Every trust must have a trustee with designated duties to perform. These duties may include paying the trust's bills and filing tax returns. The trustee can receive compensation for performing her duties, and there are several ways to determine the amount of compensation.
Compensation Described in the Trust
A trustee may be compensated according to the terms set out in the trust document or in a separate agreement between the trustee and settlor -- the legal term for the person who created the trust. The trust is the controlling document and the settlor determines how the trustee will be compensated.
Changing Compensation in the Trust
If the trust sets a level of compensation that turns out to be too low or too high, the trust can be modified to change the rate. An irrevocable trust cannot be modified without the consent of all the beneficiaries -- or their guardians or conservators, if they are minors or not of sound mind. Therefore, the trustee will need the beneficiaries' unanimous consent to change her compensation. They do not need a court's approval to modify a trust if it is modified in this manner.
Read More: What Are the Rules for Changing a Living Trust After a Spouse Dies?
Trusts That Do Not Address Compensation
If the trust does not contain a provision on trustee compensation and there is no separate agreement between the settlor and trustee, the trustee and the beneficiaries may - by unanimous consent - enter into an agreement regarding trustee compensation without court approval. Complications arise if one or more beneficiaries are minors or not of sound and do not have a guardian or conservator to represent them. If all the other beneficiaries are in agreement on the trustee's compensation, they can petition a court to approve the trustee compensation agreement.
Annual Fee by Default
Sometimes an irrevocable trust does not mention trustee compensation and the beneficiaries have not agreed to a trustee compensation agreement. In that situation, Georgia law specifies an annual percentage fee to be paid to the trustee based on the cash and market value of the trust valued on the last day of each year. The trustee will be paid 1.75 percent on the first $500,000, 1.25 percent on the next $500,000, 1.0 percent on the next $1 million, 0.85 percent on the next $3 million, and 0.50 percent on values over $5 million.
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Writer Bio
Vanessa Padgalskas was born and raised in Spokane, Wash., and currently resides in Portland, Ore. Padgalskas graduated from American University in 2007 with degrees in international studies and economics. She holds a law degree from Lewis and Clark Law School.