Complete Guide to Trustee Fees

When creating or managing a trust in Florida, understanding how trustee fees are calculated plays a key role in sound estate planning. Trustee compensation not only affects the overall value passed on to beneficiaries, but also influences trustee selection, performance, and accountability. This guide clarifies the structure of trustee fees under Florida law and sheds light on the legal and fiduciary standards that shape these payments. Whether you’re appointing a trustee, serving as one, or reviewing a trust’s administration, knowing how fees are determined ensures transparency and aligns everyone’s expectations.

Understanding the Role of the Trustee

What Does a Trustee Do?

A trustee is a person or institution appointed to administer a trust in accordance with its terms and in the best interests of the beneficiaries. In Florida, trustees serve as fiduciaries, which means they are legally obligated to act with loyalty, care, and full disclosure. Their actions must always reflect the intent of the trust and the interests of all beneficiaries—even when these interests conflict.

Fiduciary Duties Under Florida Law

Chapter 736 of the Florida Statutes, also known as the Florida Trust Code, outlines the fiduciary duties imposed on trustees. These include:

• Duty of Loyalty: The trustee must administer the trust solely for the benefit of the beneficiaries, avoiding conflicts of interest and self-dealing in any form.
• Duty of Prudence: Trustees must manage trust assets prudently, often following the prudent investor rule established under Florida law.
• Duty of Impartiality: When multiple beneficiaries exist, the trustee must act impartially and not favor one over another.
• Duty to Inform and Report: Trustees must keep beneficiaries reasonably informed about the administration and account regularly, providing detailed statements and disclosures.

Common Trustee Responsibilities

The practical duties of a trustee vary depending on the terms of the trust and the nature of its assets. However, several routine responsibilities apply in most cases:

• Asset Management: Trustees often oversee real estate, investment portfolios, business holdings, and personal property. They must make investment decisions aligned with the objectives of the trust, balancing risk and return.
• Distributions to Beneficiaries: Distributing income or principal according to the terms specified in the trust is a core responsibility. This can include periodic payments, discretionary disbursements, or lump sums based on milestone events.
• Tax Compliance: Trustees are responsible for filing relevant federal and state tax returns on behalf of the trust. This includes Form 1041 for income earned and any associated K-1s that report distributions made to beneficiaries.
• Recordkeeping: Meticulous record maintenance is required. This includes transaction logs, expense documentation, beneficiary communications, and detailed accounting reports. Trustees must be able to produce records upon request or during periods of review.

Each of these responsibilities informs how trustee fees are structured and justified. Their complexity, frequency, and required expertise directly affect the compensation owed to a trustee under Florida law.

Florida Law Sets Broad Yet Specific Guidelines for Trustee Fees

Overview of Florida Statutes Chapter 736 – Florida Trust Code

Florida governs trusts under Chapter 736 of the Florida Statutes, known as the Florida Trust Code. This statutory framework outlines the rights and responsibilities of trustees, including how compensation is determined. While the statute does not prescribe an exact dollar amount or sliding scale, it does establish a legal benchmark: trustee fees must be “reasonable under the circumstances.” (Fla. Stat. § 736.0708)

The use of the word “reasonable” gives trustees and the courts flexibility. It prevents overcharging while allowing compensation to reflect the complexity and demands of the trust. Unlike probate matters in Florida, which often follow a percentage schedule for executor compensation, trust administration does not mandate fixed rates.

What Florida Law Means by “Reasonable Under the Circumstances”

Reasonableness is not left to subjective interpretation alone. Florida courts rely on a well-established body of case law and statutory interpretation to evaluate whether the trustee’s fee meets this legal standard. Factors influencing this determination are not rigidly codified in the statute, but the statutory language opens the door for judges to weigh situational variables.

In practice, courts have considered:

• The amount of time spent administering the trust
• The complexity of the assets and trust terms
• The trustee’s skill level and professional background
• The results obtained for the beneficiaries
• Compensation rates for comparable work in the trustee’s field or geographical area

For instance, a bank serving as a professional trustee may justify a higher fee than an unpaid family member managing a simple real estate trust. Conversely, even large trusts may not require extensive justification if the administrative tasks are minimal or largely delegated.

No Mandatory Fee Schedule in Florida

Florida does not impose a mandatory compensation schedule for trustees. This sets it apart from states like New York and California, where fee schedules are more formulaic. Instead, Florida’s courts favor a case-by-case review, particularly when disputes arise over compensation. Agreements within the trust document itself, however, often serve as a starting point—if the trust specifies a fee, that amount is presumed reasonable unless proven otherwise.

Trustees are encouraged to document their time and responsibilities. In contested cases, a lack of documentation can weaken a trustee’s position when justifying fees. When ambiguity exists, courts look at how similarly situated trustees have been compensated in prior cases.

Breaking Down Trustee Compensation Options in Florida

Compensation Models Generally Accepted

Florida law permits several compensation structures for trustees, each suited to different types of trusts and trustee arrangements. The Florida Statutes allow for compensation to be determined through the trust document itself, a reasonable standard based on services rendered, or by court determination if disputes arise. However, in practice, a few compensation models dominate across most trusts.

Percentage-Based Fees

This model ties the trustee’s compensation directly to the total value of the trust assets. A common structure mirrors that used in probate administration: typically 1.0% to 1.25% annually for trusts up to $1 million in value. Rates tend to drop incrementally for higher-value trusts. For example:

• 1.0% on the first $1 million
• 0.75% on the next $4 million
• 0.50% on amounts above $5 million

This performance-based approach favors simplicity and aligns trustee incentives with asset preservation and growth. It’s especially prevalent in revocable living trusts and larger irrevocable trusts where professional oversight is routine.

