Florida trustee fees are governed by what the trust document says first, and if the document is silent, by whatever amount is “reasonable” under the circumstances. Florida does not set a statutory fee schedule for trustees the way it does for personal representatives in probate. That open standard, found in Section 736.0708, is why compensation varies widely from one trust to the next and why disputes over what qualifies as reasonable are among the most common trust conflicts in the state.1Florida Senate. Florida Code Title XLII Chapter 736 Part VII Section 736-0708 – Compensation of Trustee
What “Reasonable Compensation” Means Under Florida Law
Section 736.0708 gives every trustee a right to be paid but leaves the amount to the trust instrument. If the settlor spelled out a fee, that figure controls. If the trust is silent, the trustee receives whatever is reasonable given the size of the trust, the complexity of its assets, and the actual work performed.1Florida Senate. Florida Code Title XLII Chapter 736 Part VII Section 736-0708 – Compensation of Trustee
Even a specific fee in the trust document is not absolute. A court can adjust it in two situations: when the trustee’s duties turn out to be substantially different from what the settlor anticipated, or when the specified amount has become unreasonably high or low. A 2005 trust that pays $500 a year to manage what has grown into a $5 million portfolio with rental properties is a candidate for upward adjustment. A trust that pays $50,000 a year for writing three distribution checks invites the opposite.
How Trustee Fees Are Usually Calculated
Without a statutory formula, compensation in Florida tends to follow one of a few models. Which one fits depends on who the trustee is and what the trust holds.
Percentage of Trust Assets
Banks and trust companies almost always charge an annual percentage. Industry norms generally fall between 1% and 2% of assets under management, with tiered rates declining on larger balances. A $2 million trust might generate an annual fee of $20,000 to $30,000 under that structure. Corporate trustees also typically impose a minimum annual fee, often in the range of $3,000 to $10,000, which prices very small trusts out of institutional management.
Percentage fees hold up best when the trustee is actively managing investments, real estate, or business interests. A trustee passively holding index funds has a harder time defending 2% a year than one running a portfolio that demands ongoing attention.
Hourly Billing
Individual trustees, especially attorneys and CPAs, sometimes bill by the hour. An attorney serving as trustee might charge $250 to $500 per hour; a family member acting as trustee often charges much less or nothing at all. Hourly billing fits trusts where duties are sporadic rather than continuous.
The catch is transparency. Beneficiaries don’t see the bill until the accounting arrives, and courts have little tolerance for reconstructed or estimated time. A trustee using this model needs contemporaneous records.
Hybrid Approaches
Some trustees combine a modest annual percentage for routine administration with hourly charges for extraordinary work such as litigation, real estate sales, or running a business the trust owns. Section 736.0708(3) supports this arrangement by allowing separate reasonable compensation for services beyond ordinary trust administration.1Florida Senate. Florida Code Title XLII Chapter 736 Part VII Section 736-0708 – Compensation of Trustee The trustee has to draw a clean line between what the base fee covers and what counts as extra, because beneficiaries will challenge anything that looks like double-dipping.
Extra Compensation for Professional Services
Section 736.0708(3) matters most when the trustee is also an attorney, accountant, or property manager providing services the trust would otherwise have to hire out. In that case, the trustee is entitled to separate reasonable compensation for those services on top of the base trustee fee.1Florida Senate. Florida Code Title XLII Chapter 736 Part VII Section 736-0708 – Compensation of Trustee This is where fees can escalate quickly, and it is also where courts scrutinize most closely: the trustee has to show the professional work was genuinely separate from ordinary administration, not just a second invoice for the same activity.
Fiduciary Duties That Limit What a Trustee Can Take
The right to be paid sits inside a broader set of fiduciary obligations. A few of them bear directly on compensation.
Section 736.0801 requires a trustee to administer the trust in good faith and in the interests of the beneficiaries.2Justia. Florida Code Title XLII Chapter 736 Part VIII Section 736-0801 – Duty to Administer Trust A fee level that drains the trust or eats into distributions fails that test even if the raw dollar figure might look defensible.
