The Utah Trust & EstateEducational Resource Center
Section 1. Introduction In 2010 and 2011, the author conducted a survey of institutional trustees doing business in Utah. The author also interviewed Utah private professional fiduciaries. (See the Trust if not, the fee may be toward the higher end. Alternatively, some private professional fiduciaries will charge for their services in connection with sales on an hourly basis.
In Utah, the hourly fee ranges from 0 to 0 per hour. (See W2. 2 of this article for a discussion of private professional fiduciary fees, in general. ) Some trustees may charge a set-up fee to cover the cost of transferring title to real estate to the trustee as well as distribution fees for in-kind distributions of real estate. Such fees are typically 0 to 0 per property. Section 5. Fees for Other Assets W5. 1 Life Insurance Trusts Institutional trustees often charge a flat fee to serve as trustee of a trust that holds only unmatured life insurance policies.
In Utah, these fees range from 0 to
description,750. In addition, some trustees will charge a fee of 0 to 0 for each policy held in the trust, to cover the costs of the annual policy review. Similarly, if a life insurance policy is held in a revocable or irrevocable trust along with other assets, the trustee may charge a fee of 0 to 0 to pay for the annual policy review. Additional fees may be charged for the purchase and transfer of policies.
Some institutional and private professional fiduciaries will not accept life insurance trusts. W5. 2 Oil and Gas Interests For oil and gas interests held in trusts, most Utah institutional trustees charge a percentage of the gross income (usually 6-10%). In addition to the percentage of gross revenue, most trustees also charge either a flat fee per interest held (e. g. per interest) or a percentage of the market value of the interests held (e. g. 0. 5% to 1. 0% of the value of the interests). If the interest is not income-producing, the trustee might charge a flat fee of between and 0 for the interest.
Alternatively, some trustees might include the value of the interests in the basic (liquid asset) fee schedule, while others might treat the oil and gas interests as real estate for purposes of the fee calculation. To the extent extraordinary responsibilities are required, additional fees would be charged. W5. 3 Assets Requiring Special Management Responsibilities When a trust holds an ongoing business or other assets that require extraordinary management responsibilities, many trustees will try to negotiate a fee in advance, usually expressed as either a flat dollar amount or a percentage of fair market value. The fee will normally reflect the amount of the trustees time and effort that will be required, and the responsibility and risk involved.
Alternatively, some trustees may charge an hourly rate for work performed in connection with the asset. Some trustees will try to avoid holding such assets. Section 6. Fees for Estates of Decedents Occasionally, an institutional or private professional fiduciary will serve as personal representative of an estate or will be called upon to wind up a revocable trust upon the death of the settlor.
For such services, institutional trustees will typically charge more than they charge for serving as trustee of an irrevocable trust. Some Utah trustees will charge approximately 2-3% of the value of the estate or trust, with a minimum of ,000 to ,000. Other institutional trustees or private professional fiduciaries may charge for their services on an hourly basis at a rate of 0-200 per hour. Some institutional trustees may charge a supplemental fee if real estate, non-publicly-traded securities or other special assets are involved.
Similarly, they may charge additional fees if sales of assets are required to pay estate debts or to make distributions to beneficiaries. On the other hand, some trustees might reduce their fees for property that is not required to pass through probate, such as property that is subject to a valid beneficiary designation or property that is held in joint tenancy. At least one institutional trustee doing business in Utah charges a termination fee equal to 1% of the trust value upon the death of the settlor of a revocable trust. At least one institutional trustee doing business in Utah charges a fee of 0. 5% of the value of the gross estate for the preparation of a federal estate tax return.
Section 7. Services Included in Basic Fees; Additional Fees W7. 1 Services Included in Basic Fees The fees described in Sections 3, 4 and 5 are typical of those charged by Utah institutional trustees and private professional fiduciaries for fully-managed trust accounts. These fees usually cover standard fiduciary services, such as custody of assets, investment management, collection and distribution of income, and reporting to the beneficiaries. For trusts that hold real estate, the services covered by the fee may vary.