Hourly Rate

Hourly billing offers another method, commonly used when the trustee performs highly specific or professional services, such as trust accounting, complex investment coordination, or tax filings. Rates vary significantly. Corporate trustees may charge between $150 and $350 per hour depending on the task and professional involved. Individual trustees—especially those without financial or legal credentials—tend to fall at the lower end of the spectrum.

Flat Fees

In less complex trusts or situations involving minimal ongoing management, a flat fee structure may be specified in the trust document or agreed upon by beneficiaries. This arrangement generally applies to trusts with predictable administrative demands—such as pass-through or distribution-focused setups. While rare among corporate fiduciaries, some solo trustees and family members accept annual flat fees ranging from $1,000 to $5,000 depending on workload and expectations.

Professional vs. Non-Professional Trustee Expectations

Expectations—and compensation—diverge between professional fiduciaries and non-professional (lay) trustees. Corporate trustees, such as banks or trust companies, follow strict fee schedules and usually adhere to percentage or hourly models combined with service tiers. Their fees typically reflect institutional resources, licensure requirements, and fiduciary insurance.

In contrast, non-professional trustees, often family members or close associates of the grantor, are held to the “reasonable compensation” standard under Florida Statutes § 736.0708. Courts and beneficiaries usually evaluate their compensation based on the time invested, responsibility assumed, and skill level. Flat fees or modest hourly rates are common, especially when the trustee has little experience or operates under a moral obligation rather than for-profit motives.

How Percentage-Based Trustee Fees Are Calculated in Florida

Percentage-based compensation is one of the standard methods used to calculate trustee fees in Florida. This structure ties the trustee’s fee directly to the total value of the trust, which aligns the trustee’s compensation with the size and complexity of the estate. Florida statutes don’t mandate a fixed percentage, but courts frequently accept a certain range as presumptively reasonable.

Common Percentage Ranges in Florida

Most Florida trustees receive an annual fee ranging between 1% to 3% of the trust’s total asset value. This range reflects common fiduciary practices upheld by Florida courts and aligns with guidelines from estate planning professionals. For instance, a trust valued at $1,500,000 would typically generate an annual trustee fee between $15,000 and $45,000 under this model.

• 1% is standard for trusts with large asset pools and limited activity, where duties are primarily administrative.
• 2% to 2.5% may apply to trusts that require moderate management, such as coordinating distributions, filing tax returns, or managing investments.
• 3% is more common with small to mid-sized trusts involving active oversight, legal interactions, or beneficiary disputes.

Application Based on Total Asset Value

The percentage applies to the total fair market value of trust assets on an annual basis. Trustees typically determine this value using year-end account statements, appraisals, or financial reports depending on the asset class. For example, if a trust includes $700,000 in real estate, $300,000 in securities, and $500,000 in cash, the trustee fee calculation begins at the aggregate $1.5 million total.

In Florida, the statute does not differentiate between asset types when applying this model. All categories—liquid and illiquid—contribute to the fee base, unless the trust agreement explicitly excludes certain assets.

Gross vs. Net Estate Considerations

Percentage fees are ordinarily computed on the gross value of the trust assets, not the net. This means expenses like debts, taxes, or administrative costs do not reduce the asset base used for the trustee’s percentage calculation. If a trust holds $2 million in gross assets but $400,000 in liabilities, the standard 2% trustee fee would still be $40,000, not $32,000.

Annual vs. One-Time Commissions

Florida allows trustees to be paid on an annualized basis as well as one-time commissions, depending on the trust’s duration and terms. For ongoing trusts with long-term beneficiaries, the fee recurs yearly, tied to asset value at a given reporting period. In contrast, estate settlement trusts or limited-term fiduciary roles might involve a one-time percentage fee calculated at the end of administration.

In either case, trust documents can authorize a specific schedule. If no compensation clause exists, trustees must default to “reasonable compensation,” which Florida courts evaluate in terms of market standards, trustee duties, and results delivered.

Breaking Down Hourly and Flat Fee Structures in Florida Trustee Compensation

Trustee fees in Florida don’t always follow a percentage-based model. In many situations, an hourly or flat fee structure provides greater transparency and aligns more closely with the actual workload involved. Understanding how these alternatives work can give both trustees and beneficiaries greater clarity.

Hourly Rate for Professional Services

When a trustee performs specialized work—such as overseeing investment decisions, resolving legal matters, or managing tax filings—compensation often follows a professional hourly rate model. For example, an attorney serving as a trustee may charge an hourly fee between $200 and $500, depending on experience and geographic location. CPA trustees often fall in a similar range.

Rates can also vary among institutions. Bank trust departments and corporate fiduciaries typically have fee schedules outlining their hourly charges based on staff level—trust officers, analysts, or legal counsel.

Time Tracking and Task Details

To justify hourly fees, trustees must maintain meticulous records. Detailed timesheets usually include:

• Start and end time of each task
• Description of activities performed (e.g., reviewing estate documents, preparing tax returns)
• Who completed the task (especially relevant when duties are delegated)

Court scrutiny, if invoked, often revolves around these logs. Well-kept documentation enables judges to evaluate the necessity and reasonability of hours billed.

