Keeping Costs in Proportion
Trust administration costs money. Trustees may need to hire accountants, attorneys, investment advisors, or property managers. This statute does not prohibit those expenses. It requires them to be reasonable in light of three factors: the value of the trust property, the purposes of the trust, and the skills the trustee brings to the role.
In administering a trust, the trustee may incur only costs that are reasonable in relation to the trust property, the purposes of the trust and the skills of the trustee.
A.R.S. § 14-10805A modest trust holding a single bank account does not need the same level of professional support as a multimillion-dollar trust with real estate, business interests, and complex tax planning. Spending $10,000 a year on professional fees for a $50,000 trust would likely fail the reasonableness test. The same fees for a $5 million trust with active investments could be entirely appropriate.
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, and the cost of doing so is generally reasonable. The standard recognizes that different trustees bring different capabilities, and the cost structure should reflect that reality.
For families choosing a successor trustee, this is worth considering. 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 complexity.
