Quora Answer: Do Trustees of an Irrevocable Trust Get Paid?

The following is my answer to a Quora question: “Do the trustees of an irrevocable trust get paid for their services, and how is this determined?”

The trustee is entitles to a reasonable fee, paid annually, and for compensation for out of pocket expenses, as and when incurred.  There is no set guideline on how much a trustee is compensated since the amount and type of work varies with the trust, the assets being managed, and whether there is active management of the assets.

Some trusts are merely holding vehicles for the assets, and the trustees perform little or no active management of the assets.  They have limited mandate beyond maintaining the value of the assets, with reasonable effort, cognizant of market conditions.

Other trusts are far more complex, and require active management of a variety of assets, with the mandate to grow the value of the trust, and disburse the proceeds to the beneficiaries over an extended horizon.  This horizon of disbursement may be over more than a lifetime, or even to run institutions such as museums and universities, in perpetuity.  In such a case, the board of trustees are well compensated, since this is almost a full-time job.

Considering the vast difference in scope between the different types of trust, it is impossible for there to be a set fee.  This compensation is something agreed upon between the trustees and the settlor, and between the trustees, and the beneficiaries, if the settlor is deceased.