If a testator or settlor appoints a corporate fiduciary with a fee schedule, there is an inference that the fee schedule was known and agreed to. However, in reviewing Mr. Grimes’ time records, the Court took issue not only with the amount of time Mr. Grimes spent on various tasks, but that he did not separate out his time between his role as executor and his role as attorney. What would a reasonable fee be for a Massachusetts executor or trustee? Brad Gallant is quoted in an article, "My Sister-in-Law Died by Assisted Suicide: Connecticut Braces for Aid-in-Dying Bill," published by the Connecticut Law Tribune. There is no set rate but the amount will vary. This article first appeared in the BBA’s Trust & Estates Section’s Winter 2009 Newsletter. On December 10, Dina Kapur Sanna served as a speaker on the panel, "Inbound Planning," at the American Law Institute, Continuing Legal Education Trust and Estate Planning 2020 conference. The determination of how the factors are applied to the particular facts of the case at hand rests largely in the discretion of the probate court judge. With the increased use of the Intervivos Trust as the standard “middle class” estate plan, a typical question that arises is how the Trustees are paid. The article discusses the considerations and pitfalls for an attorney when determining fees … ... then generally the executor's fee is statutory and is a reasonable fee or it can be based on a percentage of the estate if there is a provision in the testamentary instrument concerning fees. 203E. App. The Court’s list included size of the estate, marketable nature of the assets, factual and legal questions involved, time expended, skill and ability employed, amount usually paid to others for similar work and results accomplished. (November 1, 2020), Deloitte: Tax policy implications of a Joe Biden presidency (Nov. 8, 2020), Post Election Webinars/Newsletters Etc. App. Executor’s or administrator’s fee: Pay yourself your executor’s fee, which must be reasonable. After all, an executor’s work is often very similar to that of a trustee. § 18-6-1 Reasonable compensation (not UTC) South Carolina SC Code § 62-7-708 Reasonable compensation ( Log Out /  Executors for MA estates are entitled to reasonable compensation. Brunelle v. … If you need more help deciding if you should accept compensation for serving as executor, read this guide.. Day Pitney remains committed to providing quality legal counsel, while protecting our clients and employees, and transforming our communities into more just, equal and equitable spaces. Thus arises a classic confrontation over “reasonable at 444. Similarly, the Massachusetts Uniform Trust Code (“MUTC”) states that “[i]f the terms of a trust do not specify the trustee’s compensation, a trustee shall be entitled to compensation that is reasonable under the circumstances.” M.G.L. 66.] Executor and Trustee Fees You may appoint an executor in your Will to wind up your affairs and distribute your estate on death. Frequently, however, a trust agreement is silent on the issue of Trustee fees, or the trust agreement calls for the Trustee to be paid a “reasonable fee” for his/her services. Id. An exception to this might be where the Trust owns real property that stays … The private right of action under Massachusetts Civil Rights Act (MCRA) § 11I explicitly provides for recovery of reasonable attorney fees for “[a]ny aggrieved … persons who prevail in an action” under the MCRA. In Grimes v. Perkins School for the Blind, 22 Mass. In addition to making payments to the beneficiaries, as trustee, you’re also responsible for paying the expenses you incur in administering the trust. To achieve this, the trustee must use reasonable care, caution, and skill, and they must administer the assets solely in the interests of the beneficiaries. This does not usually include attorney's fees … The Court held that “there is no rule of law and no principal of right by which such commissions are to be charged or allowed without regard to the rendition of actual services therefore.” Grimes, 22 Mass. These standards are similar to those used to establish the reasonableness of legal fees. Also, in Corcoran v. Thomas, 6 Mass. 268 (1957). For example, an MA estate worth $700K that required 850 hours of effort might generate $19K in … Amy Lonergan and Joshua Miller, managing director of Atlantic Trust, co-authored an article, "What is Reasonable? fees of $60 million on assets that they claimed grew in value to over $2 billion due to their efforts.6 The trustees also submitted the certifications of two expert witnesses opining that, in their experience, the lodestar method is never used to determine trustee fees. Therefore, when the attorney is charging fiduciary fees, he or she should determine the appropriate fees to charge by applying the factors enumerated in McMahon to the services provided and the results obtained. McMahon v. Krapf, 323 Mass. 