It turns out that a billionaire artist you’ve likely never heard of has considerable influence over the administration of your estate. His name is Robert Rauschenberg. And while he’s nowhere near as well known as Warhol or van Gogh, he has their level of influence. How? Trustee fees, that’s how.
Bear with me as I explain: While personal representatives and attorneys typically charge statutory percentages, trustees aren’t bound by any hard and fast percentages. Florida law states that if a trust document itself does not indicate a set fee for the trustee, a trustee’s fee must be “reasonable under the circumstances.” The lack of direction in that statement has led to many court cases regarding just what “reasonable” means. What do you do if a trustee has offered exceptional services or has had to do an extraordinary amount of work for a trust? Now we’re back to the case of our unknown artist in Robert Rauschenberg Foundation v. Grutman.
In this case, the initial value of the Rauschenberg estate was $600 million. The trustees increased its worth to over $2 billion. The trustees spent four years developing the reputation and worth of the art within the trust, as well as selling real estate and other assets and litigating court cases involving the estate. When the trust was ready to be distributed, the trustees originally requested $60 million in fees, which would have amounted to a $40,000-an-hour wage (they later dropped their request down to a mere $51-$55 million). The sole beneficiary, a foundation in the name of the artist, objected to this amount, and suggested that $375,000 was a more reasonable fee.
Given the amount of effort, time, skill, and increase in value the trustees had added, the Court granted the trustees $24.6 million in fees (half of what the trustees had requested, but considerably more than the Foundation suggested was reasonable).
So what does this case mean for you (other than you might want to start collecting pieces by unknown artists before they die)? In creating your trust document, you can and should specify what your trustee may earn as a fee.
A good place to start in determining reasonable trustee fees is what corporate trustees charge and what courts have accepted in your area. However, a trustee who decides to pursue a higher than typical fee should maintain detailed timekeeping records to corroborate the claim for extraordinary services. If you, as trustee, perform exceptional work, this case shows that you just might obtain exceptional pay.