that is determined in a manner other than provided for above, such as an hourly rate or a fixed fee, which may cost less than the statutory rate. It is not uncommon for non-professional trustees, especially those who are family . Identifying tax returns required to be filed by the trustee, the trustees liability for payment of taxes, and the due date of returns. Purchase, sale, lease, or encumbrance of real property by the trustee or involvement in zoning, land use, environmental, or other similar matters. Florida Trustee Compensation. The only certainty about the reasonableness of such compensation is that there is no certainty and it is the trustees responsibility to account for his or her efforts and the amount of compensation they are paid must be in line with the services they have provided. Similar to the fixing of the compensation for a personal representative, the trustee is also entitled to additional compensation for extraordinary services. 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.. Even if the trust document lists what compensation a trustee may receive, it can still be open to dispute. The first step to determine a trustees compensation is to look at the language used in the trust instrument. case or situation. How Much Does a Trustee Get Paid? | Professional vs. Non-Professional Generally, compensation of a Trustee may be established in the Trust instrument or by separate agreement with the Trustee. 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. Identifying tax returns required to be filed by the trustee, the trustees liability for payment of taxes, and the due date of returns. If a separate written agreement regarding compensation exists between the attorney and the settlor, the attorney shall furnish a copy to the trustee prior to commencement of employment and, if employed, shall promptly file and serve a copy on all interested persons. If the terms of a trust do not specify the trustees compensation, a trustee is entitled to compensation that is reasonable under the circumstances. Professional Trustees. In 2011, Romy earned her Juris Doctor degree from Florida International University School of Law. 3. 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. Legal advice regarding claims for damage to the environment or related procedures. Some professional trustees charge a minimum of $5,000 a year. But, a trustee is entitled to be compensated. First, read the trust document! 515 East Las Olas Blvd., (1) 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 . See. The failure to obtain an acknowledgment from the settlor under this subsection does not disqualify a trustee from serving and does not affect the validity of a trust instrument. Consumer Pamphlet: The Revocable Trust in Florida Tax advice on postmortem tax planning, including, but not limited to, disclaimer, renunciation of fiduciary commission, alternate valuation date, allocation of administrative expenses between tax returns, the QTIP or reverse QTIP election, allocation of GST exemption, qualification for Internal Revenue Code ss. The Florida Trust Code is a body of statutes created by the legislature for trustees and beneficiaries to follow. , Read More What Is a Petition for Discharge? To see a FREE VIDEO about whether an amendment to a revocable trust is valid, click HERE. Committee Before executing the trust, I was informed that: 1. Tax Support: Answers to Tax Questions | TurboTax US Support Skip to Navigation | Skip to Main Content | Skip to Site Map. (904) 823-3333 The Florida Supreme Court has set forth factors to be considered for trustee fees. Legal advice regarding claims for damage to the environment or related procedures. The trustees duty regarding investments imposed by the prudent investor rule. 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. The larger and more complex a trust is, the higher the compensation fees are. On the other hand, fees for individual trustees are usually negotiated and agreed upon. It depends. Some of a Trustee's common responsibilities could include: Filing and paying all taxes. If the terms of a trust specify the trustees compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if: The duties of the trustee are substantially different from those contemplated when the trust was created; or. See, for example,Osius v. Miami Beach First Nat. The IRS also reclassified as fiduciary fees $302,400 in trustee fees that the trust had deducted against rental income. Amended by a resident of this state on or after October 1, 2020, if the trust agreement nominates the attorney who prepared or supervised the execution of the amendment or a person related to such attorney as trustee. 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. And a lot think that their trustees take too much in trustee fees. Trustees, executors, and personal representatives are all fiduciaries. 415 South Olive Avenue West Palm Beach, FL. With regard to the allocation of a trustees fee, the first question involves whether the fee should be taken from principal or income. Romy Jurado grew up with the business dream of becoming a lawyer and starting her own business. When are they excessive? To the extent professional . 2006-217; s. 7, ch. Order of payment of expenses of administration of the trust and order and priority of abatement of trust distributions. 2. By Jon Alper Updated March 16, 2023. 2016-189; s. 2, ch. For businesses located outside of the State of Florida, evidence of registration with . In the end, a trustee is entitled to compensation for serving as trustee. And with everything that goes into creating your Estate Plan, choosing a Trustee can be one of the most complicated aspects, because its such a complex role and you must truly trust the person you select. In most cases, the average amount of fees paid to a trustee in Florida range from 1% to 3% of the value of the trust. Instead, if the trust instrument does not specify the trustee's compensation, F.S. (1) (a) 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. 736.0802 (10), without court PDF A Handbook For Trustees (2020 Edition) - Special Needs Alliance Non-Domiciliary Probate in Florida What You Must Know. According to IRS Publication 525-Taxable and Nontaxable Income, if the personal representative (trustee) is acting in a non-professional capacity, they will include such fees as income on Schedule 1, Line 8z (other income), of their tax return. Considerations of special valuation of trust assets, including discounts for blockage, minority interests, lack of marketability, and environmental liability. We will contact you as soon as possible. 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. Because non-professional Trustee fees are not standardized, knowing how much to expect can be a little bit less certain. 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. Robert Rauschenberg Foundation v. Gutman. Trial Attorney | LEGAL-CAREERS | Department of Justice Publications, Help Searching Javascript must be enabled for site search. In making its decision, whatever elements of proof are acceptable to a court in awarding trustee compensation, it is fundamental that the compensation must be supported by evidence, be it testimony, documentation, or both. According to Rev. Committee What is this document and why is it vital to ensure a proper probate closing? When Should You Choose a Successor Trustee in Florida? Call 305-921-0976 or email Romy@RomyJurado.com for a consultation. The minimum penalties involve probation, fines, restitution, and potential of being prohibited from performing the type of work alleged in the underlying charge. If the Florida trust document says nothing about fees, then we know to follow the West Coast Hospital case factors. All rights reserved. A person is related to an individual if, at the time the attorney prepared or supervised the execution of the trust instrument, the person is: A lineal ascendant or descendant of the individual; A relative of the individual or of the individuals spouse with whom the attorney maintains a close, familial relationship; A spouse of a person described in sub-subparagraphs b.-d.; A person who cohabitates with the individual; or. What is a Reasonable Trustee Fee in Florida? - Percentages He should know. On an estate with an inventory value of $80,000, the attorney for the personal representative would be entitled to $3,000 in fees ($1,500 + $750 + $750). A Trustee doesnt have to be a person - you can appoint a bank or professional wealth management company as Trustee if you want to. what trustee fee factors are to be considered. Fiduciary duties, avoidance of self-dealing, conflicts of interest, duty of impartiality, and obligations to beneficiaries. You could detail an hourly rate if you want to, but know that this is really not the norm. The citation for the West Coast Hospital case is 100 So. The attorneys participation in tax planning for the estate, the trust, and the trusts beneficiaries and tax return preparation or review and approval. 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.