A loved one passes away and names your sibling as trustee of the family trust. Months go by and you finally receive a trust accounting. Buried in the fine print is a line item showing the trustee paid themselves $40,000 in fees. You have no idea whether that number is remotely justified or whether it was taken from what should have been your share.
This situation plays out in California trust administration and probate disputes more often than many people realize. Trustee fees are one of the most common points of conflict in trust litigation, yet most beneficiaries are unfamiliar with the rules that govern how those fees are set and reviewed. If you are a beneficiary who suspects something is off, or a trustee trying to follow the law, this article is for you. Here is what California law actually requires and what you can do if trustee compensation appears excessive or improper.
What Does California Law Say About Trustee Compensation?
California does not set a fixed dollar amount or a hard percentage for trustee compensation. Instead, the law takes a flexible approach. California Probate Code section 15681 states that when a trust instrument does not specify what the trustee should be paid, “the trustee is entitled to reasonable compensation under the circumstances.”
That phrase, reasonable under the circumstances, sounds simple enough. In practice, it is anything but. What counts as reasonable depends heavily on the specific trust, the specific trustee, and what that trustee actually did. Two trustees managing trusts of the same size might legitimately receive very different amounts based on the work involved.
California Probate Code section 15680 makes clear that when the trust document does specify compensation, the trustee is entitled to that stated amount. The document controls. However, a court may adjust that compensation in limited situations, such as when the amount is unreasonably high or low, or when the trustee’s duties are substantially different from what was originally contemplated. Those situations are the exception, not the rule.
How Are Trustee Fees Actually Calculated?
There is no trustee fee schedule in California comparable to the executor commission schedule under Probate Code section 10800, which uses tiered percentages of the estate’s gross value. Trustees do not have a fixed statutory formula. Instead, compensation is based on what is reasonable under the circumstances, and in practice, the structure typically falls into one of three categories.
Percentage of Trust Assets
Professional and corporate trustees commonly charge an annual percentage, typically ranging from 1% to 2% of trust assets. Many institutions use tiered rates that decrease as the size of the portfolio increases. On a $1 million trust, this might translate to roughly $10,000 to $20,000 per year, depending on the complexity of administration, the services provided, and the level of responsibility involved.
Hourly Rate
Individual professional fiduciaries licensed through California’s Professional Fiduciaries Bureau often bill by the hour. Rates generally start around $100 per hour and can exceed $200 per hour in larger metropolitan counties like Los Angeles and Orange County, depending on the complexity of the trust administration and the work required. More complex estates involving litigation, real property, or business interests typically fall on the higher end of that range.
Fixed Fee
Less common, but some trustees negotiate a flat fee for specific tasks, such as final distribution, trust termination, or clearly defined administrative projects. Even in these arrangements, California law still requires that the total compensation remain reasonable, and courts may review fixed fees if they are challenged by beneficiaries.
Family members and friends serving as trustees, sometimes called lay or non-professional trustees, are also entitled to reasonable compensation for their time. Many choose to waive fees entirely, especially in smaller or less complex trusts. Others take compensation but fail to properly document their work, which often creates problems later. The most common issues arise when trustees either do not take compensation at all and later try to claim it without records, or they set informal fees without keeping detailed time logs or descriptions of services performed.
How Do Courts Decide Whether a Fee Is Reasonable?
When a dispute over trustee fees ends up in court, judges in California rely on established case law and statutory principles rather than a fixed formula. Courts commonly consider factors that are reflected in California Rule of Court 7.776 and related fiduciary compensation standards. These factors are not a rigid checklist. Instead, the court weighs them together and decides how much importance to give each one based on the facts of the case. Together, they form the foundation for how trustee fee disputes are evaluated in California probate courts:
- The gross income of the trust estate
- The success or failure of the trustee’s administration
- Any unusual skill, expertise, or experience brought to the trustee’s work
- The fidelity or disloyalty shown by the trustee
- The amount of risk and responsibility assumed by the trustee
- The time spent performing trustee duties
- The custom in the community where the court is located, including what corporate trustees charge for trusts of similar size and complexity
- Whether the work performed was routine or required more than ordinary skill or judgment
Factor four, fidelity versus disloyalty, deserves special attention. When a trustee has breached their fiduciary duties, a court has authority under California Probate Code section 16420. In serious cases, courts may also order the trustee to repay fees that were improperly taken and may remove a trustee entirely. In some situations, charging excessive or unjustified fees can itself support a finding of breach of fiduciary duty.
What About Extraordinary Services?
Standard trustee compensation generally covers the routine work of trust administration, including managing investments, communicating with beneficiaries, preparing accountings, and making distributions. When a trustee performs services that fall outside the ordinary course of administration, additional compensation may be warranted. Common examples include managing or selling real property held by the trust, overseeing a business interest, handling trust litigation, or dealing with complex tax matters such as an IRS audit.
These extraordinary service fees are still subject to the overarching requirement that all trustee compensation must be reasonable under California law. They are typically evaluated separately from ordinary compensation, and courts may review them if a dispute arises or if the total compensation appears excessive in relation to the services performed.
The 60-Day Notice Rule — What Trustees and Beneficiaries Both Need to Know
California Probate Code section 15686 requires a trustee who seeks to increase their compensation above what is specified in the trust instrument to provide at least 60 days of written advance notice. That notice must be given to each beneficiary who is currently entitled to receive income or principal, each beneficiary who would receive a distribution if the trust terminated at the time notice is given, and any beneficiary who has previously requested notice of changes in trustee compensation.