When Flat Fees May Be Used

Not all trust administrations require ongoing time tracking or complex analysis. In these cases, flat fees provide a streamlined option. This approach typically surfaces in two scenarios:

• Simple Trusts: When the trust has limited assets, few beneficiaries, or straightforward distribution instructions, a trustee may quote a fixed fee for administering the entire estate.
• Non-Professional Trustees: Relatives or friends acting as trustees for uncomplicated trusts often prefer flat arrangements. These eliminate the need for detailed timekeeping and reduce conflicts over valuation of their time.

A common example: a family member managing the distribution of a $200,000 trust across two beneficiaries might set a flat fee of $2,000 to $5,000, agreed upon by all parties in advance.

What Determines a Reasonable Trustee Fee in Florida?

Size and Complexity of Trust Assets

A trust holding $500,000 in liquid investments demands less administrative effort than a $10 million trust spread across real estate, closely held business interests, and international accounts. In Florida, courts recognize that the complexity and value of trust assets directly affect the workload of the trustee. Large or diverse portfolios generally warrant higher compensation because they involve more oversight, specialized coordination, and time-intensive responsibilities. For example, managing rental property requires handling leases, insurance, maintenance, and tenant relations—responsibilities not present with standard market securities.

Trustee’s Duties and Time Commitment

Not all trustees perform the same tasks. Some are limited to recordkeeping and distributing income, while others must manage investments, handle litigation, prepare accountings, and maintain regular communication with beneficiaries. The number of hours spent managing the trust significantly influences how fees are determined. A trustee averaging 20 hours of work each month—reviewing financial reports, filing tax documents, and coordinating with attorneys—will justifiably expect higher compensation than one with minimal oversight obligations.

Level of Professional Expertise Required

Trusts often require more than basic administrative skills. A corporate trustee offering fiduciary services backed by attorneys, tax professionals, and certified financial planners brings a level of value that justifies higher fees. When a trustee possesses specialized expertise—such as a CPA managing tax liabilities or a financial advisor actively overseeing portfolio performance—the compensation structure reflects those qualifications. In Florida, this factor consistently supports above-average fees when the trustee’s involvement substitutes for services typically billed separately by outside professionals.

Income Generated by the Trust

The revenue a trust produces isn’t just about profitability—it also shapes trustee responsibilities. Higher-yielding trusts often require continuous reinvestment strategies, income distributions aligned with trust terms, and more frequent tax filings. Since Florida does not impose a fixed rule linking trustee fees to trust income, the relationship remains indirect but relevant. Trustees managing income-generating assets such as dividend-producing stocks or rental properties usually spend more time on trust matters, thereby qualifying for higher compensation.

When Courts Step In: Oversight and Fee Disputes in Florida Trusts

Judicial Involvement in Trustee Compensation

Florida courts do not automatically supervise trustee compensation. However, interference becomes likely when disputes arise or when a trust fails to specify how fees should be calculated. Under Florida Statutes §736.0708(2), if a trust lacks a fee provision, or if the compensation outlined is unclear or contested, beneficiaries or trustees can petition the court to determine what constitutes “reasonable compensation.”

Triggers for Court Intervention

• Absence of Fee Terms: When a trust doesn’t detail how fees should be calculated, trustees cannot unilaterally decide their compensation. In these situations, courts rely on statutory standards and judicial precedent to establish fair fees.
• Beneficiary Challenges: Beneficiaries may question the fee amount, claiming it is excessive or unjustified. Once a dispute is filed, trustees must submit a formal accounting along with evidence of their time, labor, and services rendered.

What Courts Examine in Fee Disputes

When ruling on trustee fees, Florida courts evaluate multiple facets of the trustee’s performance and billing practices to determine whether the compensation claimed aligns with fiduciary standards.

• Service Documentation: Courts demand clear records—timesheets, correspondence, accounting logs, and detailed descriptions of tasks handled. Vague or retroactively prepared documentation weakens a trustee’s position.
• Industry Benchmarking: Judges compare the trustee’s rates with prevailing compensation for fiduciary services in Florida. For example, institutional trustees routinely charge around 1.0% to 1.5% of trust assets annually, while individual fiduciaries often justify fees on an hourly basis ranging from $50 to $150 per hour, depending on experience and complexity of duties.
• Value Assessment: The court correlates requested fees with the value of the services performed. Tasks requiring high financial acumen, legal coordination, or sustained administration typically justify higher fees. Menial tasks or duplicated work do not.

Outcome of Court Review

Court decisions carry binding authority. If a judge finds fees excessive, courts can reduce payment, order partial reimbursement, or even remove the trustee for breach of fiduciary duty. Inversely, if a trustee undercharged, the court may authorize additional compensation, though this occurs less frequently.

Wondering whether your trustee fee arrangement could withstand court scrutiny? Consider this: Are the services logged? Do the charges match professional standards? If either answer is no, judicial oversight may just be around the corner.

Revocable vs. Irrevocable Trusts: Fee Considerations

Not All Trustee Roles Are Created Equal

The structure of a trust—whether revocable or irrevocable—has a direct impact on trustee compensation in Florida. Control, responsibilities, and risk exposure differ significantly, and these elements shape reasonable expectations for fees.

Revocable Trusts: When the Grantor Pays Themselves

In many revocable trusts, the grantor names themselves as trustee. During their lifetime, they maintain full control over trust assets and can alter or revoke the trust at will. Since the trustee and grantor are the same person, there’s typically no formal compensation arrangement—most grantors waive a trustee fee entirely.

When another individual or institution is named as a successor trustee—usually after the grantor becomes incapacitated or passes away—compensation begins to follow familiar norms. At that point, fee structures start to mirror those of irrevocable trusts, based on either reasonable percentage, hourly billing, or negotiated fixed rates.

