Deciding on Whether to Compensate Your Trustee
As part of your estate planning process, you may choose to allocate a portion of your assets into a trust. By doing so, you transfer ownership of included property to a designated trustee who, in turn, manages the funds for a beneficiary. Although not all trustees are paid, some do receive compensation because of the extent of work involved in managing the trust.
Deciding to provide payment
There is no set amount a trustee can or must be paid, which typically leaves the payment sum to be determined by the grantor of the trust or the trustee. Should the grantor of the trust decide on a payment amount, it may be included in the trust’s clauses.
If there is no compensation total specified, the trustee may pay himself or herself an amount that the individual and the state of Florida deem to be “reasonable” for the amount of effort required. Trustees may allocate their payments directly to themselves from the funds in the trust.
Accepting payment as a trustee
Serving as a trustee may involve hours of work over a long period of time. As such, many trustees choose to accept payment when it is offered to them. However, before you agree to accept compensation for your trustee duties, you may want to consider how it can impact your financial and family situation.
Compensation earned by being a trustee is considered to be a taxable source of income according to the federal government. This means you will have to report it on your income taxes. Additionally, you may wish to reflect on how your relationships with loved ones may be impacted if you agree to take payment. Some trustees may choose not to receive compensation to avoid changing family dynamics.
For more information on the details of your estate plan, consult the knowledgeable Tampa trust attorneys with BaumannKangas Estate Law.