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Trustee Compensation - Part II

In continuation of the case discussion on Thorpe v. Reed, the trial court granted Mr. Thorpe's petition and appointed him as permanent trustee. The court also later approved the trustee's fee petition, plus trustee's attorney fees. However, Danny Reed, the beneficiary, appealed the court ruling on the grounds that the trust prohibited compensation to successor trustees.

The Court of Appeal reversed the trial court's ruling claiming that the trust instrument specifically states that a successor trustee is not entitled to compensation. If Mr. Thorpe deemed the amount of compensation specified in the trust to be inadequate, he could have refused to accept the appointment or condition acceptance on modification of the clause by the court until the current trustee has obtained a modification. Since the trust has limited the amount which Mr. Thorpe should receive as compensation for his services, and Mr. Thorpe having accepted the trust, he is therefore bound by its terms, and the order of the court allowing him a greater amount is deemed without authority.

Additionally, the statutes (Section 15642, subd. (e) and Section 17206) used as basis by the trial court merely conferred authority on the probate court to appoint a temporary trustee. There is neither mention of compensation generally nor conferment of specific authority to compensate a temporary trustee differently from the amount specified in the trust instrument. Accordingly, the trial court's judgment was reversed and the court was directed to deny Mr. Thorpe's petition.

*This blog entry was not written by an Attorney and should not be construed as professional legal advice.