Can a Trustee Pay Themselves and Hire a Lawyer With Trust Money?

Yes to both. A trustee can pay themselves for their work and hire a lawyer at the trust’s expense, and doing both isn’t double-dipping. They’re payments for two different jobs.

Whether the amounts are defensible is a separate question, and that’s usually the real dispute.

Where trustee compensation comes from

If the trust says what the trustee gets, the trust controls. Most well-drafted instruments say something, even if it’s only “reasonable compensation.”

If the trust is silent, Prob. Code § 15681 supplies the default: “If the trust instrument does not specify the trustee’s compensation, the trustee is entitled to reasonable compensation under the circumstances.”

That’s the entire section. California deliberately declined to give trustees a percentage schedule the way it did for probate under § 10800. There’s no 1% rule, no 2% rule, and anyone quoting you one is quoting a custom, not a statute.

What “reasonable” actually means

Courts look at what the work required, not at what the trust is worth. The factors that matter:

• Time actually spent, and whether it’s documented
• How complex the administration was. A trust holding one bank account is not a trust holding a rental property, a closely held business, and a beneficiary with a special needs trust.
• Whether the trustee has relevant professional skill, and whether they used it
• Results, including whether assets were preserved or squandered
• What a professional fiduciary would have charged for the same work

A family member trustee who spends 60 hours over a year settling a straightforward trust is in very different territory from one billing 400 hours for the same estate.

The practical advice for trustees is simple and almost universally ignored: keep contemporaneous time records. Date, task, time. A trustee who can produce that has a defensible fee. A trustee who reconstructs it two years later from memory, when a beneficiary objects, usually loses something.

Hiring a lawyer

A trustee is entitled to retain counsel and pay for it out of the trust, so long as the legal services benefit the trust and its administration. That covers the ordinary work: preparing the § 16061.7 notice, handling deeds, dealing with the county assessor, preparing accountings, advising on distribution.

Where it gets contested is litigation. If a beneficiary sues the trustee for breach of fiduciary duty, the trustee is defending their own conduct, and paying that defense out of trust funds is a live issue. Courts have discretion, and a trustee who loses a breach case can be ordered to repay fees they took from the trust to defend it.

So the honest answer to “can the trustee use my inheritance to fight me” is: temporarily, sometimes, and not necessarily permanently.

The line that actually matters

§ 16004 is the provision to know. A trustee has a duty not to use trust property for their own profit or for any purpose unconnected with the trust, and not to take part in any transaction in which they have an interest adverse to the beneficiary.

Paying yourself a reasonable fee for actual work is connected with the trust. Paying yourself for time you didn’t spend is not. Neither is hiring your own son’s firm at above-market rates, or using trust funds for something that benefits you personally.

§ 16004(c) adds a sharp edge. A transaction between trustee and beneficiary during the trust, where the trustee obtains an advantage, is presumed to violate fiduciary duty, and that presumption affects the burden of proof. The trustee has to justify it, not the beneficiary. There’s a carve-out: that subdivision doesn’t apply to an agreement between trustee and beneficiary about hiring or compensating the trustee. So a negotiated fee agreement is treated differently from, say, the trustee buying the trust’s house.

If you think the fee is too high

Ask for the accounting first. Under § 16062, a trustee generally must account at least annually, at termination, and on a change of trustee, to each beneficiary entitled to current distributions. The accounting should show what was paid and to whom.

An accounting that lists “trustee fees: $40,000” with no supporting detail is not an answer. Ask for the time records behind it.

If that goes nowhere, the remedy is a § 17200 petition. The court can review compensation and order excessive fees returned. And note § 15642(b)(5): excessive compensation is its own listed ground for removing a trustee.

Advice for trustees reading this

Most fee fights I see are avoidable, and they’re rarely about greed. They’re about surprise.

Tell the beneficiaries what you intend to charge and on what basis, in writing, early. Keep time records from day one. Don’t pay yourself a lump sum at the end that nobody saw coming. Don’t pay yourself before the work is done.

A beneficiary who was told in month one that you’d be charging $75 an hour and tracking your time will mostly accept the bill in month fourteen. The same beneficiary handed a surprise $40,000 line item objects, and then everyone pays lawyers.

Ridley Law advises trustees and beneficiaries in Ventura, Santa Barbara, and Los Angeles counties, and the practice is fully remote. Call (805) 244-5291.

Related reading

This post is part of our Guides for Trustees and Beneficiaries library.

• Trustee Compensation in California: What’s Fair
• Executor and Trustee Fees in California
• Trustee Accounting Requirements in California
• Trustee vs Beneficiary: Rights, Duties, and Where They Collide

For the full picture, start with California Trust Administration Lawyer.