Irrevocable Trusts: Higher Stakes, Structured Pay

Unlike their revocable counterparts, irrevocable trusts limit control. Once established, they can’t be modified or dissolved without court approval or beneficiary consent. That shift in control heightens the trustee’s responsibility and legal exposure.

Irrevocable trustees face ongoing obligations: managing investments, distributing income, filing trust tax returns, and ensuring compliance with trust terms. These duties justify a structured and predictable fee.

• Corporate trustees administering irrevocable trusts often operate on a tiered percentage basis, typically ranging between 0.5% to 1.5% annually on the value of managed assets.
• Individual trustees may bill hourly, particularly when distributions are complicated or require detailed recordkeeping.

Asset Complexity and Income Distributions Add Weight

Complex trust assets—commercial real estate, limited partnerships, or closely held businesses—require enhanced due diligence and active management. These added layers of responsibility increase trustee workload, affecting compensation structures.

Recurring income distributions also demand precise timing and accountability. Trustees handling regular beneficiary payouts must manage liquidity, monitor market fluctuations, and document every transaction. These tasks go beyond passive asset holding—compensation adjusts accordingly.

In contexts where the trustee must act as a financial advisor, investment manager, and bookkeeper, higher fees reflect the broader professional skillset required and the time invested.

Worth Comparing Roles—Who’s Holding the Reins?

Managing a revocable trust while alive often means minimal trustee fees, particularly when the grantor is steering the ship. But once authority passes to another party, especially under the structure of an irrevocable trust, the scope and scale of responsibilities shift dramatically—and so do the numbers attached to compensation.

Challenging Trustee Fees: Beneficiary Rights and Legal Recourse in Florida

Right to Inspect Trust Accounting

Florida law gives trust beneficiaries clear access to financial information. Under Florida Statutes § 736.0813, a trustee must provide a trust accounting annually, and upon reasonable request, disclose the trust’s financial transactions. This includes detailed records of trustee compensation. Beneficiaries don’t have to accept vague or summarized reports—a proper accounting must show how fees were calculated and why they were deducted.

Objections to Trustee Fees: Timing and Procedure

Beneficiaries must act promptly once an accounting is received. Florida allows a six-month window to object, starting from the date the trustee serves a properly documented trust accounting. Silent acceptance beyond that period typically waives the right to raise objections later. To challenge trustee fees, the beneficiary must file a written objection outlining specific concerns—whether tied to excessive charges, duplicative billing, or payments not aligned with trust performance.

Filing Exceptions with the Court

When informal resolution fails, beneficiaries may pursue formal action. Filing exceptions with the probate court becomes the next step. These exceptions serve as a targeted response to the trustee’s accounting, highlighting disputed fees. Florida courts will only consider objections that were timely filed and clearly substantiated. A hearing may follow, where both parties present documentation and testimony justifying their positions.

Requesting Audits and Justification of Fees

Courts have authority to order a forensic audit when trustee compensation appears unreasonable or lacks documentation. Beneficiaries can request this remedy if they believe fees don’t reflect the services rendered. Auditors may examine invoices, bank statements, communications, and time logs. If the audit reveals misconduct or unjustified charges, the court may order fee reductions or impose penalties.

Court’s Role in Safeguarding Beneficiary Interests

Judicial oversight acts as a final check on trustee conduct. When disputes escalate, courts assess not only the numbers but also the trustee’s adherence to fiduciary duty. If a trustee acted in self-interest, failed to perform, or charged fees out of proportion with the complexity of the trust, the court may intervene. Outcomes range from fee adjustments to suspension or removal of the trustee.

• Annual accountings empower beneficiaries to monitor trustee actions.
• Objections must be precise, timely, and grounded in fact.
• Audits and court reviews offer powerful tools to ensure fair trustee compensation.
• Florida courts consistently uphold the right of beneficiaries to transparent and reasonable trust administration.

What do the trustee’s invoices actually show? Does the calculated fee reflect real work—or just a percentage of trust assets? These are the critical questions beneficiaries must ask when reviewing their legal rights in Florida.

Best Practices for Setting Trustee Fees in Florida

Include a Trustee Fee Clause in the Trust Document

Stating the method of compensation directly in the trust instrument eliminates ambiguity. A clearly defined trustee fee clause—whether based on a percentage of trust assets, an hourly schedule, or a flat rate—sets expectations from the outset. Florida courts will generally enforce the terms of the trust unless the compensation proves unreasonable under §736.0708(1), Florida Statutes.

Use Clear, Written Agreements for Compensation

Even when the trust includes a compensation guideline, supplementing it with a written agreement ensures alignment between the trustee and beneficiaries. Put all terms in writing: rate structure, frequency of payment, parameters for additional compensation, and value-added services. This step significantly reduces potential disputes and aligns with professional fiduciary standards.

Maintain Detailed Logs of Trustee Activities

Accurate records create transparency. A well-maintained log showing hours worked, types of tasks performed, and how trust assets were managed supports the reasonableness of requested fees. Logs should capture:

• Specific dates and time spent on duties like investments, taxes, or beneficiary communication
• Descriptions of strategic financial decisions and their impact on the trust’s value
• Any extraordinary services provided outside the trustee’s routine responsibilities

These documents can serve as evidence if fees are challenged in court or reviewed by beneficiaries.

