A trust is a valuable estate planning tool that can help you avoid probate, protect assets and transfer property to beneficiaries. A trust is often used in estate planning to manage an asset or property, both real estate and personal property, for the benefit of another. Essentially, a trust is a ‘contract’ used to reposition assets to protect, hold and manage them.
A person who establishes a trust is called a grantor or settler; the person receiving the benefits of the trust is known as the beneficiary; and the person managing the trust is called a trustee. If you are establishing the trust, you are the settler and you identify your beneficiaries, but how do you choose a trustee, the person who administers the trust? Do you choose a professional or institution or choose a friend or relative to handle the task?
Many trusts are established while the settlor is still living, and are appropriately called “living trusts”. Often the settlor chooses to administer the trust, then chooses a successor trustee to take over trustee duties in the event of their incapacitation or death. Often they appoint a spouse, relative or close friend to take over the duties or they choose a professional, such as a trust attorney.
Trust Administration Fees
The fees that are paid to a trustee are subject to Oregon law, specifically the Oregon Uniform Trust Code. Normally trustee fees or commissions are specified within the terms of a trust, but a court may allow an adjustment to the fee if the duties substantially differ from those originally contemplated or if the compensation is found to be unreasonable. If a friend or relative is appointed as a trustee, they may choose to waive a trustee fee.
Oregon courts allow “reasonable” compensation for trustee duties, which usually takes into account the size of the estate, the complexity involved and the time spent by the trustee. Fees are paid from the trust and are considered taxable income to the trustee.
Trust administration and the fees involved should be addressed within trust documents. An estate planning attorney with experience in creating trusts and trust administration can advise of the best course of action for your specific estate planning needs.