Executor, Trustee and Other Fiduciary Compensation

Executor, Trustees and others serving estates and trusts as fiduciaries, or an agent under a financial power of attorney may be entitled to compensation. The first step is to review the governing legal document. For an estate it is generally a will and any amendments (codicils), for a trust it is the trust document as well as any amendments that may have been made or other modifications, for a financial agent it is the power of attorney. The first step is to confirm what the document provides in terms of compensation. In some instances, people state in their will trust or other document that there shall be no compensation. If that occurs and compensation is not desired that is fine. If compensation is prohibited but is desired consult an attorney to see if anything can be done. If compensation is permitted but not desired also consult an attorney as there may be tax implications to waiving compensation. Some people appointed as fiduciaries may not be willing to serve if they do not get paid for their efforts.

The situation is often more complex then the compensation or not binary above. Some documents may provide for compensation for all fiduciaries other than family members. Then you have to determine who is a family that is prohibited from receiving compensation. Some documents state that the fiduciary should receive “reasonable” compensation. Unless that is further defined with clear details you should consult an attorney to determine what that means.

You need to be careful, especially if you are the trustee paying yourself that you adhere to compensation terms in the trust and state law that applies.