Know When to Seek Court Approval or Notify Beneficiaries

Florida law does not require routine court approval of trustee fees, but circumstances may trigger the need for judicial review—especially when the trust is silent on compensation or services fall outside standard trustee duties. Also, any substantial change in services or fee structure merits formal communication with impacted beneficiaries. Proactive engagement often prevents formal objections and cultivates trust among stakeholders.

Striking the Right Balance in Trustee Compensation

Trustee fees in Florida don’t follow a rigid formula—they derive from a balance between fiduciary responsibility, fair compensation, and oversight. The statutes give room for flexibility, but that flexibility yields structure only when informed by context: the trust’s terms, the trust’s complexity, and what courts deem “reasonable.”

The law doesn’t hand out blank checks. Florida Statute 736.0708 allows reasonable compensation, but it leaves space for interpretation, which courts often fill when disagreements arise. Trustees who document their efforts, adhere to trust provisions, and maintain transparency with beneficiaries avoid conflict and justify compensation claims more effectively.

What shifts theory into practice is proactive planning. Including specific compensation terms in the trust document eliminates ambiguity. Aligning expectations between trustees and beneficiaries from the outset keeps relationships intact and avoids litigation down the line.

Trustees serve a demanding role, requiring both diligence and judgment. Their fees should reflect the value of the work, not just the size of the estate. At the same time, beneficiaries are entitled to accountability. When both interests align—through clear terms, reasonable rates, and informed execution—the trust functions as intended.

Trustee Fee Litigation Examples

Spear v. Denmark

In Spear v. Denmark, the court significantly reduced the amount of trustee fees and costs requested by the trustee, and also reduced the hourly rate of the trustee’s expert witness.  The Florida appellate court ruled that competent, substantial evidence supported the Florida probate court’s reduction of the trustee fees and costs award, but that the reduction of the expert’s hourly rate was error.

Between January and June 2010, the beneficiary of the trust, seeking the termination of the trust pursuant to its terms, asked the trustee to make a distribution, resign, and forgo a full, final accounting.  The beneficiary insisted that the beneficiary’s attorney would, in lieu of an accounting, review the raw data.

Instead of following the beneficiary’s directive, the trustee made three partial accountings of the trust during that six month period.  The trustee refused to resign unless the beneficiary released the trustee from all liability.  The beneficiary refused, and sued.

The trustee moved for fees and costs pertaining to the three accountings, time spent defending against the beneficiary’s suit, and time spent by the trustee’s expert witness in preparation for the evidentiary hearing on the award.

The trustee sought over $80,000 for work performed on behalf of the trust.  The Florida probate court awarded approximately $8,400, mainly upon a determination that much of the alleged work performed by the trustee was neither necessary nor authorized.

When Can The Court Determine The Amount Of A Trustee Fee Award?

The Florida probate courts are often called on to review or set trustee fee awards.  Florida law provides that “if the compensation of the trustee has not been fixed by statute or direction of the settlor, the amount of the award rests in the discretion of the court having jurisdiction, which is ordinarily the court receiving the account of the trustee.”

An award of trustee’s fees and costs is reviewed by a Florida appellate court for an abuse of discretion.

What Test Is Applied To Calculate Trustee Fees in Florida?

The test to make an award of trustee fees is referred to as the West Coast test, and requires the examination of several factors to determine the appropriateness of a trustee fees award.  The factors include:

• Amount of capital and income received;
• Customary wages and salary;
• Success or failure of trustee’s administration;
• Unusual skill or experience possessed by trustee;
• Trustee’s loyalty or disloyalty;
• Amount of responsibility assumed by trustee;
• Time consumed by trustee in serving trust; and,
• Customary charges by trust companies for similar work

Here, the evidence showed that the court considered two of the factors: the amount of time spent and value of services provided by the trustee.  In response to appellant’s argument that the court incorrectly applied the lodestar method, which does not apply to trustee’s fees, the Florida appellate court stated:

The mere fact that the only two factors for which there was either sufficient or credible evidence in this case are the two that coincidentally happen to be used in the lodestar method, and that the trial court did not expressly assert its application of the West Coast test does not mean that it failed to apply it as far as the evidence allowed it.

The appeals court upheld the award as to the trustee’s fees and costs, despite the award being substantially less than the trustee sought.  The award was supported by competent, substantial evidence.  The Florida appeals court reversed the portion of the award calculating the trustee’s expert witness’ hourly rate based upon a different (lower) hourly rate than testified to at the hearing.

The trustee was specifically instructed by the beneficiary not to do accountings.  Instead, the trustee prepared three accountings within a short time period and then demanded over $80,000 in fees and costs.  While the reduction in the amount may at first blush seem extreme, the work performed by the trustee was unnecessary, unauthorized, and performed in contravention of the beneficiary’s instruction.  It is not surprising that the Florida probate court reduced the fee significantly and declined to award the trustee fees for work that was completely unnecessary.

In re Bloom

A Florida trustee can charge a trust for incurred expenses if the services are necessary and incurred for the benefit of the trust.  In the June 2020 opinion of In re Bloom, the Florida appeals court reminded practitioners that the trustee must actually be the trustee to charge expenses to the trust.

Leon Bloom executed a Trust in 1988.  After Leon became temporarily incapacitated in 2012, Robert Johnson (Leon’s attorney) assumed the role as trustee of the Florida Trust.

Johnson filed a guardianship proceeding and sought to have Leon’s nephew, Marshall, appointed as emergency temporary guardian.  Dorothy, Leon’s wife, sought reimbursement from the Trust for money that she spent to care for Leon.  Dorothy was represented by Marc Soss.

