Estateably Trust: Trustee Compensation Fees

Learn more about how Estateably accounts for trustee compensation fees.
Estateably Trust: Trustee Compensation Fees

Introduction

Estateably Trust brings a whole new way of calculating trustee fees and compensation. Choose from either the By Account or By Tier Fees. This choice makes calculating trustee fees much more straightforward and flexible for all trustees. Whether you're a new individual trustee or a national institution with fee structures of your own, learn about how Estateably Trust can optimize this side of your trust administration.

By Account Fees

The first option is to charge the trustee compensation fees by account. In Canada, the typical rate accepted by courts and tariff guidelines is 2.5% of capital receipts, 2.5% of disbursements, and 0.4% of the average annual value of the assets. 

However, as Laing Estate v. Hines, a more complex estate can allow a trustee to claim a higher compensation percentage for their work. A court will review the request and determine the fair and reasonable compensation. Quoting Toronto General Trusts Corp. v. Central Ontario Railway, the Court of Appeal stated that the five relevant factors are:

  • (1) the magnitude of the trust; 
  • (2) the care and responsibility springing therefrom; 
  • (3) the time occupied in performing its duties; 
  • (4) the skill and ability displayed; 
  • (5) the success which has attended its administration.

Other factors for fixing trustee compensation have also been explored. Subsection 64(5) of the Uniform Trust Act recommends the following broad factors in determining the calculation:

  • the complexity of the work involved;
  • unusual difficulties encountered;
  • the instruction on possible litigation;
  • the managing of the trust's business or corporation;
  • the amount of skill, labour, responsibility, and technological support during the administration;
  • the time spent on the trust;
  • the number of trustees and the complexity of the delegated work.

With this background, Estateably allows trustees to input the appropriate percentage when calculating their fees. You choose whether to use the estate's gross or net value. While recording these calculation methods, include notes on the file explaining the increase or decrease in compensation fees.

The complexity of the model trust below necessitates Capital Receipts and Disbursements to be calculated at 3%, while the Care and Management fee would be 0.6%. 

In other cases, the relatively simple trust may require a lower percentage to remain fair and reasonable. Adapt these fees to each trust's scenario.

By Account Statement of Accounts

The statement of accounts (or other less formal documents) will then incorporate these fees in the accounting calculations. Take into account the different factors you wish to consider. Choose whether to include the compensation on balance to distribute, include or exclude the profits on trustee investments, deduct an amount from the compensation, or to use the sales tax in these calculations. After optimizing these choices, generate your statement of accounts with the proper trustee compensation amounts. 

By Tier Fees

Many trustee institutions choose a different approach to calculating trustee fees that better reflects the estate's capacity to pay. Corporate trustees are often more interested in a percentage of the total trust's value. In their payment agreements, these corporate trustees may choose to be compensated on a tiered basis. Estateably now incorporates this payment structure to better serve these private agreements.

By Tier Statement of Accounts

When generating a statement of accounts, modify the tiered approach to suit the compensation scheme. Among the other factors listed in the “By Accounts” method, it is possible to: incorporate a retroactive calculation; choose whether this retroactive calculation is calculated monthly, quarterly, or annually; and clarify the percentage charged to capital and revenue.

The summary of trustee compensation clearly presents the payment structure and amount calculated to any court or inquisitive beneficiary. Whether a testamentary or inter vivos trust, the compensation will draw on the trust's gross or net value (as chosen by the user) to calculate the fees. 

Flat Fee

Smaller trusts may opt to use a flat fee for the administration of the trust. When necessary, enter this flat trustee compensation fee and include it in lieu of the other two calculation methods. 

Conclusion

Estateably Trusts allows you to control your (or your client's) compensation fees. Include more specific schemes than ever before. Our accounting software can effortlessly calculate these fees in accounting reports, giving you the piece of mind that your compensation fees are accurate.

The Estateably Team
Estateably is the modern, cloud-based software solution for estate and trust professionals. We help over 500 firms save over 5 hours per file by automating the filling of court forms and precedent letters, simplifying input of estate inventory and accounting and enabling one-click court-formatted reporting. The information provided on this website does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only.
LinkedIn

You may also like

Back to  all posts
Trusted by over 700 Estate & Trust Administration Practices