Trustee Compensation in California: What’s Fair

Trustee Compensation in California: What’s Fair

A California trustee is entitled to reasonable compensation for administering a trust, and unless the trust document says otherwise, “reasonable” is measured against the actual work performed, not a fixed percentage. That standard comes from Probate Code §15681, and it’s deliberately flexible. Flexible is good for tailoring a fee to real circumstances. It’s also exactly why compensation turns into a fight between siblings more often than almost anything else in trust administration.

Being a successor trustee is a job. Tracking down assets, dealing with banks and title companies, filing tax returns, managing or selling real property, keeping beneficiaries informed, all of that takes real hours. California law recognizes that and lets the trustee get paid for it. The question is always how much.

Is a trustee entitled to be paid in California?

Yes, a trustee is entitled to reasonable compensation under Probate Code §15681 unless the trust document specifies otherwise. This is different from how an executor gets paid in formal probate. There, Probate Code §10800 sets a statutory percentage fee schedule tied to the size of the estate, so the math is largely mechanical. Trustee compensation doesn’t work that way. There’s no percentage table to plug numbers into. The standard is reasonableness given the circumstances of the specific trust and the specific work required to administer it.

If the trust document itself specifies a fee, whether that’s a flat dollar amount, an hourly rate, or a percentage of assets, that figure generally controls instead of the open-ended reasonableness standard. Probate Code §15680 gives a court authority to adjust a stated fee if it turns out to be unreasonably high or unreasonably low given how the administration actually went, but courts don’t do this casually. If the trust sets the number, start there.

What does “reasonable” actually mean?

Reasonable compensation is judged against a list of practical factors, not a formula, so the same trustee doing the same work can justify very different fees depending on the trust. Courts and practitioners generally look at:

• The size and complexity of the trust
• The skill and experience the job required, and whether the trustee actually had it
• The time actually spent administering the trust
• Whether the trustee delegated work to attorneys, accountants, or property managers, and what that delegation cost
• The results achieved and the overall quality of the administration
• The risk and responsibility the trustee took on
• What’s customary locally for similar trust work

None of these factors is dispositive on its own. A trust with a single bank account and one beneficiary requires far less justification for a fee than a trust with a business interest, contested real property, and three tax filings.

How much do professional trustees charge versus family members?

Professional trustees typically charge differently than family members do, and the gap reflects the difference between running a fiduciary business and stepping in for one administration. A bank trust department or licensed professional fiduciary usually charges an annual percentage of the trust’s assets [verify], with the exact rate varying by institution and by the size of the trust. That model makes sense for an institution managing investments over years.

A family member trustee, which is the more common situation for the trusts I work with, usually doesn’t fit that model. Most family trustees either bill an hourly rate for the actual work performed [verify] or take a smaller flat or percentage fee that reflects the fact that they don’t have professional trust infrastructure behind them. There’s no statewide published rate for either approach. What’s reasonable in Ventura County for a mid-size trust may not match what’s reasonable in a different market or for a much larger trust, so if you’re unsure, ask before you set a number, not after someone objects to it.

The adult child trustee problem

An adult child who spends eight months handling a deceased parent’s trust, selling the house, dealing with a difficult sibling, and filing three separate tax returns, is entitled to be paid for that work under California law. It is not greedy to take a fee for real, documented effort. But this is also the single most common source of resentment among siblings, particularly ones who didn’t do the work and now see “their inheritance” reduced by whatever the trustee pays themselves.

The way to avoid that fight isn’t to skip the fee. It’s to keep detailed contemporaneous time records from day one: what you did, how long it took, and why it was necessary. A trustee who can produce a log showing 200 documented hours to justify a $15,000 fee is in an entirely different position than one who shrugs and says “I think that’s fair.” The second trustee is inviting a challenge. The first one is closing the door on it before it opens.

What happens when compensation disputes escalate

Beneficiaries who believe a trustee’s fee is excessive, or who believe the trustee is taking compensation without doing corresponding work, have a formal path to challenge it. They can object during the accounting process, since that’s where the fee gets itemized line by line, or petition the court under Probate Code §17200 to review the compensation directly. This is a common companion issue to broader mismanagement disputes, and in the worst cases a pattern of self-serving compensation can become grounds for a removal petition if it suggests the trustee is prioritizing personal gain over the beneficiaries’ interests.

The honest caveat

There’s no shortcut here. I can’t hand you a percentage or an hourly number and tell you it’s safe for every trust, because it isn’t. A rate that’s obviously reasonable for a complicated trust with real property and business interests could look inflated for a simple trust with one bank account. If you guess wrong in either direction, you either shortchange yourself for real work or hand a beneficiary an easy target for a §17200 petition. The honest answer is that reasonableness gets decided case by case, and the trustees who come out fine are the ones who documented their time and asked a professional before taking the fee, not after someone challenged it.

Talk to a real California estate attorney

If you’re serving as trustee and aren’t sure what to charge, don’t guess and don’t wait until a beneficiary raises an eyebrow. I’ll look at the size and complexity of the trust, what the job actually requires, and what’s defensible given local practice, so you can set a fee you can stand behind from the start. If you’re a beneficiary and a trustee’s fee looks disproportionate to the work, I can help you ask for the documentation before you assume bad faith.

Talk to Eric Ridley is a free 60-minute consultation by phone or Zoom, anywhere in California. Or call (805) 244-5291.

Related reading: Trustee Accounting Requirements in California, Can a Trustee Be Held Personally Liable in California, What Does a Successor Trustee Do in California.

Frequently asked questions

How much can a trustee charge in California?

There’s no fixed rate. Probate Code §15681 entitles a trustee to reasonable compensation based on the work involved, unless the trust sets a different amount. What’s reasonable depends on the trust’s size and complexity, the time actually spent, and what’s customary for similar work in the area.

Is a trustee entitled to be paid in California?

Yes. Under Probate Code §15681, a trustee is entitled to reasonable compensation for administering the trust unless the trust document says otherwise. This applies whether the trustee is a bank, a professional fiduciary, or a family member.

Can beneficiaries dispute a trustee’s fee?

Yes. A beneficiary who thinks a fee is excessive can object during the accounting process or petition the court under Probate Code §17200 to review the compensation. The trustee then has to justify the fee as reasonable given the work performed.

Does a family member trustee get paid the same as a bank trustee?

Not usually. Professional trustees like bank trust departments typically charge an annual percentage of trust assets [verify]. A family member trustee more often bills an hourly rate for actual work performed [verify], or takes a smaller fee reflecting that they aren’t running a fiduciary business.

What happens if the trust document sets the trustee’s fee?

If the trust specifies an amount, whether flat, hourly, or a percentage, that figure generally governs. Under Probate Code §15680, a court can still adjust it if the stated fee turns out to be unreasonably high or low given the circumstances of the administration.

This is general information about California law, not legal advice for your situation.