The parties entered into a settlement agreement, which was ratified by the Florida guardianship court.

The Trust was added as a party to the guardianship proceeding, Johnson resigned as trustee, and a trust company became trustee.

The Florida Guardianship Court Orders That A Successor Trustee “Shall Be Presented For Appointment”

In 2015, after Leon died, the trust company trustee was permitted to resign, and the court ordered that “a successor trustee shall be presented for appointment by” July 23, 2015. The court found that Johnson was “an interested party for purpose of notice and objection to [the] successor trustee.”

Dorothy appointed her lawyer, Marc Soss, and Raymond James Trust, N.A. as successor trustees, but did not file her notice or present it to the court. Johnson objected to Soss serving as successor trustee due to a conflict of interest.  Raymond James declined to serve.

Disqualification Hearing

In August 2015, Johnson died.  Marshall, as personal representative of Leon’s estate, was substituted for Johnson as petitioner in the guardianship proceeding.  Marshall sought to disqualify Soss as successor trustee.

Two days before the hearing on Soss’ disqualification, Soss withdrew as Dorothy’s counsel in the guardianship proceeding.  Marshall, as personal representative of Leon’s estate, filed a motion to compel Soss to return any fees paid from the Trust.

Soss was removed as successor trustee.  As summarized the Florida appeals court:

The court found that Soss’s representation of Dorothy in her claim against the Trust while simultaneously serving as Successor Trustee of the Trust created an irreconcilable conflict of interest that was not cured by his subsequent withdrawal as counsel for Dorothy. The court further found that Dorothy’s purported appointment of Soss was never confirmed by the court as mandated by its order approving of Caldwell’s resignation. The court also removed Marshall as personal representative of Leon’s estate and appointed Robert M. Elliott to serve as Trustee of the Trust and personal representative of Leon’s estate.

Hearing To Return Fees From The Trust

After being removed as personal representative of Leon’s estate, Marshall appeared individually in the Florida guardianship proceeding and filed an amended motion for an order compelling Soss to return any fees paid from the Trust during his purported service as trustee.  Soss noticed his appearance as co-counsel for Dorothy.

The evidence at hearing showed that Soss, while purporting to act as trustee during a roughly eight-month period, paid:

• $45,360 to himself from the Trust
• $82,500 to the attorney that defended him in the disqualification proceeding
• Overpaid Dorothy by about $62,000.

Of those amounts:

• Soss’ attorney paid back almost $19,000.
• Soss did not return any of the funds that Soss took from the Trust.

Soss testified that he held $20,000 from the Trust.  The court sua sponte ordered Soss to return the $20,000 to the Trust.

The circuit court asked Soss about the order permitting the corporate trustee to resign that stated that “a successor trustee shall be presented for appointment by the end of” July 23, 2015, and that “Robert M. Johnson is an interested party for purpose of notice and objection to [the] successor trustee.” Soss responded that the order did not specifically say that it had to be presented to the court; instead, it had to be “presented for appointment to the beneficiaries of the trust and Robert Johnson, as an interested party.”

Marshall filed a supplemental motion for order compelling Soss to return the funds to the Trust.

The circuit court found that ” it was clear that there was an objection to Mr. Soss serving as co-trustee or trustee [and] that he was on notice of that fact throughout the time.” The court also found “it incredible to believe in good faith that [the order approving of Caldwell’s resignation as successor trustee] was somehow misinterpreted” and that “it was clear that a successor trustee had to be presented and approved by the court or confirmed by the court,” which was never done.

West v. Chrisman

West_v_Chrisman , (M.D.Fla. 2014), concerned the unusual situation of a Federal bankruptcy court’s review of the attorney fees charged in a Florida trust and estate matter.  The attorney, West, had included himself as co-trustee of his client’s revocable trust, to take effect on his client’s death.  The client dies shortly thereafter, and the attorney takes over as co-trustee.  As co-trustee, West and the other co-trustee hire West in his capacity as attorney to help administer the estate and trust.

“Reasonable Fees Under Florida Trust Code”

The attorney has the other co-trustee sign an engagement letter pursuant to which attorney fees would be charged under the Florida Probate Code and the Florida Trust Code.  Those laws set forth presumptively reasonable fees. The estate was worth about $23 million, and West charged the estate $355,887, based on the percentage fee schedule set forth in the Florida Probate Code. After a falling out between West and the family of the deceased (mainly over the size of the fee), West filed for bankruptcy.  The family then sued West in bankruptcy court for the return of the fee paid, and also asked the court to rule that “West had abused his fiduciary position as Co-Trustee of the Trust to fraudulently enter into a fee arrangement with the Estate and the Trust.”  The Bankruptcy Court and the District Court agreed.

The Fee Agreement Was Not An Enforceable Agreement

West argued that he had a valid and binding attorney fee agreement with the estate and trust and that his fees were therefore lawfully charged and were not a breach of duty under Florida probate law or otherwise.  The fee agreement was of the type and form commonly used by trust and estate attorneys in Florida and stated that fees would be calculated pursuant to the attorney fee provisions of the Florida Probate Code and the Florida Trust Code. Those statutes set forth a percentage based on a sliding scale, but state that the amount can be modified by agreement of the parties or by the court’s consideration of a list of factors, such as complexity, difficulty, and diligence. The Court explained that the ambiguous amount of fees to be charged as set forth in the agreement rendered the entire agreement a nullity.

