Trustees Fighting for ‘Reasonable Compensation’
June 12, 2014
There are a number of estate planning issues that are fairly straightforward and once they are settled, there is rarely a need to readdress them. However, if an estate plan includes a trust, there can be concerns that come up long after the creator of the trust has passed away.
For example, trustees for a foundation created by a late artist filed a lawsuit seeking a significant increase in the compensation they receive for the services they have provided. The lawsuit was filed about three years after the artist passed away, but the trustees say much has changed since then.
According to reports, the three foundation trustees say that they have taken the estate from being worth about $600 million to now being worth $2 billion. Their efforts had a direct impact on this increase, according to court documents, and now they want to be compensated for their services.
In states across the U.S., laws specify that a trustee’s compensation is based on what is considered to be “reasonable under the circumstances,” unless the trust includes terms that specifically address compensation. This can leave trustees with a number of questions regarding what is considered reasonable.
In this case, the trustees argue that they should be paid a total of $60 million for their services in managing the trust. The foundation, however, has stated that such a large huge amount is wildly inappropriate and unreasonable. It will be left to a court to decide what is considered to be reasonable compensation.
Whether a person is creating a trust or has been assigned the role of trustee, there are a number of complicated legal issues (including compensation) that should be addressed. Working with an attorney can allow people to better understand their options and rights in relation to trust administration.
Source: The News-Press, “Trustees of artist Rauschenberg’s foundation want $60M,” Mary Wozniak, June 10, 2014