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Serving as trustee to a trust, especially a special needs trust, is no small undertaking. It can be a time-consuming and complex endeavor. Moreover, administering a trust properly requires adhering to a number of regulations as well as to the guidance of the trust documents, carrying potential liability for any missteps. For that reason, trustees are typically compensated for their work. How are trustees compensated? Who pays them? To learn about trustee compensation for special needs trusts, read on. Speak with a knowledgeable West Palm Beach special needs trust attorney if you have any questions.
Many people choose to have their trusts administered by financial institutions or trust companies. Institutions have the resources and the experience to manage trusts; they know how to keep track of money, how to follow trust documents, and how to follow the law. They also employ investment managers who can keep the trust assets in a safe place while generating income. That comes at the expense of the personal touch of an individual trustee, however.
Typically, institutional trustees will charge either a percentage of the assets under management or a flat fee. For the typical trust, the institution will usually charge one to one and a half percent of the value of the assets per year. If the trust does not have much in the way of assets, they may instead charge a flat minimum fee. Larger trusts thus cost more to manage, but they also likely require more active management.
Many people rely on individual trustees to manage a special needs trust. While you can appoint a trusted family member or friend to manage the trust, it’s often wise to hire a professional trustee such as a lawyer or accountant. It helps to have someone well-versed in law and finance to ensure the funds are well looked after and to avoid burdening an overwhelmed family member.
Professional trustees typically charge an hourly fee for the services they render. They may charge a higher or lower fee depending upon the locale and the amount of assets under management, as well as for providing additional expertise and services beyond the minimum trustee duties.
Trustee compensation typically comes out of the trust itself. Trust funds can be used to compensate trustees as well as associated professionals such as investment managers, lawyers, accountants, and others. So long as the compensation is deemed reasonable, it’s an appropriate disbursement of trust funds.
A knowledgeable West Palm Beach special needs trusts attorney can help you and your family plan appropriately to maximize your chances to qualify for Medicaid, Social Security and other needs-based governmental programs. If you are in need of a seasoned and experienced Florida asset protection attorney, contact the experienced West Palm Beach estate planning attorneys Shalloway & Shalloway at 561-686-6200.