California trustee fees are governed by the trust document first and by a court’s “reasonable compensation” standard second. There is no statutory percentage the way there is for probate executors. If the trust spells out how the trustee gets paid, that controls. If it doesn’t, the trustee is entitled to reasonable compensation under the circumstances, and courts weigh a defined set of factors to decide what that figure is. For a $1 million trust handled by a corporate trustee, the number usually falls somewhere around 1% to 1.3% of assets per year, though the actual amount can land well above or below that depending on the work involved.
What the Trust Document Says Comes First
California Probate Code Section 15680 directs trustees to follow the compensation terms written into the trust. That might be a flat annual amount, a percentage of asset value, an hourly rate, or some mix of the three. Whatever the person who created the trust chose, neither the trustee nor the beneficiaries can override it on their own.
Courts can adjust the trust’s stated fee, but only in three situations and only on petition:
- The trustee’s duties have become substantially different from what was expected when the trust was created.
- The compensation specified in the trust has become unreasonably low or unreasonably high.
- Extraordinary circumstances call for equitable relief.
Until a judge signs off, the written terms bind the trustee. A trustee who inherits a failing business nobody anticipated, or who ends up running complex litigation, has a legitimate path to ask for more. But asking is a court proceeding, not a unilateral decision.1California Legislative Information. California Code PROB 15680 – Compensation of Trustee
When the Trust Is Silent: The Reasonableness Standard
Plenty of trusts say nothing about compensation. When that happens, Probate Code Section 15681 entitles the trustee to “reasonable compensation under the circumstances.”2California Legislative Information. California Code PROB 15681 – Compensation of Trustee California Rules of Court, Rule 7.776 lists the factors a judge weighs to put a number on that phrase:
- Gross income of the trust.
- Success or failure of the trustee’s administration.
- Any unusual skill, expertise, or experience the trustee brought to the role.
- The trustee’s fidelity or disloyalty.
- The amount of risk and responsibility assumed.
- Time spent performing trustee duties.
- Custom in the community for similar work by trust companies and professional fiduciaries.
- Whether the work was routine or required more than ordinary skill and judgment.
No single factor decides the outcome. Time logs matter, but efficient work at a high skill level often justifies more per hour than slow work at a lower one. Local custom provides a benchmark; results and conduct can push the number up or down from there. Two trusts of identical size can produce very different fee awards because the work and the trustee’s performance were different.3Judicial Branch of California. California Rules of Court 2026 – Rule 7.776 Compensation of Trustees
What California Trustees Actually Charge
Market practice fills in where statute doesn’t. Corporate trustees and bank trust departments generally charge tiered annual fees based on assets under management:
- First $1 million: roughly 1% to 1.3%.
- $1 million to $2 million: roughly 0.7% to 1.25%.
- Above $5 million: as low as 0.35% to 0.65%.
Corporate trustees also tend to set a minimum annual fee, often starting around $3,000 to $5,000 depending on the institution. Private professional fiduciaries often charge at the lower end of these ranges or below them, in part because they hire out investment management and other specialized tasks rather than performing them in-house.
Individual trustees who are family members or friends frequently charge less than professionals, and some serve without compensation at all even though the law entitles them to be paid. When a family trustee does charge, hourly rates between $25 and $75 are common for straightforward administration. Someone with professional credentials, such as a CPA or attorney, may justify a higher rate.
These numbers are reference points, not entitlements. A court applying the Rule 7.776 factors can land anywhere the evidence supports.
Compensation and Expense Reimbursement Are Not the Same
Trustee fees and trustee expenses sit in two different buckets. Probate Code Section 15684 lets a trustee be reimbursed from trust assets for expenditures properly incurred in administering the trust, and for improper expenditures to the extent they actually benefited the trust.4California Legislative Information. California Code PROB 15684 – Repayment of Expenditures
Reimbursable costs include things like attorney fees for the administration, filing fees, property maintenance, and reasonable travel for trust business. “Reasonable” is the operative word. A first-class flight for a routine bank errand will draw scrutiny; a standard trip to meet with the trust’s accountant will not. Reimbursement is on top of the trustee’s fee, not part of it.
How the Trustee Actually Gets Paid
This is where trustees often go wrong. California’s Notice of Proposed Action procedure, in Probate Code Sections 16500 through 16502, is a useful shortcut for many trustee decisions. It does not apply to compensation. Section 16501(d)(1) specifically bars using a notice of proposed action for “allowance of the trustee’s compensation.”5California Legislative Information. California Code Probate Code PROB 16501 – Notice of Proposed Action The same exclusion covers attorney fees and settlement of accounts, categories where the trustee has a personal financial stake in the outcome.
A trustee who wants court-approved compensation files a petition under Probate Code Section 17200, which authorizes proceedings to fix or review trustee compensation.6California Legislative Information. California Code PROB 17200 – Proceedings Concerning Trusts A judge reviews the documentation, hears any objections from beneficiaries, and issues an order setting the amount.
In practice, many undisputed trusts handle compensation informally. The trustee takes a fee consistent with the trust document or prevailing market rates, discloses it in the annual accounting to beneficiaries, and nobody objects. That approach works right up until someone does object, which is when the Section 17200 petition becomes necessary. Trustees who want certainty from the start file the petition proactively.
When Courts Cut or Deny the Fee
Courts do not rubber-stamp fee requests. A trustee who breaches fiduciary duty risks reduced or denied compensation. Self-dealing is the fastest route there. A trustee who buys trust property for themselves, steers trust business to a company they own, or makes unauthorized loans from the trust has created a conflict the court takes seriously. The trustee then carries the burden of proving that both the process and the outcome were fair.
Fees also get cut for poor recordkeeping, unreasonable delays in distributing assets, failure to invest prudently, and lack of communication with beneficiaries. A trustee who sat on a distribution for two years without explanation will struggle to defend full compensation for that period. In serious bad-faith cases, a court can order the trustee to pay the beneficiaries’ attorney fees personally, which can far exceed anything the trustee hoped to earn.
The Rule 7.776 factor on “fidelity or disloyalty” is not decorative. It gives courts explicit authority to weigh conduct when setting the number.3Judicial Branch of California. California Rules of Court 2026 – Rule 7.776 Compensation of Trustees
Tax Treatment of Trustee Fees
Trustee compensation is taxable income to the person who receives it. The IRS treats it as ordinary income whether the trustee is a professional or a family member serving occasionally. Professional fiduciaries operating a business also owe self-employment tax on the fees and report the income on Schedule C. A non-professional trustee typically reports the fees as other income on a personal return. The trust itself generally gets a corresponding deduction for the compensation paid, reducing the trust’s taxable income. A trustee who waives the fee avoids the income tax but cannot claim a charitable deduction for the donated time.