Legal Question in Wills and Trusts in Illinois

Keep a detailed log of your activities as trustee, with dates, amount of time spent, and a detailed description of what you did and why, noting especially any reasons why any particular tasks took longer than someone might expect. Reconstruct a similar log of what you've already done. Hire a lawyer to help you create an accurate log, set an appropriate hourly rate, and obtain compensation in a lawful and proper manner.

You've got to establish an hourly rate for your services on behalf of the trust. What would a law firm bill out for your services to a client if you were a paralegal? Do you have any special training and experience that makes your ability to perform services unique? What hourly rate do earn in your trade or occupation? Talk to the attorney advising the trust, and consider how your rate of pay will be viewed by the trust beneficiaries.

In examining any trust issues, there are two controlling issues which must always be considered first, that being; 1) what do the terms of the document itself provides; and 2) which State�s law applies in interpreting the terms of the Trust.

In determining the answers to most questions concerning the administration of a Trust, including what is the appropriate amount of compensation for a Trustee, the first place to look is the Trust document itself. A Trust is at its most basic a contract, and accordingly like a basic contract the terms of the document control. The terms of the Trust document control how it is to be administered except in unusual situations where the terms are against public policy. While this is the ideal solution, if the Trust was poorly drafted or drafted with certain flexibility in mind, many Trusts fail to address many potential issues. Most weld drafted Trusts do contain provisions regarding Trustee compensation, however it is common for such provisions to provide simply that corporate or professional trustees are entitled to receive fees based upon their published fee schedules while individual non-professional Trustees are entitled to reasonable compensation. The question then becomes what is reasonable compensation.

If the Trust document itself does not provide a resolution to an issue, the next place to look is the laws which apply to the Trust. It is important to understand that Trust laws vary from State to State, and it is essential to determine which State�s laws control the Trust. The Trust document itself will frequently provide the official location or situs of the Trust or identify the laws of a particular State as controlling. Once that is determined you look at that State�s statutory Trust Act and that State�s Court decisions dealing with your particular issue. Finally, local custom or practice may impact the answer to an issue.

Since it is indicated that this is an Illinois Trust, and I will assume that the Trust itself does not provide a formula or amount for Trustee compensation, the next step is examining Illinois law as it applies to your issue of Trustee compensation. Unfortunately, the provisions of the Illinois Trusts and Trustees Act which deal with Trustee compensation do not provide an answer to your question. Specifically 760 ILCS 5/7 provides that �Compensation. The trustee shall be reimbursed for all proper expenses incurred in the management and protection of the trust and shall be entitled to reasonable compensation for services rendered. �So again, you are left with the question what is reasonable compensation.

In trying to determine what constitutes reasonable compensation, one of the easiest methods is for you as Trustee to negotiate an amount with the beneficiaries whether it is based upon a flat fee, percentage or hourly rate. If you cannot reach an agreement with all the beneficiaries, you should discuss the matter with the Attorney you have retained to get a better idea of local customs and practices in determining Trustee fees. It is a smart practice to use the standards which a local Court would apply in determining your compensation, so that if it is still objectionable to any of the beneficiaries you can be confident that if the amount of your fees becomes a litigated issue that you are likely to prevail. In Illinois for the most part if a Court needs to determine reasonableness, it will take into account the specific circumstances of the trust at hand as well as compensation for similar services that has been deemed to be reasonable in the past.

Generally, in Illinois an individual Trustee fees will be based upon the time expended payable at a certain hourly rate. A non-professional Trustee will not receive an hourly rate anywhere near that which a professional or corporate Trustee would receive. There are many factors which must be considered in determining whether a fee is reasonable. The administration of some trusts is far more complex than others. This complexity, along with the time required, the risk taken by the trustee and the expertise required in the administration of the trust are all factors that a court will consider in determining reasonableness. The nature of the trust assets and the difficulty of managing those assets will also be considered. If the trust owns a business that must be managed by the trustee, that is likely to require more time and effort than managing a trust which owns only cash and stock accounts. The skill and expertise of the individual Trustee will be considered, however the type of service provided is also relevant. A Trustee who is a CPA could not reasonable charge $125.00 per hour for cleaning up the Decedent�s home, while that might be reasonable is doing an accounting of the Decedent�s complex assets.

In your particular case, since you have hired both an Accountant and Attorney to assist you in the Trust Administration, I would assume that you do not possess a great deal of expertise relevant to the administration of the Trust. I generally advise Clients that they may not reasonable charge any more than they would pay a third party to perform the same service. I sometimes suggest that a Trustee or Executor have two hourly rates, one for performing services which require no particular expertise and one for those services of a more complex nature including working with the accountant and Attorney. So a rate of $15 per hour may be appropriate for cleaning a Decedent�s home, a rate of $40 per hour may be appropriate for reviewing the Decedent�s mail and financial records. I recommend that you discuss this with the Attorney to see what an appropriate hourly rate would be based upon the local custom in your community. Good Luck.