Trustees play a crucial role in trust management, administering assets and ensuring the wishes of the trustor are fulfilled. However, disputes over trustee fees can arise, leading to disagreements among beneficiaries and trustees.
This article helps provide insight into disputing trustee fees in California and outlines your options for resolving such disputes.
Who Is a Trustee?
A trustee is an individual or entity appointed to manage and oversee a trust’s assets. Their primary responsibility is to act in the best interest of the beneficiaries while adhering strictly to the terms of the trust document.
The trustee role encompasses various duties, including:
- Maintaining accurate records
- Investing and managing trust assets
- Distributing income or principal to beneficiaries
Trustees must possess a high level of transparency and accountability, ensuring that their actions align with the trustor's intentions and comply with applicable laws. The role of a trustee is crucial, as it directly impacts the financial health and well-being of the beneficiaries.
Understanding Trustee Fees
Trustees are entitled to reasonable compensation for their services unless the trust explicitly states otherwise. Trustee fees can vary depending on factors such as the complexity of the trust, the amount of assets managed, and the trustee's responsibilities. Fees are typically paid from the trust's assets, and they can impact the overall distribution to beneficiaries.
Common Issues Leading to Disputes
Here are some scenarios that can lead to trustee fee disputes:
- Excessive Fees
Beneficiaries may dispute trustee fees if they believe the fees are excessive or not justified by the services provided. - Conflict of Interest
If trustees are also beneficiaries, or they have financial interests that conflict with their duties, beneficiaries may challenge the reasonableness of the fees charged. - Lack of Transparency
Trustees must provide a clear and accurate accounting of their actions, including fees charged. A lack of transparency in fee disclosures can lead to distrust and disputes.
Steps to Dispute Trustee Fees
If you suspect a trustee’s fees are inappropriate, take the following steps:
- Review the Trust Document
Start by reviewing the trust document to understand the terms regarding trustee compensation. It should outline whether trustee fees are fixed, based on a percentage of assets managed, or subject to court approval. - Request an Accounting
Beneficiaries have the right to request a detailed accounting of the trust's finances and transactions, including trustee fees charged. Doing so can help clarify any discrepancies or concerns regarding fees. - Mediation or Negotiation
Consider mediation or negotiation as a first step to resolve disputes amicably. Mediation allows parties to discuss their concerns with the help of a neutral mediator, potentially avoiding costly litigation. - Court Intervention
If disputes cannot be resolved through mediation or negotiation, beneficiaries may file a petition with the court to review and approve trustee fees. Courts will evaluate whether fees are reasonable and necessary based on the circumstances of the trust.
How an Attorney Can Help
A lawyer can help you resolve disputes over trustee fees and other trust-related matters. They can provide strategic guidance and vigorous advocacy to protect you and your beneficiaries. A good attorney is there to help ensure trustees fulfill their fiduciary duties.
Whether you are challenging trustee fees, need assistance with trust administration, or have questions about your rights as a beneficiary, OC Trial Group is here to assist you. Contact us today to schedule a free consultation. We are available online or by phone at (949) 270-3424.
