Opinion ID: 2310646
Heading Depth: 2
Heading Rank: 1

Heading: Unpaid Trustee Fees professors

Text: As is evident, a court's initial focus must be on the terms of the trust. In re Estate of Cavin, 728 A.2d 92, 98 (D.C. 1999). Pursuant to the trust instrument, Riggs, as an institutional trustee, was to be paid according to its applicable fee schedule whereas Goldstein was entitled to compensation that is customary for trustees in the District of Columbia. The legatees assert that the probate court made no findings regarding Estate funds totaling $33,398, which, according to the legatees, were taken unilaterally by Riggs and Goldstein once they became personal representatives. [3] The trial court recognized, however, that remaining additional [trustee] commissions must be payable, if at all, from assets of the estate because all Trust assets have been relinquished to the estate. The trial court was presented expert testimony, in the form of affidavits, from both the trustees and the legatees regarding general practices in the payment of trustee commissions in the District of Columbia.
The legatees' expert, August Zinsser, III, stated that institutional trustees are paid commissions based on their standard schedules of fees, but that institutional trustees in the District of Columbia typically do not charge a percentage termination fee where they served as trustee for a trust which pours over into an estate for which they also serve as personal representative, even when a published fee schedule literally permits a termination fee. Even if Zinsser accurately described standard practice in the District of Columbia, as appellees' expert, George Levendis, and the probate court correctly noted, the payment of termination commissions was contractual, in the sense that the Trust instrument provided that institutional commissions would be based upon the fee schedule of Riggs ... which in turn does provide for termination fees. . . . Cf. RESTATEMENT (SECOND) OF TRUSTS § 242 cmt. f (If by the terms of the trust it is provided that the trustee shall receive a certain amount as compensation for his services as trustee, he is ordinarily entitled to that amount. . . .). The legatees argue that because the Final Account of the trust was not prepared until at the earliest 1993, the probate court should have based its award on Riggs' standard fee schedule in effect at that time, which called for Riggs to receive a single one percent (1%) commission where Riggs served both as trustee of a trust and also was named personal representative of the estate which receives the trust corpus. The trust by its own terms terminated on the death of Ms. King in 1991, however, and the trust instrument unequivocally states that [t]his trust shall terminate upon the death of the Grantor. Although the customary practice may be to waive such fees, Riggs was within its contractual rights, pursuant to the trust instrument and the fee schedule in place at the termination of the trust, to receive the termination fees. See id. Accordingly, the trial court did not abuse its discretion by awarding the requested trustee compensation to Riggs based on its 1991 fee schedule.
The trust instrument provided that non-institutional trustees would be compensated as is customary for trustees in the District of Columbia. In determining the propriety of Goldstein's trustee compensation, the court credited Zinsser's statement that non-institutional trustees customarily bill their time at an hourly rate if they usually bill at an hourly rate in their business; otherwise, non-institutional co-trustees are typically paid fifty percent (50%) of what the institutional co-trustee is paid. Rather than presenting an hourly statement of services, Goldstein, a certified public accountant, charged the Trust the same commissions charged by Riggs at its institutional rate. The probate court found that Goldstein's request for commissions was entirely arbitrary and approved Goldstein's trustee commissions at fifty percent (50%) of the commissions charged by Riggs. [4] The court then considered Goldstein's trustee compensation as a whole, finding that compensation Goldstein had previously received from the trust, billing the trust for his services at Riggs' institutional rate, was more than the amount to which he was entitled when his trustee compensation was properly computed at fifty percent (50%) of Riggs' compensation. Because Goldstein had overcharged the trust by almost fifteen thousand dollars, [5] the probate court denied Goldstein any further trustee compensation. Rather than have Goldstein reimburse the estate for the prior overpayment in trust fees, however, the probate court offset the amount Goldstein had been overpaid as a trustee against the amount he was requesting in personal representative compensation. Although we perceive no abuse of discretion in the probate court's denial of further trustee compensation to Goldstein, the record is unclear as to the trial court's decision to offset the overpayment as trustee against Goldstein's requested compensation as personal representative of the Estate. See infra part C. [6]