2. Change ), You are commenting using your Google account. §7768 Reasonable compensation; added factors a court may consider Rhode Island RI Gen.L. However, such percentage schedules are not appropriate for an individual fiduciary. Federal laws - In addition to state law regulations, the federal government has laws that govern the operation of homeowners' associations, condominiums, and other residential properties in the state of Massachusetts.. Massachusetts Condominium Statute, Mass. Section 708: Compensation of trustee. (It should be noted that all of the case law on this topic to date–including the cases referenced below–was decided before the enactment of the MUPC and the MUTC, but such case law is still considered the primary source of interpreting the “reasonableness” standard.). For more information, please visit our COVID-19 Resource Center | Racial Justice and Equity Task Force. Ct. 1990 (1978), an appellate court held that “[t]he only rule of law is that the fiduciary is to receive just and reasonable compensation for all services performed in his trust.” The average fee is roughly 1%-5% of the corpus of the trust, but it … c. 190B, § 3-719. The primary expenses include trustee’s fees, investment advice, accounting fees, and taxes. In sum, trustees should take a fee annually, with full disclosure (and, if possible, written consent from the beneficiaries) and in accordance with the rules of fiduciary accounting. For an attorney in Massachusetts, serving as a personal representative or trustee (“fiduciary”) for a trust or estate can be a rewarding and fulfilling role. Probate Stars: Can You Vote With A Power of Attorney? Consideration is also given to the net benefit that may result from the fiduciary’s services. This is not the situation with an individual fiduciary. Oregon ORS 130.635(1) Reasonable compensation; fees paid to third party performing trustee functions may reduce trustee fee Pennsylvania 20 Pa. C.S. Re: Massachusetts executor's fee calculator Depends on the size of the estate and the amount of work entailed. Finally, if multiple fiduciaries are serving, each is entitled to compensation in proportion to his or her services. Compensation of trustee (a) If the terms of a trust do not specify the trustee's compensation, a trustee shall be entitled to compensation that is reasonable under the circumstances. […] James M. Lestikow, a partner in the Springfield, Illinois office of Hinshaw & Culbertson LLP, authored the article "Trustee’s Fees: What Is “Reasonable' Compensation?" App. Trustee’s Skill and Expertise Change ), You are commenting using your Facebook account. However, the instrument often simply states that the fiduciary is entitled to reasonable compensation. What exactly is “reasonable compensation” though? Timothy Fitzgerald, Kevin Hassett, Cody Kallan, and Casey B. Mulligan: An Analysis of Vice President Biden’s Economic Agenda: The Long Run Impacts of its Regulation, Taxes, and Spending (October 21, 2020), Karen Czapanskiy: Tax Policy, Structured Settlements and Factoring: Making Exploitation Easy and Profitable (October 23, 2020). Sullivan v. Sullivan, 335 Mass. It is not uncommon for an attorney to act in multiple roles and the Court acknowledged that being one’s own attorney may be efficient. 118 (1948), enumerated the factors to be used in determining reasonableness of trustee fees. costs of the litigation and reasonable attorneys' fees in an amount fixed by the court. If an attorney would like to charge a fee schedule for his or her services as a fiduciary, that should be discussed when the controlling document is drafted and made a part of such instrument. : 2021 Inflation Adjustments and Tax Tables Issued (October 26, 2020), Sally P. Schreiber, J.D. ( Log Out /  The Court’s list included size of the estate, marketable nature of the assets, factual and legal questions involved, time expended, skill and ability employed, … A percentage schedule may be used as a guide, but it is “not to be mechanically applied without consideration of the care, thought and intelligence” that are given to the service of the fiduciary. Pick a reasonable hourly rate. trustee compensation, is a matter left largely to the judge's discretion. HOA LAWS AND REGULATIONS. ( Log Out /  What is Reasonable? Under state law, fees are usually calculated either as a percentage of the total value of trust assets or a percentage of the transactions you make (the money that goes in and out of the trust). On the other hand, there are other responsibilities that require the skill and knowledge of an attorney or professional, such as the sale of property, interpretation of a legal document and preparation of an estate or fiduciary tax return, in which it is proper to charge his or her hourly rate. Corporate trustees, banks and trust offices very often use fee schedules to charge for their services as fiduciary. historically, this amount is between 2% and 5% plus all out of pocket expenses. Change ), You are commenting using your Twitter account. Trustees’ fees A trustee’s fee is the amount the trust pays to compensate the trustee for his or her time. Determine whether the grantor has made any mention of estate trustee fees. Amy R. Lonergan is counsel in the Individual Clients department of the Boston office of Day Pitney LLP and Joshua S. Miller is a managing director and senior wealth strategist in the Boston office of Atlantic Trust Private Wealth Management. 