As noted in W4. 1, if an outside property manager is employed, the trustees fee should be lower than if it manages the real estate itself, and the cost of the property manager will be in addition to these reduced trustee fees. Even if the trustee is not responsible for managing real estate, however, the trustee will still have custody of the property, and will still have the responsibility of collecting and distributing the income and reporting to the beneficiaries. The trustees reduced fee will cover these basic fiduciary duties. W7. 2 Hourly Rate for Extraordinary Services When responsibilities fall upon the institutional trustee that are beyond the scope of the basic fee, an hourly rate will often be charged for the time expended by trust officers and other trustee personnel.
Examples of such responsibilities might be the management of litigation involving the trust, court hearings on trust matters, environmental issues affecting real estate held in the trust, or the preparation of estate tax returns. In Utah, these hourly rates are typically 0 to 0. Hourly rates of private professional fiduciaries tend to fall in this same range, although they may be lower for simple services. (See W2. 2 of this article for a discussion of private professional trustee fees. ) W7. 3 Minimum Fees Some institutional trustees impose a minimum fee. If the assets under management are insufficient to produce the minimum fee under the schedule, the minimum fee would apply.
In Utah, such minimum fees range from
description,200 to ,000. Where a family has multiple trust accounts, those accounts will generally be aggregated for purposes of calculating the minimum fee, thus reducing its impact. W7. 4 Annual Base Fees Some institutional trustees charge an annual base fee in addition to the other fees described in this survey. Annual base fees are more common when a trust has been divided into several sub-trusts.
The asset value of the sub-trusts may be aggregated for purposes of the fee schedule calculations, but the annual base fee will be charged to each sub-trust to cover the costs of its administration. None of the Utah institutional trustees surveyed currently charge an annual base fee. W7. 5 Set-Up Fee Some trustees charge a set-up fee to cover the costs of registering securities in the name of the trustee and the costs of transferring real estate to the trustee. Other trustees may just treat these costs as out-of-pocket expenses and pass them through to the trust.
Other trustees might not charge anything for such services. W7. 6 Additional Charges Most institutional trustees charge an additional fee for preparation of fiduciary income tax returns. For Utah trustees, the additional fee is generally in the range of 0-0 per set of federal and state returns. Some trustees charge a fixed fee.
Others pass through the cost charged by outside accountants who prepare the returns. Institutional and private professional fiduciaries will generally pass out-of-pocket expenses through to the trust. Examples of such expenses may include: brokerage commissions, transfer agent fees, wire transfer fees, appraisal costs, postage and courier delivery costs, and legal and accounting fees. Some institutional trustees may charge additional fees for in-kind distributions of securities to cover the costs of coordination with transfer agents.
None of the Utah trustees surveyed currently charge an additional fee for in-kind distribution of securities. Most private professional fiduciaries employ outside financial advisors, accountants and other professionals to provide services that institutional trustees often provide in-house. They accordingly charge less than institutional trustees in recognition of the added fees of these advisors and consultants. Some private trustees charge an hourly fee for their own time spent coordinating tax matters with the professionals.
W7. 7 Timing of Fees Most trustees take their fees either monthly or quarterly in arrears. Where the fees are calculated as a percentage of principal, market value is typically determined as of the last business day of the preceding period, although some are valued only yearly. It may be preferable, though less common, to calculate the average market value of the assets during the preceding period. This method may smooth out market fluctuations during volatile times.
W7. 8 Distribution Fees Distribution of income is almost universally a service that is included in a trustees basic fee structure. However, some institutional trustees doing business in Utah charge a principal distribution fee equal to 1% of the principal distributed, even if the trust is not terminating. Other Utah institutional trustees do not charge a principal distribution fee. W7. 9 Termination Fees Most institutional trustees charge a fee upon termination of the trust.
Some Utah trustees charge an hourly fee for the time spent coordinating the distribution of the trust assets to the beneficiaries (e. g. 5 – 0 per hour). Other Utah trustees charge a termination fee equal to 1% of the value of the trust. Some trustees, while reserving the right to charge termination fees, rarely do so. At least one institutional trustee doing business in Utah charges a 1% termination fee upon the death of the settlor of a revocable trust.
Copyright 2014 UNCATEI, LLC, a Utah limited liability company. All Rights Reserved.