A Trustee Compensation Clause is a provision within a trust document that specifies the compensation or fees that a trustee is entitled to receive for their services in managing the trust. This clause is important because it establishes the terms under which the trustee will be paid, ensuring clarity and reducing potential disputes between the trustee and the beneficiaries.
Typically, the Trustee Compensation Clause can outline various aspects, including:
-
Fee Structure: This may involve hourly rates, flat fees, or a percentage of the trust’s assets. For example, a trust might stipulate that the trustee is entitled to a fee that is a percentage of the trust’s value, which can be particularly relevant if the trust holds significant assets.
-
Expense Reimbursement: The clause may also detail what expenses the trustee can be reimbursed for, such as legal fees, accounting costs, or any other expenses incurred during the administration of the trust.
-
Authority to Adjust Fees: Some clauses provide the trustee with the discretion to adjust their fees based on the complexity of the trust’s administration or the level of involvement required.
-
Comparison to Industry Standards: It may reference industry standards or customary fees for similar trustee services to provide context for the compensation specified.
In the context of Texas law, including Houston and surrounding areas, it is essential for the Trustee Compensation Clause to comply with state laws governing trusts. Texas courts typically respect the agreements laid out in the trust document unless they are deemed unreasonable or contrary to public policy. Therefore, a well-drafted Trustee Compensation Clause can help ensure that the trustee is fairly compensated for their role while also protecting the interests of the beneficiaries.
« Back to Glossary Index