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In trusts and estates with charitable beneficiaries, the Massachusetts Attorney General has objected to individual fiduciaries who charged fees solely based on a schedule and did not provide any further substantiation to the reasonableness of their fees. This would be a typical benchmark for individual Trustees to base their Trustee fees on and most Courts uphold a minimum annual Trustee fee of 1% to be reasonable by default. These cases do not involve the situation where an additional fee is warranted because the actions by the executor or trustee provided a windfall. Few key cases in Massachusetts guide the fiduciary in setting reasonable fees. Trusts in Massachusetts are governed by the Massachusetts Uniform Trust Code, codified at G.L.c. Gen. Laws ch. Compensation of trustee (a) If the terms of a trust do not specify the trustee’s compensation, a trustee shall be entitled to compensation that is reasonable under the circumstances. It would be reasonable to point out past history as the usual and customery fee as in the past. - Answered by a verified Estate Lawyer ... realize that if the fee is contested by a beneficiary you will have to justify your fees to the court. In Corcoran, the executor charged the estate for fees ordinarily charged by a real estate broker for the sale of the real estate. Determining Fiduciary Fees in Massachusetts ," for Wealth Strategies Journal . A trustee is entitled to “reasonable” compensation. Courts have determined trustees’ fees by comparing the subject trustee’s fees to those of multiple other trust companies in the area.10 Courts have authorized corporate trustees to receive commissions based on their published fee schedules so long as such schedules are reasonable. at 123. The trial court determined the trustees committed a breach … Bridgewater Global Observations: Beyond the Election: What Doesn’t Change Will Be a Lot More Than What Does (Nov. 3, 2020), Rubin on Tax: A Co-Maker of a Promissory Note Is Not Always Liable to the Co-Signer [Florida] (October 31, 2020). Sorry, your blog cannot share posts by email. Section 708. As a general rule, if the Trustee is also investing the trust assets, the percentage will be higher than if the Trustee is simply managing and distributing the assets. Amy Lonergan and Joshua Miller, managing director of Atlantic Trust, co-authored an article, " What is Reasonable? Ct. 439 (1986), Mr. Grimes was acting both as the executor and the attorney for the estate. The executor fees can also be subject to approval by the probate court. Trustees are entitled to “reasonable” compensation whether or not the trust explicitly provides for such. In 1948, the Supreme Judicial Court in McMahon v. Krapf, 323 Mass. The Court in Corcoran v. Thomas, 6 Mass. § 736.0708(1), Fla. Stat. Typically, professional trustees, such as banks, trust companies, and some law firms, charge between 1.0% and 1.5% of trust assets per year, depending in part on the size of the trust. The attorney is entitled to receive the fair value of his or her services and the amount charged should be reasonable based on the services provided and the factors set forth in McMahon. 118, 123 (1948). In Massachusetts, trustee fees are governed by the terms of the trust document and by accepted standards of reasonableness within the Commonwealth. A trust is a legally binding arrangement whereby a settlor transfers title to another person, the trustee, for the benefit of a third, the beneficiary. Trust instruments, however, rarely specify the level of trustee fees, other than to note that trustees are entitled to “reasonable compensation.” Chuck Cavanaugh (Citi Personal Wealth Management): Federal Estate Tax Exemption Is Set to Expire – Are You Prepared? (2020), Venable Post-Election Series: Election Night Discussion (Nov. 4, 2020). A violation of this is a breach of trust. Does a Massachusetts executor charge a % of the estate or an hourly rate? In some cases, it would be more appropriate for the executor to hire someone to perform the work than to do it himself and charge his hourly rate. c. 203E, §708(a). https://elder-law.com/special-needs-trustee-fees-set-corporate-fee-schedule [Text of section applicable as provided by 2012, 140, Sec. The will or trust, as the case may be, controls the fees a fiduciary may charge for providing fiduciary services. 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