Without any showing of the actual calculation of fees, however, this term, as it appeared in the June 2 version of the Fee Agreement, was open and ambiguous. Indeed, although the “Amount of Fees” purports to be calculated pursuant to Florida Statutes §§ 733.6171 and 737.2041, these sections do not set forth a “definite proposition” as to the fees. Rather, both sections provide that the parties “may agree to compensation determined in a different manner than provided in this section.” See Fla. Stat. §§ 733.6171(2), 736.1007(2). Further, although these sections include a fee schedule that is “presumed to be reasonable,” the “Amount of Fee” provision does not clearly and unambiguously state that the fees are to be calculated according to this particular schedule. The provision’s vague reference that fees are to be “based on the value of the inventory assets of the probate estate, including the value of any homestead property, and any assets held in trust,” does not resolve this ambiguity. It is entirely plausible that the parties could have agreed to a fee calculated according to the value of the estate but that differs from the “presumptively reasonable” schedule set forth in Florida Statutes §§ 733.6171 and 737.2041. The fee calculation in the appendix was the provision that actually set the fee amount, and was not merely “a numerical expression of what the fee agreement language provides.”  Because an essential term in the June 2 version of the Fee Agreement was open, ambiguous, and subject to future negotiation, no enforceable contract could have been entered into on that day.

Attorney Fee Charged Pursuant to Florida Probate Statute Were Not Reasonable and Were a Breach of Duty

West argued that he cannot be guilty of defalcation and did not breach his duty because the attorney fee he sought to charge the estate comported with Florida probate law. (Defalcation is a type of fraud which would make any liability owed by West to be non-dischargeable in bankruptcy – a VERY big deal.)  The Court rejected that argument.

West’s argument is unavailing. To begin with, the fact that a fee is “presumptively reasonable” does not mean that it is actually reasonable. Indeed, the Bankruptcy Court found that such a fee would not be reasonable in this case. Moreover, neither case stands for the proposition that charging a presumptively reasonable fee necessarily precludes a finding of a breach of fiduciary duty.

Failure to Fully Disclose How Attorney Fees Can be Charged Is Breach of Fiduciary Duty

Here, West was Co-Trustee before he entered into the Fee Agreement with Aleta. Accordingly, as the Bankruptcy Court held, he had the duty to do more than simply not act unreasonably. He had the duty to “administer the trust in good faith, in accordance with . . . the interests of the beneficiaries,” and to “administer the trust solely in the interests of the beneficiaries.” Fla. Stat. §§ 736.0801 and 736.0802 (emphasis added). And he had “[the] obligation to make full disclosure to the beneficiary of all material facts.”  By entering into the Fee Agreement without affirmatively advising Aleta that such a fee was not mandatory or explaining any alternatives to her, West acted in reckless disregard of these duties. West is an experienced attorney who has practiced law for many years. He admits that he knew that the provisions of Florida Statutes §§ 733.6171 and 737.2041 were not mandatory, and that he had a duty to minimize attorneys’ fees. Despite having this knowledge and experience, however, instead of advising Aleta of her options, West pushed Aleta to sign the fee agreement, even going so far as to tell her that it was “required” by Florida law. At the very least, West acted in reckless disregard of his duties of loyalty and candor, and grossly and egregiously deviated from the standard of conduct that a law-abiding fiduciary would observe.

Breach of Fiduciary Duty Equals Nondischargeable Debt in Bankruptcy

If a debt is the result of what is known as defalcation under the Bankruptcy Code, the debt will not be discharged in bankruptcy.  The Court found defalcation here because of the breach of fiduciary duty and other misconduct of the probate attorney charging the fee without full disclosure.

11 U.S.C. § 523(a)(2)(A) precludes the discharge of a debt for money obtained by “false pretenses, a false representation, or actual fraud.” Courts have generally interpreted this section to require the traditional elements of common law fraud. Accordingly, a creditor must prove that: “(1) the debtor made a false representation to deceive the creditor, (2) the creditor relied on the misrepresentation, (3) the reliance was justified, and (4) the creditor sustained a loss as a result of the misrepresentation.”

Here, Aleta was entitled to rely, and did justifiably rely, on West’s statement because he was a fiduciary. Indeed, as a college-educated woman, she had the capacity and knowledge to recognize that she should be able to rely on him, as Co-Trustee, to act in good faith, to affirmatively disclose all material facts, and to act solely in the interest of the beneficiaries. See In re Vann, 67 F.3d 277, 281, 283 (11th Cir. 1995) (“Justifiable reliance . . . is gauged by an individual standard of the plaintiff’s own capacity and the knowledge which [she] has, or which may fairly be charged against [her] from the facts within [her] observation in the light of [her] individual case.”) The Court will therefore affirm the Bankruptcy Court’s finding that West made a false representation upon which Aleta justifiably relied to her detriment, in violation of 11 U.S.C. § 523(a)(2)(A).

Frequently Asked Questions About Tree Fees in Florida

Is A Person Serving As A “De Facto” Trustee Entitled To Fees From The Trust?

No.  A person serving as a “de facto” trustee who knows that he is not serving as an appropriate trustee is not entitled to payment of fees and expenses from a Florida trust.

“A trustee has the burden of proving the necessity of all expenses incurred by him or her, including attorneys’ fees.” Ortmann v. Bell, 100 So. 3d 38, 46 (Fla. 2d DCA 2011).

When a trustee seeks to charge a trust corpus with an expense incurred by him, including attorney fees, the burden of proof is upon the trustee to demonstrate that the expense was reasonably necessary and that such expense was incurred for the benefit of the trust, and not for his own benefit nor the benefit of others.  Barnett v. Barnett, 340 So. 2d 548, 550 (Fla. 1st DCA 1976) (emphasis added).

