Is Your Trustee’s Paycheck Too Big? Objecting to Trustee Fees in California

As a Beneficiary of a California Trust, you have the right to expect the Trustee to manage assets prudently and adhere to their fiduciary duty. This includes taking only appropriate compensation for their services. While trustees are entitled to be paid, sometimes the fees charged can seem excessive, unreasonable, or out of line with the work performed. If you suspect the trustee is overpaying themselves from your inheritance, what can you do?

California law provides pathways for beneficiaries to challenge Trustee Compensation. Here’s how Burrey Law Group helps beneficiaries hold trustees accountable:

Understanding Trustee Compensation Rules

First, check the trust instrument itself. If it specifies a fee (e.g., a percentage, an hourly rate), that usually governs unless it’s proven unreasonable or circumstances have drastically changed (Probate Code § 15680).

If the trust is silent, the trustee is entitled only to “Reasonable Compensation under the circumstances” (Probate Code § 15681). This is where disputes often arise, as “reasonable” isn’t defined by a fixed schedule like probate executor fees.

Evaluating Reasonableness: What to Look For

When reviewing trustee fees (often disclosed in an Accounting), consider these factors (based on California Rule of Court 7.776):

• Time & Effort: Did the work performed justify the fee? Request time records if compensation is hourly or seems high. Vague “block billing” can be a red flag.
• Complexity & Skill: Was the administration complex (e.g., managing a business, dealing with litigation), or relatively simple? Did the trustee possess special skills that benefited the trust?
• Trust Size & Income: Is the fee proportionate to the trust’s value and the income generated?
• Success: Was the administration successful? Poor investment results or administrative failures might argue against a high fee.
• Community Standards: What would a professional or corporate trustee typically charge for a similar trust in your area?

Your Right to Information: Demanding an Account

Often, you can’t evaluate the reasonableness of fees without seeing the full picture. If the trustee hasn’t provided a recent, detailed accounting, your first step might be to formally demand one in writing. If the trustee fails to provide it within 60 days, you can file a Petition to Compel Account/Report with the Probate Court (Probate Code § 17200(b)(7)). Obtaining the accounting provides the necessary information to assess the fees taken.

How to Formally Object

If, after reviewing the accounting or other information, you believe the compensation is unreasonable, you must formally object:

1. Objecting to an Accounting: If the trustee files a petition seeking court approval of their accounting (which includes fees paid), you must file written Objections with the court before the hearing date, specifically stating why you believe the compensation is unreasonable based on the factors above.
2. Petitioning for Review: Even if the trustee isn’t seeking court approval, you have standing as a beneficiary to file your own Petition asking the court to review the reasonableness of the compensation already taken or proposed (Probate Code § 17200(b)(9)).
3. Objecting to Fee Increases: If a trustee provides notice of a fee increase (under Probate Code § 15686), you generally have only 60 days to object by filing a petition for review or even for Removal of the Trustee. Failure to act within this window may allow the increase to take effect.

Potential Outcomes

If the court agrees that the compensation was unreasonable, it can:

• Reduce the trustee’s fee.
• Deny payment of improper fees.
• Order the trustee to repay the trust for excessive fees already taken (a form of surcharge).
• Consider the excessive compensation as evidence supporting trustee removal in egregious cases.

As a Beneficiary of a California Trust, you have the right to expect the Trustee to manage assets prudently and adhere to their fiduciary duty. This includes taking only appropriate compensation for their services. While trustees are entitled to be paid, sometimes the fees charged can seem excessive, unreasonable, or out of line with the work performed. If you suspect the trustee is overpaying themselves from your inheritance, what can you do?

California law provides pathways for beneficiaries to challenge Trustee Compensation. Here’s how Burrey Law Group helps beneficiaries hold trustees accountable:

Understanding Trustee Compensation Rules

First, check the trust instrument itself. If it specifies a fee (e.g., a percentage, an hourly rate), that usually governs unless it’s proven unreasonable or circumstances have drastically changed (Probate Code § 15680).

If the trust is silent, the trustee is entitled only to “Reasonable Compensation under the circumstances” (Probate Code § 15681). This is where disputes often arise, as “reasonable” isn’t defined by a fixed schedule like probate executor fees.

Evaluating Reasonableness: What to Look For

When reviewing trustee fees (often disclosed in an Accounting), consider these factors (based on California Rule of Court 7.776):

• Time & Effort: Did the work performed justify the fee? Request time records if compensation is hourly or seems high. Vague “block billing” can be a red flag.
• Complexity & Skill: Was the administration complex (e.g., managing a business, dealing with litigation), or relatively simple? Did the trustee possess special skills that benefited the trust?
• Trust Size & Income: Is the fee proportionate to the trust’s value and the income generated?
• Success: Was the administration successful? Poor investment results or administrative failures might argue against a high fee.
• Community Standards: What would a professional or corporate trustee typically charge for a similar trust in your area?

Your Right to Information: Demanding an Account

Often, you can’t evaluate the reasonableness of fees without seeing the full picture. If the trustee hasn’t provided a recent, detailed accounting, your first step might be to formally demand one in writing. If the trustee fails to provide it within 60 days, you can file a Petition to Compel Account/Report with the Probate Court (Probate Code § 17200(b)(7)). Obtaining the accounting provides the necessary information to assess the fees taken.

How to Formally Object

If, after reviewing the accounting or other information, you believe the compensation is unreasonable, you must formally object:

1. Objecting to an Accounting: If the trustee files a petition seeking court approval of their accounting (which includes fees paid), you must file written Objections with the court before the hearing date, specifically stating why you believe the compensation is unreasonable based on the factors above.
2. Petitioning for Review: Even if the trustee isn’t seeking court approval, you have standing as a beneficiary to file your own Petition asking the court to review the reasonableness of the compensation already taken or proposed (Probate Code § 17200(b)(9)).
3. Objecting to Fee Increases: If a trustee provides notice of a fee increase (under Probate Code § 15686), you generally have only 60 days to object by filing a petition for review or even for Removal of the Trustee. Failure to act within this window may allow the increase to take effect.

Potential Outcomes

If the court agrees that the compensation was unreasonable, it can:

• Reduce the trustee’s fee.
• Deny payment of improper fees.
• Order the trustee to repay the trust for excessive fees already taken (a form of surcharge).
• Consider the excessive compensation as evidence supporting trustee removal in egregious cases.

Beneficiaries are not powerless against unreasonable trustee fees. Burrey Law Group represents beneficiaries in reviewing trustee actions, demanding accountings, and filing objections or petitions concerning improper compensation. We fight to ensure trustees are held accountable and that trust assets are preserved for their intended purpose.

If you believe a trustee’s compensation is excessive or unjustified, contact Burrey Law Group today for a confidential consultation to discuss your rights and options.

Beneficiaries are not powerless against unreasonable trustee fees. Burrey Law Group represents beneficiaries in reviewing trustee actions, demanding accountings, and filing objections or petitions concerning improper compensation. We fight to ensure trustees are held accountable and that trust assets are preserved for their intended purpose.

If you believe a trustee’s compensation is excessive or unjustified, contact Burrey Law Group today for a confidential consultation to discuss your rights and options.