Legal Question in Wills and Trusts in California

Re: Living Trust inclusion of assets, basis for Trustee fee, character of bank a

a) Tangible persdonal property usually does not include cash, unless there is a specific definition that inldues cash in the trust document. More importantly, if you are referring to a bank account that is truly a POD account at the bank, then the balance in the account at death is payable outside the trust to the beneficiary designated on the account, regardless of what the trust document says, and is not generally considered a trust asset.

b) Absent language in the trust document defining how a trustee's fee is to calculated, then any reasonable basis for calculation would be appropriate. This would usually be on the value of the assets or the time expended. An executor's fee is controlled by statute and is usually based on the gross value of the assets together with income received and gains on sales during administration, less losses during administration.

c) What woulkd be excluded would be those assets that do not properly come within the responsibility of the trustee or executor to administer. Assets passing outside the trust or a probate proceeding would not be subject to administration and probably would not require any action by the trustee or executor and should be excluded. Assets requiring administration under the trust or that the trustee is required to expend efforts to bring into the trust would be assets that a fee could be calculated on. The rule would be the same for an executor for any assets that are required to be probated to be distributed.

d) Unless the document provides otherwise, fees are generally treated as an administratibve expense and not pro rated. Fees should be paid before property is distributed.

e) Yes, except under extraordinary circvumstances I would consider any fee for administreing a trust that is excess of the statutory probate fee for executors to be excessive. Statutory fees are based on percentages of gross value on a sliding scale. As a rule of thumb, the fee for a $100,000 probate estate is $3,150 plus 2% on the excess up to $1,000,000. Since most people create living trusts to save administration expenses the statutory probate fee should be the bupper limit of the fees. I would say that a fee of 1/3 to 1/2 of the gross value, exclusive of tax return preparation, if necessary, would be in the range of a reasonable fee.