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I am Trustee - Need Assistance in Proper Handling of Family Trust

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spdblondie

Junior Member
What is the name of your state (only U.S. law)? Missouri

My father passed last month, and named me as the Trustee. Luckily, he truly does not have that much to handle, however I still need assistance with a few items and want to ensure I am doing things properly. The attorney that drew up the Trust in 2003 honestly informed me she has not kept up with trust laws, saying they changed so much she truly isn't up to date. So, having said that - I am looking to you on this board for assistance.

My father (mother passed in 2007) legally has me as the trustee. His assets, ARE in the name of the trust and consist of two bank accounts (I am named on each of them as well) and his home, which is completely paid for. I have his house on the market as of a week ago. I know I need to maintain funds for any expenses (medical or otherwise) and I have been handling his checkbook for over a year now anyhow. He is not in debt to anyone. Other than the monthly expenses of maintaining his home I think I have handled everything necessary. I did call the IRS and have a TAX ID number, knowing I need to do a 1040 for the time period my father was alive, and have a 1041 completed from the day after his death through 12/31/2010. (Dad died 9/10/10).

Are there things I should be handling now?

Dad asked the following:

Each grandchild receive $1,000.00
Each great grandchild receive $500.00
This should bring the total to compensate them to $6,000 out of his trust.

The rest is to be split between myself and my two sisters, and a clause was written that I am to receive "customary" compension for handling the trust, however no amount was given. Does anyone know how you determine this compensation?

Dad has approximtely 35K between the two checking accounts, and his home will probably sell (lord willing) for about $120,000.

Are there things I need to handle now, and what should I be preparing myself for in the future.

Thank you so much.

Sandy in KC
 


anteater

Senior Member
Seems to me that this isn't a terribly complicated situation and you have things under reasonable control. You might consider:

1) Lining up an attorney with trust administration experience, as a just in case, that you can consult with on an hourly basis.

2) Find a tax professional for filing the returns unless you are very knowledgeable.

3) Send the beneficiaries an update email every couple weeks. Helps to keep anyone from getting jittery about what is occurring.

...consist of two bank accounts (I am named on each of them as well)
Not knowing what "...named on each of them..." means exactly... Ownership of the accounts might be a question. But, if you are considering them to be part of the trust, I don't think anybody is going to quibble.

Does anyone know how you determine this compensation?
The Missouri statutes only say, "If the terms of a trust do not specify the trustee's compensation, a trustee is entitled to compensation that is reasonable under the circumstances." You would have have to ask a MO attorney what is considered reasonable. But, if you keep track of the tasks performed and the amount of time spent on each, and then apply a reasonable hourly rate, you will probably be alright.
 

curb1

Senior Member
Are the three of you (you and two sisters) in agreement about dividing all of the assets?

1)You should be maintaining very accurate documentation of expenses and any income.

2) I would suggest distributing the money to the children mentioned and be done with that.

3) Make sure you have an accurate valuation of all assets at day of death, including the house.

4) Hopefully the house will sell immediately and all assets distributed. The sooner the better for tax reasons. Trust tax rates accelerate significantly faster than individual rates. Efficient termination also minimizes the number of required tax filings and reduces the time during which accounting records need to be maintained.

The amount you should charge as the trustee depends on the amount of time you put into the project. Keep it very fair and keep sisters happy. Discuss this with your sisters. Be transparent with them.
 

spdblondie

Junior Member
Thank you for your rapid response. You are correct, everything is named in the trust, and my two sisters and I are in complete agreement regarding everything. We live close to one another and I keep them updated almost daily. They have complete access to all banking records & the trust book, so I too feel confident we will not have any issues.

I have an accountant who will handle the taxes for my fathers trust, so I think I have that area under control as well. The only part he did not know about was the "trustee compensation" and what is considered customary. I have handled all the legwork, including going through all the contents, inventorying, distributing and lastly packing away what no one wanted and having them donated. I have also handled the painting, installation of new light fixtures, and general maintenance issues. My sisters were in agreement that I was the one that was best to handle this, as they are older and not ones who like to dig in and pack up. I might also mention, my father lived in my home since December 2009, with a few hospital stays and two short stays at a Rehab Center while caring for his cancer related illness. During this time, I was taking complete care of him, ensuring he was bathed, fed and went to all the numerous medical appointments, and maintained his home and bills during this sequence of events.

Can anyone tell me what is customary for the trustee fee?

Thank you again.

Sandy in KC
 
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Kiawah

Senior Member
You don't 'have' to take a penny. Anything drawn from the trust is effectively money out of their pockets and into yours.

Perhaps a fair way of thinking of it, is to walk a mile in their shoes. What is it worth to them, to have you handle all of this stuff for them, so they don't have to do anything? Or, what would YOU be willing to pay one of them to handle it?

My siblings are all close, all similar in financial comfort, I charged nothing but travel expenses if/when incurred. I was more concerned in making sure there was absolutely no infighting or resentment that might possibly take place. There's no amount of money that is worth fracturing family relations.
 

spdblondie

Junior Member
My sisters both said they did not want the duties associated, but wanted to ensure I was compensated since I took time off work and have handled everything, saying they are happy with everything and believe I have more than earned any compensation. Again, I am just trying to stick with the original conversation we had with my father back when he prepared this trust. This conversation included my sisters, and everyone stated I was to receive payment for my services, however the term "usual compensation" is what is leaving us without an answer, as we have NO IDEA what that would be and they are telling me to be sure I take out the reasonable amount for all the work I have handled.

Thank you again.

Sandy in KC
 

anteater

Senior Member
I think that you are getting too hung up over this. One of the nice things about a trust is that you don't have to subject trustee compensation to court scrutiny unless a ticked off interested party drags the matter before a court.

What was your hourly employment rate? Multiply that by the hours you spend. Or 1 or 2 % of the value of the trust. I would be fairly certain either would pass the reasonableness test.

As far as I know, nobody here is from Missouri. If you really, really want to know what is considered reasonable and customary in Missouri, you will need to ask a Missouri attorney.
 

curb1

Senior Member
The "reasonable" amount is a reflection of the cost to you for doing the duties. I would have a conversation with sisters. Present an amount that you consider compensates you fairly and ask them if it is too much, or too little. They will probably go along with your estimation. Be accurate about the time and amounts that you have expended. Be flexible and fair.
 

spdblondie

Junior Member
Thank you to each and every one of your responses.

I have shared the webpage comments with my sisters and they stated 1.5% of the trust sounds like a perfect amount.

I appreciate everyones assistance.

Sandy in KC
 

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