Section 736.0802’s duty of loyalty prohibits self-dealing. A trustee who unilaterally raises their own fee beyond what the trust provides, or who hires their own firm for paid services without disclosure and consent, is entering voidable-transaction territory. Courts can order the return of excessive fees and, in serious cases, remove the trustee.3The Florida Legislature. Florida Statutes 736.0802 – Duty of Loyalty
Section 736.0813 requires trustees of irrevocable trusts to provide a trust accounting to each qualified beneficiary at least annually.4The Florida Legislature. Florida Statutes 736.0813 – Duty to Inform and Account That accounting must disclose compensation paid to the trustee and any agents the trustee hired.5Florida Senate. Florida Code Title XLII Chapter 736 Part VIII Section 736-08135 – Trust Accountings Beneficiaries must also be told about the trust’s existence within 60 days after it becomes irrevocable, along with their right to request accountings. Trustees who cannot produce clean records when a fee dispute reaches court rarely fare well.
Challenging Trustee Fees in Court
Fee disputes often begin with a beneficiary asking for a detailed breakdown of services. When that doesn’t settle things, Florida law provides a formal route. Section 736.0201 gives courts general jurisdiction over trust matters, including fee review, and Section 736.0206 lays out a more specific process, particularly when the settlor’s estate is being probated and the trust is a beneficiary under the will.6Florida Senate. Florida Code Title XLII Chapter 736 Part II Section 736-0201 – Role of Court in Trust Proceedings7Florida Senate. Florida Code Title XLII Chapter 736 Part II Section 736-0206
The detail that surprises many trustees: under Section 736.0206, the burden of proof falls on the trustee to show the compensation is reasonable, not on the beneficiary to show it is excessive.8The Florida Legislature. Florida Statutes 736.0206 A trustee whose fees are found “substantially unreasonable” may also be ordered to pay their own attorney fees for the proceeding out of pocket rather than charging them to the trust. Either side can bring expert testimony on industry norms, and the court can award expert witness fees from trust assets when the testimony helped.
A trustee who expects trouble can go the other direction and petition the court to approve fees in advance. Getting judicial approval early creates a record that shuts down later challenges.
Expense Reimbursement Is Separate From Compensation
Section 736.0709 entitles a trustee to reimbursement from trust property for expenses properly incurred in administration, with interest where appropriate.9Official Internet Site of the Florida Legislature. Florida Statutes 736.0709 – Reimbursement of Expenses If a trustee advances personal funds to protect the trust, such as paying an urgent property tax bill or insurance premium, the trustee acquires a lien against trust property to secure repayment.
Fees and expenses belong on separate lines of the accounting. Bundling reimbursable costs into a compensation figure, or the reverse, confuses beneficiaries and invites a challenge that could have been avoided.
Tax Treatment of Trustee Fees
The IRS treats trustee compensation differently depending on whether you serve as a fiduciary regularly as part of a profession. If you do, fees are self-employment income reported on Schedule C and subject to self-employment tax. If you are a one-time trustee, such as a family member administering a relative’s trust, the fees go on Schedule 1 (Form 1040), line 8z, as other income and are not subject to self-employment tax.10Internal Revenue Service. Publication 559, Survivors, Executors, and Administrators Self-employment tax adds roughly 15.3% on top of regular income tax for the first $176,100 of net earnings in 2025, plus the 2.9% Medicare portion on earnings above that threshold. Florida has no personal income tax, so an individual trustee in Florida owes federal tax on the fees but nothing to the state.
Waiving Fees Without Creating a Tax Bill
Family trustees who prefer not to be paid need to handle the waiver correctly, because the IRS can otherwise treat waived fees as constructive income. Under Revenue Ruling 66-167, a trustee can avoid including statutory or customary fees in gross income by formally waiving the right to compensation within a reasonable time after beginning to serve, and by acting consistently with an intent to serve gratuitously throughout the administration.11Internal Revenue Service. Private Letter Ruling 201024045 – Salary Waivers A trustee who accepts fees for two years and then “waives” them in year three while drawing other benefits from the trust is unlikely to meet the standard. Put the waiver in writing, do it early, and document it in the trust records.