This rule has real consequences. If a beneficiary files a petition under Probate Code section 17200 within the 60-day period, the proposed fee increase is stayed until the court resolves the dispute. Trustees who increase compensation without providing proper notice or who fail to comply with the statute may be required to return improperly taken fees and may face court scrutiny regarding their conduct.
Co-Trustees Cannot Each Collect a Full Fee
This comes up more often than people expect. When two or more trustees serve together, California Probate Code section 15683 provides that, unless the trust instrument states otherwise or the co-trustees agree to a different arrangement, compensation must be divided among the co-trustees based on the services each one actually performs. In other words, one co-trustee is not entitled to collect a full trustee fee simply by serving alongside another trustee who is doing most of the work. A trustee who ignores this default rule creates a legitimate basis for a fee dispute and potential court intervention.
Can Beneficiaries Challenge Excessive Fees?
Yes, and the process is more straightforward than many people assume. California Probate Code section 17200 allows a beneficiary to file a petition in the probate division of the Superior Court in the county where the trust is administered, asking the court to review whether the trustee’s compensation is reasonable. If the court finds that fees were excessive, it can reduce the amount, order repayment of fees already taken, or deny future compensation.
Beneficiaries also have the right to obtain information about trust administration, including compensation paid to the trustee. Under California Probate Code sections 16060 through 16061.7, trustees have a duty to keep beneficiaries reasonably informed and to provide relevant information upon request. If a trustee refuses to provide requested information or fails to respond appropriately, that conduct can itself be brought before the court as part of a petition under Probate Code section 17200.
Key Takeaways
- California law sets no fixed trustee fee. The standard under Probate Code section 15681 is “reasonable compensation under the circumstances.”
- The trust document comes first. If it specifies trustee compensation, that amount generally controls unless a court finds a legal basis to modify it.
- Courts evaluate fee disputes using established factors reflected in California Rule of Court 7.776 and related fiduciary compensation principles.
- Professional and corporate trustees typically charge around 1% to 2% annually or $100 or more per hour, depending on location, complexity, and services provided. These figures reflect common market practice, not a legal requirement.
- A trustee who seeks to increase compensation above what is stated in the trust instrument must provide 60 days’ written advance notice to the required categories of beneficiaries under Probate Code section 15686.
- Extraordinary service compensation, such as managing or selling real property or handling litigation or complex tax matters, is still subject to the requirement that total compensation remain reasonable. It is not automatically exempt from court review or statutory requirements.
- Co-trustee compensation must be apportioned based on the services each trustee actually performs, unless the trust instrument or a co-trustee agreement provides otherwise under Probate Code section 15683.
- A trustee who breaches fiduciary duties may have compensation reduced or denied under Probate Code section 16420.
- Beneficiaries may petition the Superior Court under Probate Code section 17200 to challenge trustee compensation they believe is unreasonable.
- Charging excessive or unjustified fees may itself constitute a breach of fiduciary duty depending on the circumstances.
Frequently Asked Questions
Does a family member trustee have to take a fee?
No. A family member trustee is not required to take compensation and may waive it entirely. If they do choose to take a fee, it is important to keep clear and contemporaneous records of time spent and services performed, since trustee compensation must always be reasonable under California law and may be reviewed if challenged.
Is there a standard percentage trustees charge in California?
No. California law does not set a statutory percentage for trustee compensation the way it does for executor fees. Corporate and professional trustees often charge around 1% to 2% of trust assets per year, but this is a market practice, not a legal requirement.
Can a trustee pay themselves without court approval?
Generally yes. Most trustee compensation is taken without prior court approval. However, the trustee must still comply with the trust terms and California’s requirement that compensation be reasonable. If a dispute arises, the trustee must be able to justify the fees with proper records and documentation.
What happens if a trustee takes more than they are entitled to?
If a trustee overpays themselves, the court can order repayment of the excess, reduce future compensation, or in serious cases involving misconduct, deny compensation entirely and remove the trustee.
How long does a beneficiary have to challenge trustee fees?
There is no single fixed deadline in all cases. The timing depends on factors such as when the beneficiary received required accountings or information and the nature of the claim. Because deadlines can vary, beneficiaries should act promptly if they suspect improper fees.
Can excessive trustee fees be considered a breach of fiduciary duty?
Yes. Charging or taking unreasonable compensation can constitute a breach of fiduciary duty. Under California Probate Code section 16420, courts have authority to reduce or deny trustee compensation and impose other remedies if a breach is found.
Think the Trustee Is Overpaying Themselves? We Are Here to Help.
Trustee misconduct and breach of fiduciary duty cases are what we handle every day at Casiano Law Firm. If you are a beneficiary who suspects a trustee is paying themselves too much, hiding the details behind confusing accountings, or refusing to provide information you are entitled to, you have rights and we are here to help you enforce them.
We serve clients throughout San Diego County, Orange County, Los Angeles County, Riverside County, and San Bernardino County. Trust fee disputes can absolutely be worth pursuing. The money at stake often belongs to you and your family.
Contact Casiano Law Firm today for a consultation. You should not have to guess whether your trustee is treating you fairly, and you should not have to face it alone.
