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What are the guidelines for trustee compensation?

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Quick Answer

Generally, guidelines for trustee compensation for the administration of a trust are outlined by state law, FreeAdvice explains. Usually compensation is set at 1 percent of the total value of the estate, but unless there is a previous agreement established in the trust document, the state law guides the amount of compensation the trustee receives.

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Full Answer

The compensation for a trustee varies by state, the size of the trust, and the expertise and time it takes to handle the affairs of the trust, the American Bar Association notes. Many times the trust document establishes a compensation rate for the trustee, and if it does not, state laws apply. Some states allow trustees to be awarded reasonable compensation, and in those instances, the trustee must negotiate his compensation with the beneficiaries of the trust. Other states have an established fee schedule.

The general rule of thumb is 1 percent of the value of the assets in the trustee for the compensation of the trustee, as of 2015. Most state courts consider 1 percent compensation reasonable. Some state fee schedules usually target that amount as well, such as the state of Georgia, where trustees are paid 1.75 percent on the first $500,000 in the assets, Legal Zoom notes. The next $500,000 in assets is paid at 1.25 percent, and it deceases to 1.0 percent on the next $1 million. Any portion of the trust over $5 million sees a compensation rate of 0.50 percent.

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