What is Reasonable Compensation for the Trustee of a Massachusetts Pet Trust?
Posted June 20, 2011on:
Under Massachusetts law, a Trustee is entitled to a fee that is ”reasonable.” Reasonable persons can have disagreements about what is a reasonable fee for services as a Trustee, so it is important to give guidance in the trust document.
The person establishing the trust can and should establish the method for compensating persons who serve in each key role, including Trustee. If a bank will be serving as Trustee, the bank’s fee schedule will establish the fee, but if a person who doesn’t normally serve as Trustee will be serving, the method of determining compensation should be dealt with.
Should the Trustee’s fee be based on an hourly rate or a percentage of the total amount of assets in the trust? There is no right answer. Basing the fee purely on an hourly rate would result in scrutiny by the Monitor, and disagreements could be the result. On the other hand, a percentage fee could result in the Trustee being overcompensated in some cases or undercompensated in others. In many cases, a blended fee could make sense, such as a low percentage of the assets plus a low hourly rate.
Posted by: Brian E. Barreira, Esq. / 18 Samoset Street, Plymouth, MA 02360 / 508-747-8282