Navigating the intricacies of trust and estate management can be challenging, particularly when it comes to understanding the compensation structures for trustees and fiduciaries. In Michigan, the laws governing trustee and fiduciary fees are outlined primarily in the Michigan Compiled Laws (MCL) and shaped by various court rulings. This article aims to shed light on these regulations and provide guidance for those involved in trust and estate administration.

Compensation of Trustees Under MCL 700.7708

According to MCL 700.7708, the compensation of a trustee hinges on the terms specified within the trust document. Here are the key points:

1. Reasonable Compensation: If the trust does not specify a trustee's compensation, the trustee is entitled to a fee that is reasonable under the circumstances. This means that the fee should reflect the complexity and demands of the trustee's duties.
2. Specified Compensation: When a trust outlines specific compensation for the trustee, the trustee is typically entitled to that amount. However, a court may intervene and adjust this fee if:
   • The duties of the trustee have significantly changed from what was originally contemplated when the trust was created, or
   • The compensation outlined in the trust is deemed unreasonably low or high.

This flexibility ensures that trustees are fairly compensated for their work while also protecting the interests of the beneficiaries.

Factors Influencing Trustee Fees: Insights from Comerica v. Adrian

In the case Comerica v. Adrian, 179 Mich App 712 (1989), the Michigan Court of Appeals identified several factors that probate courts may consider when determining the reasonableness of a trustee's fee. These factors include:

1. Size of the Trust: Larger trusts may warrant higher fees due to the increased responsibility.
2. Responsibility Involved: The level of responsibility taken on by the trustee can influence compensation.
3. Character of Work: The nature of the tasks performed by the trustee plays a crucial role in fee determination.
4. Results Achieved: Successful outcomes may justify higher fees.
5. Knowledge, Skill, and Judgment: The expertise required for effective trust management can impact compensation.
6. Time and Services Required: The amount of time dedicated to managing the trust is a significant factor.
7. Manner and Promptness: How quickly and efficiently the trustee performs their duties can influence their fee.
8. Unusual Skill or Experience: Trustees with specialized skills may command higher fees.
9. Fidelity or Disloyalty: The trustee's loyalty to the trust and its beneficiaries can affect their compensation.
10. Amount of Risk: The level of risk associated with managing the trust can also play a role.
11. Community Custom: Local practices regarding trustee fees can inform what is considered reasonable.
12. Trustee's Estimates: The trustee’s own assessment of the value of their services can be considered.

The probate court has the discretion to weigh these factors differently based on the specifics of each case.

Conclusion

Understanding trustee and fiduciary fees in Michigan is crucial for both trustees and beneficiaries. The relevant laws provide a framework to ensure that compensation is fair and reflective of the duties performed. If you are navigating the complexities of trust management or need assistance in determining reasonable trustee or fiduciary fees, consider reaching out to an experienced professional.

For personalized guidance, contact Greg Jenkins. His knowledge can help you navigate the nuances of trustee and fiduciary compensation and ensure that your interests are protected. Don’t hesitate to seek the advice you need to make informed decisions regarding trust and estate management.