When I meet with a client who is new to the role of Trustee, they (understandably) have numerous questions about the role they have agreed to fulfill. One of those questions typically relates to whether they will be paid for acting as Trustee. With those clients in mind, I put together some general information regarding how a Trustee usually gets paid for administering a trust.
Understanding Trusts
A trust is a legal arrangement in which property is managed by one party for the benefit of another. The individual who establishes the trust is known as the “Trustor,” or “Grantor.” The Trustor assigns property to a Trustee, who is responsible for holding and managing that property for the benefit of the trust’s beneficiaries, as designated by the Trustor. The primary responsibilities of a Trustee include protecting and investing the trust assets and administering the terms outlined in the trust agreement.
Trusts are categorized into two main types: testamentary and living trusts. A testamentary trust is created through a provision in the Trustor’s Will and comes into effect upon the Trustor’s death. In contrast, a living trust is activated once it is formally established and funded. Living trusts are further classified as either revocable or irrevocable.
Trustee’s Duties and Responsibilities
Before diving into compensation, it’s important to grasp the Trustee’s role. Trustees are fiduciaries, meaning they are legally bound to act in the best interests of the beneficiaries. A Trustee’s duties may include, but are not limited to, things such as:
- Managing and Investing Trust Assets: Investing and managing assets prudently to ensure they grow or at least maintain their value.
- Distributing Income and Principal: Distributing the trust’s income and principal to the beneficiaries as stipulated in the trust agreement.
- Record Keeping and Reporting: Keeping accurate records of all transactions and providing periodic reports to the beneficiaries.
- Communicating with the Beneficiaries: A Trustee is responsible for communicating with beneficiaries and keeping them informed about trust business.
- Paying Taxes: Preparing and filing necessary tax returns and ensuring that the trust complies with relevant tax laws.
How Is a Trustee Paid?
A Trustee will spend a significant amount of time administering even a simple trust with modest assets. A more complex trust that holds valuable assets can be a full-time job to administer. As such, Trustees do typically get paid for their services. The rate at which a Trustee is compensated can vary based on several factors, including the complexity of the trust, the amount of work involved, and the type of Trustee (Family, friend, professional Trustee). Trustee compensation is typically addressed in the trust agreement; however, Maryland law will determine the rate of compensation if it is not included in the trust agreement.
When a professional Trustee administers a trust (referring to a bank, trust company, or attorney), their fees are usually based on a percentage of the trust assets. This percentage commonly ranges from 0.25 percent to 2 percent annually, depending on the size and complexity of the trust.
When an individual serves as a Trustee (family member or friend), compensation is usually based on an hourly rate, an annual fee, or a flat fee with the Trustee’s expertise and the area standards factoring into the rate. Some trusts provide a fixed annual fee, which could be adjusted periodically for inflation or other factors. A Trustee might even get paid a flat fee for general services and an hourly rate for specific tasks, such as managing complex investments or legal issues.
Under Maryland law, if the Trust Agreement does not specify the Trustee’s compensation, the “Trustee’s Commission” is based on two components: a percentage of the income and a percentage of the principal. Maryland law provides a graduating scale for these percentages.
Keep in mind that Trustee fees are not set in stone, meaning they can usually be adjusted if there has been a change in circumstances or additional work is required. Sometimes the trust agreement allows the beneficiaries to agree to a change in compensation; however, if the trust agreement is silent on the matter a court can always approve the change.
Do You Have Additional Questions About How a Trustee Is Paid?
For more information, please contact our estate planning office in Owings Mills, Maryland by calling 410-654-3850 to schedule an appointment.
- What You Need to Know about the Medicaid Estate Recovery Program in Maryland - July 7, 2026
- How Divorce Affects Your Estate Plan in Maryland - January 9, 2026
- Should the Details of My Maryland Estate Plan Remain Private? - January 8, 2026
