Three trustees who have been charged with managing a charitable trust on behalf of a friend are now embroiled in a court battle over fair compensation for their work. To understand the case it is first important to know that there are various titles for people who manage an estate, including an administrator appointed by the court for someone who does not have a will, or an executor named in a will or appointed by a court to manage affairs, or a trustee named in trust documents or a will or appointed by the court. Each of these three titles hold what is called a fiduciary duty, which means that the person holds a high duty of care and loyalty to do the job to the best of their ability and in good faith.
Becoming a trustee, executor, or administrator can hold a lot of responsibility and can be a tremendous amount of work, and as a result those who take on the duties are generally paid by the estate for their efforts. Compensation must be reasonable for the work that has been done and often varies depending on the duties involved and the complexity of the estate. In this recent case, the whole concept of reasonable fees has been put to the test as trustees for a charitable trust are requesting $60 million in fees.
Several experts in the field have stated that this cannot be a reasonable amount given the typical interpretation of that concept which generally caps fees around $250 per hour. According to some familiar with the case, the $60 million figure would lead to about a $40,000 per hour breakdown. The trustees say that they have put in significant work and that the fees are reasonable, but others believe differently. The matter is now before a judge.
What do you think – is this reasonable by any measure of the word?
Source: New York Times, “Foundation Fights Fees for Artist’s Trustees,” Patricia Cohen, Aug. 21, 2013.