Reimbursement, Compensation, and the Bond Default
Serving as a custodial trustee takes time, attention, and sometimes out-of-pocket spending. This statute establishes three straightforward rules about how a custodial trustee is compensated for their work, unless the trust instrument, an agreement with the beneficiary, or a court order provides otherwise.
Except as otherwise provided in the instrument creating the custodial trust, in an agreement with the beneficiary or by court order, a custodial trustee: 1. Is entitled to reimbursement from custodial trust property for reasonable expenses incurred in the performance of fiduciary services. 2. Has a noncumulative election, to be made not later than six months after the end of each calendar year, to charge a reasonable compensation for fiduciary services performed during that year. 3. Need not furnish a bond or other security for the faithful performance of fiduciary duties.
A.R.S. § 14-9114What This Means in Practice
First, the trustee can recover reasonable expenses from the trust property. This includes costs directly tied to managing the trust, such as filing fees, accounting costs, or travel expenses related to trust administration.
Second, the trustee may elect to take reasonable compensation for their services each year. This election is noncumulative, meaning the trustee cannot skip a year and then claim double the following year. The election must be made within six months after the calendar year ends. What counts as "reasonable" depends on the complexity of the trust and the work involved.
Third, the trustee is not required to post a bond. A bond is a financial guarantee that protects beneficiaries if the trustee mismanages trust assets. By defaulting to no bond requirement, the statute reduces the cost and complexity of custodial trust administration. However, a court, the trust instrument, or the beneficiary can override this default and require one when circumstances warrant it.