Do Payment Of A Trustee’s Attorneys Fees Have To Benefit The Trust?

Yes, payment of a trustee’s attorneys fees must benefit the trust, not just the trustee.

However, as Marshall correctly contends, those funds went to his attorney for the benefit of Soss—not for the benefit of the Trust. Cf. McCormick v. Cox, 118 So. 3d 980, 987 (Fla. 3d DCA 2013) (affirming disallowance of attorney’s fees that trustee paid to law firm in beneficiaries’ action to remove trustee for breaches of fiduciary duties). Given that Soss failed to demonstrate that his payments to Waskom were “for the benefit of the trust, and not for his own benefit,” the circuit court abused its discretion in failing to order Soss to return those funds to the Trust. See Barnett, 340 So. 2d at 550.

In re Bloom.

What does a corporate trustee charge?

Typically 0.5% to 3% of trust assets, on a sliding fee schedule.  The lowest fees are for the largest trusts.  On a trust of $3 million, corporate trustee fees are typically around 1.5%, and less if the corporate trustee is not going to be managing the assets of the trust.  All corporate trustees have fee schedules, but only a few publish the schedules online.  Here are a few examples of corporate trustee fee schedules.

Charles Schwab Trustee Fee Schedule

Citibank Trustee Fee Schedule

Ameriprise Trustee Fee Schedule

Comerica Trustee Fee Schedule

Why a Corporate Trustee Can Be The Best Choice

A typical family member who takes over as trustee has never administered a trust before.  The person might know how to invest money, but investing as an individual and investing as a fiduciary are two very different things.  The conduct of a trustee is governed by state law, and typically involves the application of the prudent investor rule.

The most complex trusts to manage are those where one person is an income beneficiary of the trust, and different people are the remaindermen, who only begin to receive distributions when the lifetime beneficiary has died.  The most common situation for such a distribution pattern is where the surviving spouse is the income beneficiary, while adult children are the remaindermen.  This plan is often utilized where the surviving spouse is not the parent of the adult children.

When the income beneficiary and the remaindermen are different people (often referred to as a split-interest trust), obvious tension arises between generating sufficient income for the lifetime beneficiary, while preserving and growing principle for the remaindermen.  Managing such conflict can be challenging, and should not be the first assignment of someone who has never served as a trustee before.

If the trust contains assets that are great in value, and/or assets that require active management, it is crucial that the trustee has sufficient skill and experience in such tasks.  An untrained trustee may be unable to properly administer such a trust.  While no one likes to pay a trustee fee, the family receives a much higher level of assurance that the trust will be administered properly and fairly.  Thus, the amount that the corporate trustee charges could be a necessary cost to proper administration of the trust.

How a Corporate Trustee Adjusts its Fees

Typically, a corporate trustee will charge a percentage of the assets under management, with a minimum fee.  Comparing fee schedules can be tricky, because some percentages are all-that-you-will pay, and other percentages may omit certain charges.  For example, if a trust company is going to manage the assets in house, the percentage fee should be the final fee.  If the assets are going to be managed by another firm – for example if the trustee is going to invest in mutual funds – the trustee’s fee may be on top of whatever fee is charged by the mutual fund company.  So diligence is required.

Also, a corporate trustee may charge additional fees to manage assets that require management above and beyond a securities portfolio.

Comerica Bank Trustee Fee Schedule

Here is how Comerica Bank describes its extraordinary fees that may be charged:

Attendance at atypical client meetings away from Comerica’s principal office location; facilitating trust amendments, and real property investments, structures and mortgages; establishing and administering credit facilities; managing and valuing special restricted or unpriced securities, recovering class action proceeds, holding or valuing unusual assets; preparation of additional requested reports or revision of financial statements. Some extraordinary services may be provided on an hourly billing basis, at a rate not to exceed $500 per hour. All costs and expenses (including legal or professional fees) associated with the preparation or filing of a formal or informal accounting will be paid by the account.

Ameriprise Trust Fee Schedule

As explained above on the issue of whether the trustee fee also includes the fee for the management of the assets, Ameriprise publishes two fee schedules – one where the investment management fee is separate from the trustee fee, and another where both services are bundled together.

Without investment management fee:

Annual base fee $750 (waived for linked trusts over $1M)
Account fee for first $1 million 0.75%
Account fee for next $2 million 0.60%
Account fee for next $1 million 0.50%
Account fee for next $6 million 0.25%
Over $10 million 0.10%
Minimum account size $500,000

With investment management fee:

Annual base fee $750 (waived for linked trusts over $1M)
Account fee for first $1 million 1.50%
Account fee for next $2 million 1.25%
Account fee for next $1 million 1.00%
Account fee for next $6 million 0.70%
Over $10 million 0.40%
Minimum account size $500,000

Pricing is negotiable at most trust companies, especially at higher asset levels (i.e., typically with over $10 million in assets).

The Cost of Getting it Wrong

If family members do not get along prior to a successor trustee taking over, the family members not named as trustee may end up in conflict or litigation with the family member who was named trustee.  Rare is litigation involving family members where there are not issues beyond the technical subject of the litigation.  Having a disliked family member acting as trustee over one’s inheritance is a blueprint to create litigation.  If the trust administration devolves into litigation, any cost saved associated with using a family member as trustee will be lost, and the overall costs usually end up far higher.

For more information, visit Florida Trust Litigation today!