Successor Trustee Fees

A successor trustee is an individual who steps in and takes control when the trustmaker or grantor—the person who made and funded the trust—becomes incapacitated or dies. In most cases, the grantor of a trust acts as a trustee during his lifetime.

Successor trustee fees are either dictated by the terms of the trust agreement or by state law. These laws usually provide guidelines as to what is considered a “reasonable fee” based on how complex the trust is, how much time it will take to administer and settle and whether the trustmaker’s estate is subject to estate taxes. The laws also take into consideration whether the validity of the trust or the choice of the successor trustee is likely to be or has been challenged by the trust beneficiaries.

These fees are also dictated by the terms of the trust agreement or by state law. They are usually calculated similarly to the successor trustee’s fee.

Accounting fees will vary depending on the overall value of the trust and the type of assets it holds. A “small” trust based on its overall value may own 25 different stocks and bonds, and this could generate more in the way of accounting fees than a larger, more valuable trust that owns only a primary residence, a bank account, and a CD.

If the grantor’s estate is subject to estate taxes at the state or federal level, accounting fees may also include the preparation and filing of these tax returns. Although the federal estate tax exemption for an individual is $11.58 million as of 2020, state thresholds are often considerably less. Some estates that would not owe taxes or require a return at the federal level may still have to deal with this expense at the state level.

Appraisal and business valuation fees will be necessary to determine the date of death values of real estate and personal property, including jewelry, antiques, artwork, boats, and cars. Business interests held by the trust must also be valued. Appraisal fees for personal property can range anywhere from a few hundred to a few thousand dollars, while business valuation fees will typically run several thousand dollars.

Miscellaneous fees can range from the cost of postage to mail documents to trust beneficiaries and taxing authorities to costs associated with insuring, storing, shipping, and moving personal property.

After adding up all these fees and costs, you can probably count on settling your trust for anywhere from less than 1% to as much as 5% of the value of your assets. This doesn’t include estate or income taxes that may be due and payable during the course of the trust administration. Compare this with the cost of settling your estate through probate court, which can range anywhere from 3% to 8% of the value of your assets.