When the Trust Is Silent on Compensation
Many trust documents say nothing about what the trustee should be paid. When that happens, the law fills the gap with a simple standard: the trustee is entitled to compensation for their services that is reasonable under the circumstances.
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.
A.R.S. § 14-10708(A)What counts as "reasonable" depends on several factors. These include the complexity of trust administration, the value of the trust property, the time spent on the work, and the level of skill the job demands. A trustee managing a straightforward distribution is in a different position than one overseeing ongoing obligations like real estate, business interests, and tax returns.
Some professional trustees charge an hourly rate. Others bill based on a percentage of the trust's total value. When a family member serves as trustee, they may not realize they are entitled to compensation at all. But the law allows it, and the standard is the same regardless of whether the trustee is a professional or a relative.
When the Trust Sets a Fee
Some trust documents include a specific compensation provision. In those cases, the trustee is generally entitled to the amount stated. But the court keeps the authority to adjust it.
If the terms of a trust specify the trustee's compensation, the trustee is entitled to be compensated as specified, but the court may allow more or less compensation if either: 1. The duties of the trustee are substantially different from those contemplated when the trust was created. 2. The compensation specified by the terms of the trust would be unreasonably low or high.
A.R.S. § 14-10708(B)This protects both trustees and beneficiaries. A trustee who ends up doing far more work than anticipated can petition for a higher fee. Beneficiaries who discover the trust is paying an outsized amount relative to the actual work can ask the court to reduce it.
Why This Matters for Families
Trust administration involves real work: managing investments, keeping records, filing tax returns, and communicating with beneficiaries. The time and effort required can be significant, especially when the trust holds complex assets or has multiple beneficiaries with different needs.
Families should discuss trustee compensation early in the estate planning process. Setting clear expectations in the trust document avoids disagreements later. It also helps the trustee understand the scope of the role before they agree to serve.