In Florida, trustee compensation is governed by Florida Statute § 736.0708, which provides that when a trust does not specify compensation, a trustee is entitled to compensation that is reasonable under the circumstances. Determining what is reasonable can depend on the nature and complexity of the trust, the trustee’s responsibilities, and the services performed. Disagreements over compensation may arise during trust administration and, in some cases, may require court review.
Florida law does not establish a fixed percentage or statutory fee schedule for trustee compensation. If the trust specifies the trustee’s compensation, the trustee is generally entitled to be paid as provided in the trust, although a court may adjust that amount in limited circumstances. If the trust does not specify compensation, the trustee is entitled to compensation that is reasonable under the circumstances. A court may review the reasonableness of trustee compensation when the amount is disputed.
Key Takeaways
- Florida law does not set a fixed percentage or statutory fee schedule for trustee compensation.
- If the trust specifies compensation, those terms generally control, although a court may adjust the amount in limited circumstances.
- If the trust does not specify compensation, a trustee is generally entitled to compensation that is reasonable under the circumstances.
- Courts may consider factors such as the amount of trust property involved, the trustee’s time and skill, the complexity of the work, risk and responsibility, and customary compensation for similar services.
- Special rules may apply to attorney-trustees, corporate trustees, cotrustees, and the allocation of trustee fees between trust income and principal.
Court Adjustments to Trustee Compensation
There are certain instances where the court may decide to adjust a trustees compensation, even if the trust does in fact specify the trustees compensation. This typically occurs if the trustee’s duties are substantially different from those originally intended when the trust was created, especially if the compensation is unreasonably high or low.
If compensation is disputed, the court may also review the reasonableness of compensation paid or requested by the trustee. However, the amount does not rest solely within the court’s discretion when the trust already specifies compensation; the trust terms generally control unless one of the statutory grounds for adjustment applies.
Can a Beneficiary Challenge Trustee Fees in Florida?
Yes. An interested person may ask a Florida court to review the reasonableness of compensation paid or requested by a trustee. Disputes over excessive or improper compensation can become part of broader trust litigation between trustees and beneficiaries.
If the court determines that a trustee received excessive compensation, it may order an appropriate refund to the trust. The court may also determine reasonable compensation without requiring expert testimony, although the parties may present expert testimony when appropriate
Can a Trustee Lose Compensation for Misconduct?
Yes. If a trustee breaches the trust, a Florida court may reduce or deny the trustee’s compensation. The court may also order other remedies, including repayment of money, restoration of trust property, an accounting, suspension, or removal of the trustee.
Whether compensation is reduced or denied depends on the circumstances of the breach and the relief the court determines is appropriate.
Attorney-Trustees and Compensation
Florida law contains special compensation rules for certain attorneys who are appointed as trustees. If an attorney prepared or supervised the execution of a trust instrument that appoints the attorney, or certain persons related to the attorney, as trustee, the trustee may not be entitled to compensation unless statutory disclosure requirements are satisfied or an applicable exception applies.
Factors in Determining a Reasonable Trustee Fee
The factors that go into determining a reasonable trustee fee are based in case law, specifically the 1958 Florida Supreme Court decision in West Coast Hospital Ass’n v. Florida National Bank of Jacksonville. The primary factors considered as a result of this decision are:
- The amount of capital and income received and disbursed by the trustee
- The wages or salary customarily paid in the community for agents performing like work
- The amount of risk and responsibility assumed by the trustee
- The extent of a trustees success or failure in the performance of their duties
- Unusual skills, experience or other benefits the trustee brought to the administration of the trust
- How loyal the trustee was to the beneficiaries
- How much time was spent in administering the trust
- Customs in the community in question as to the level of compensation of trustees by courts and settlors, as well as that paid to trust companies and banks that are serving the role of trustee during the estate administration process
- The character of the work performed, including whether it was routine or required skill and judgment
- Estimates the trustee provided as to the value of their services
- Any payments made to the trustee by the beneficiaries intended to be applied to the trustees overall compensation
There are other factors not listed here that may be included in the determination of appropriate and reasonable compensation for a trustee. Generally speaking, the basis behind all these factors is reasonableness, which is determined in light of the facts and circumstances of each trust administration matter. Working with a trust administration attorney is important to ensure that these factors are properly considered, as they are best equipped to present and argue the facts of a case.
Corporate Trustees
Corporate and professional trustees commonly use published fee schedules, which may vary depending on the institution, the value and composition of the trust assets, and the services required. Florida law does not establish a fixed statutory percentage or fee schedule for corporate trustees. If the trust does not specify compensation, the trustee is entitled to compensation that is reasonable under the circumstances.
Like individual trustees, corporate trustees may also be entitled to additional reasonable compensation for other services performed in connection with the administration of the trust. The reasonableness of those fees can depend on the nature and complexity of the services provided.
Additional Considerations
In addition to the previously mentioned factors that go into determining trustee compensation, there are several other considerations to take into account. Namely, these include what should be considered to be reasonable compensation when there are multiple trustees involved, and also how the determination is made in regards to the allocation of a trustee’s fees from principal versus income.
When multiple trustees serve together, the total compensation is generally the same as would be paid to a single trustee, unless the trust provides otherwise or particular circumstances or specialized services justify additional compensation. The trustees may divide the compensation among themselves based on the services and responsibilities of each trustee. If they cannot agree, a court may determine an appropriate allocation.
If the trust does not specify how trustee compensation should be allocated between income and principal, Florida’s Uniform Fiduciary Income and Principal Act generally governs the allocation. Under current Florida law, one-half of the trustee’s regular compensation is generally charged to income, to the extent income is sufficient, with the remaining amount generally charged to principal, subject to applicable statutory exceptions and fiduciary discretion.
Even though the Florida Legislature has failed to provide clear and uniform guidelines for determining the reasonableness of trustee fees, it is abundantly clear through case law that a trustee is entitled to compensation consistent with the services rendered during the administration of the trust. As mentioned previously, an attorney specializing in trust administration and probate proceedings can be immensely helpful in sorting out any misunderstandings and disputes.
