An important part of any estate plan involving a living trust is the choice of a successor trustee. This person is responsible for carrying out the trust administration. Once you have selected the appropriate individual or professional trust company, your next step is to address the issue of trustee compensation. Including provisions in your trust for trustee compensation is advisable in some, but not necessarily all, situations. An experienced attorney can help you make the choice that is best suited for your estate plan ensuring that you address out-of-pocket expenses for successor trustees.
Out-of-Pocket Expenses Are Automatically Eligible for Reimbursement
Regardless of whether you opt to include a trustee compensation provision within your trust, all trustees are entitled to reimbursement for their out-of-pocket expenses relating to the trust administration, even if it is not specifically stated within the trust itself. Examples of common out-of-pocket expenses that may occur include the following:
- Hiring an attorney to assist with the trust administration process.
- Hiring an accountant to handle final tax returns of the decedent, income tax returns of the trust, and estate tax returns. There are likely additional tax matters requiring assistance including gift tax issues, tax basis issues, and appraisals.
- Hiring a real estate broker to sell any Orange County real estate that is held in the trust.
- Hiring an appraiser to appraise any of the property of the trust.
Decisions relating to successor trustees are very important as you create your estate plan. Fortunately, we are here to help. We encourage you to view our client testimonials page today to learn more about how we have helped other clients create effective estate plans in California.