The question of how to estimate "reasonable" trustee fees is probably not at the top of the minds of most Pennsylvania readers. The concept is rather distant from our daily lives, and the idea of something being objectively "reasonable" is a concept that may exist only in the bounds of the law. One person's idea of reasonable fees to compensate them for their work managing a trust may be wildly different from the next, but in the end all of the parties must agree on a number and pay it.
Why do we assess reasonable fees for trustee duties? The main reason is that being a trustee is a big responsibility and can take up a significant amount of time. Depending on the nature of the assets and the purpose of the trust, managing the trust could very well take up as much time as any other job. Managing a trust can also be difficult, particularly when people name their friends or family members as trustees, putting them in a position to make difficult choices down the road.
One case of the reasonableness of trustee's fees made the news recently, since the dispute has to do with a charitable trust established by the artist Robert Rauschenberg. The artist named three of his trusted friends to manage the trust and they are now asking that the foundation pay them about $60 million in fees.
For most of us, $60 million in fees may seem objectively unreasonable. But take a step back and look at it from another perspective. One trustee was a close friend and companion of the artist, and he says that the trustee fees were intended to be a sort of gift - a way for the artist to give his companion a bit more. He also says he has been managing a property in addition to the trust, and that some additional compensation is due for those services.
What do you think - could $60 million be reasonable for managing this trust?
Source: New York Times, "Foundation Fights Fees for Artist's Trustees," Patricia Cohen, Aug. 21, 2013.