Costs of Trust Administration

Keeping Costs in Proportion

Trust administration costs money. Trustees may need to hire accountants, attorneys, investment advisors, or property managers. Trust documents should address how these costs are handled. This statute does not prohibit those expenses. It requires them to be reasonable in light of three factors: the assets in the trust, the purposes of the trust, and the skills the trustee brings to the role.

A modest trust holding a single bank account does not need the same level of professional support as a large trust with real estate, business interests, and complex tax planning. What counts as reasonable will vary depending on the complexity of the trust and the types of assets it holds.

The Trustee's Skills Factor In

This statute ties costs to the trustee's own abilities. A trustee with financial expertise may not need to hire an investment advisor. A trustee without that background should hire one. The cost of doing so is generally reasonable. The standard recognizes that different trustees bring different capabilities.

Professionals may charge hourly rates or flat fees for their services. Either approach can be appropriate depending on the work involved. The key question is whether the total cost is proportional to the assets in the trust and the benefit the services provide.

Why This Matters for Families

For families choosing a successor trustee, the cost question is worth considering early. A family member serving as trustee may keep direct costs lower but may need more outside help. A professional trustee charges a fee but typically handles more of the work in-house.

Either approach can be reasonable depending on the trust's size and the complexity of the trust. The goal is to make sure that administration costs do not eat into what was set aside for the beneficiaries. Reviewing costs periodically helps keep expenses in line with the trust's actual needs.