Trustee Compensation and Reimbursement

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If you’ve been named a trustee in Georgia, you probably have a lot of questions. One of the most common is simple: “Do I get paid for this?” The answer is yes, and Georgia law is clear about it. Whether you’re managing a trust for a loved one or you’re a settlor trying to plan ahead, understanding how trustee compensation and reimbursement work is a key part of good estate planning. At Slowik Estate Planning, based in Atlanta, Georgia, we help clients set up trusts that clearly address these issues from the start, so there’s no confusion later.

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What Georgia Law Says About Trustee Compensation

Georgia has a well-defined framework for trustee compensation, and it’s found in the Revised Georgia Trust Code of 2010, specifically under O.C.G.A. Title 53, Chapter 12, Article 11. This is the section of Georgia law that governs trustees and their rights. So, what does it actually say?

Under O.C.G.A. § 53-12-210, trustees shall be compensated in accordance with either the trust instrument or any separate written agreement between the trustee and the settlor. That means the first place to look is always the trust document itself. If the settlor wrote clear compensation terms into the trust, those terms generally control. If no terms were included, Georgia law provides a default framework.

If there is no provision for trustee compensation in the trust instrument and there is no separate written agreement between the trustee and the settlor, a separate written agreement may be entered into between the trustee and the qualified beneficiaries. The trustee and all qualified beneficiaries may by unanimous consent enter into an agreement relating to trustee compensation without receiving the approval of any court, or any qualified beneficiary may petition the court to approve an agreement relating to trustee compensation.

When neither of those options applies, Georgia’s statutory default kicks in. In cases where no trust instrument or separate agreement governs compensation, a corporate trustee is entitled to its published fee schedule, provided that such fees are reasonable under the circumstances. For individual trustees, the law sets out a specific fee schedule based on the value of the trust assets. This tiered approach is designed to reflect the actual work involved.

Under the statutory schedule, an individual trustee receives an annual fee based on a tiered percentage of trust asset value, with rates that decrease as the value of the trust grows. For assets over $2 million but not more than $5 million, the annual fee is $25,000 plus 0.85 percent of the excess over $2 million; and for assets over $5 million, $50,500 plus 0.50 percent of the excess over $5 million.

In addition to the annual fee, an individual trustee is also entitled to one percent of cash and the fair market value of any other principal asset received upon the initial funding of the trust and at such time as additional principal assets are received. This is sometimes called a “receipt fee” and it’s separate from the annual management fee. Understanding both parts of this formula matters a great deal when you’re deciding how to structure a trust. Working with an estate planning attorney in Atlanta ensures these details are handled correctly from day one.

How Trustee Reimbursement Works in Georgia

Compensation and reimbursement are two different things, and it’s important to understand the difference. Compensation is the fee a trustee earns for their time and effort. Reimbursement is the right to be paid back for money spent out of pocket while doing the job. Both are protected under Georgia law.

Under O.C.G.A. § 53-12-213, a trustee shall be entitled to be reimbursed out of the trust property for reasonable expenses that were properly incurred in the administration of the trust. This is a straightforward and important protection. A trustee should never have to pay administration costs out of their own pocket when those costs are legitimate and necessary.

What kinds of expenses qualify? Think about the day-to-day costs of running a trust. Travel to meet with beneficiaries, accountant fees, legal fees, court costs, and bond premiums are all common examples. Reimbursable expenses may include necessary costs for travel, bond premiums, legal counsel, or accounting services. These are real costs that trustees regularly face, and the law recognizes that they shouldn’t come out of the trustee’s own wallet.

There is an important nuance here when it comes to legal fees. Georgia courts have allowed a trustee to be reimbursed from the trust corpus for legal fees expended in a cause of action for breach of a fiduciary obligation, even when that cause of action was unsuccessful. However, if a suit against the trustee is successful, the trustee will not be entitled to reimbursement. This makes sense. If a trustee did something wrong and a court agrees, they can’t ask the trust to cover their defense costs.

The key word in all of this is “reasonable.” Expenses must be reasonable and properly incurred. That means a trustee can’t run up unnecessary costs and expect the trust to cover them. Keeping detailed records of every expense, with receipts and explanations, is the best way to protect yourself. If you’re serving as a trustee and want to make sure you’re handling reimbursements correctly, reach out to Slowik Estate Planning in Atlanta, Georgia, for guidance.

Modifying Trustee Compensation After the Trust Is Created

What happens if the compensation terms in the trust document no longer make sense? Maybe the trust has grown significantly, or the trustee’s responsibilities have changed. Georgia law allows for modification, but there’s a process to follow.

After the settlor’s death or incapacity, or while the trust is irrevocable, the trust instrument or the agreement relating to the trustee’s compensation may be modified in two ways: the trustee and all qualified beneficiaries may by unanimous consent modify the agreement relating to the trustee’s compensation without receiving the approval of any court, or by petition pursuant to Code Section 53-12-61.

The unanimous consent route is the simpler path. If everyone agrees, no court involvement is needed. But what if there are minor beneficiaries or someone who lacks legal capacity? That’s where things get more involved. The court may need to appoint a guardian ad litem to represent those interests, and a hearing will be held. The judge will then decide whether to approve or deny the modification.

It’s also worth noting that Georgia law treats trust compensation modifications differently from executor compensation modifications. The trust code does not have a provision allowing a trustee who is compensated according to the trust agreement to petition for additional compensation beyond what the agreement allows. Instead, a trustee must seek the consent of the settlor, if living, or of the beneficiaries to modify the compensation-related provisions of the trust instrument.

This is a meaningful distinction. If you’re a trustee who feels undercompensated, you can’t simply go to court and ask for more money. You need the agreement of the people involved. This is why it’s so important to get compensation terms right when the trust is first drafted. Slowik Estate Planning helps clients in Atlanta think through these issues carefully when creating wills and trusts, so there are no surprises later.

Co-Trustees and Compensation: What You Need to Know

Many trusts name more than one trustee. This is common in family situations where parents want two adult children to serve together, or in more complex trusts where a family member serves alongside a professional or corporate trustee. When co-trustees are involved, compensation works a bit differently.

When co-trustees are serving, the annual fee shall be apportioned among the trustees according to the proportion of time each rendered services during the year. This is a fair approach. It means the trustee who does more of the work gets a larger share of the fee. It also means that if one co-trustee is largely inactive, they won’t receive the same compensation as the one who’s doing the heavy lifting.

This apportionment rule only applies to the annual fee, not the receipt fee on assets coming into the trust. For that initial fee, the law doesn’t specify a split, so it’s wise to address this in the trust document itself. A well-drafted trust can specify exactly how co-trustee compensation is handled, which prevents disputes down the road.

Having co-trustees can also raise questions about reimbursement. If both trustees incur expenses, both are entitled to reimbursement for their reasonable, properly incurred costs. But if one trustee incurs expenses that the other didn’t authorize or agree were necessary, that can become a point of conflict. Clear communication and record-keeping are essential.

If you’re considering naming co-trustees, or if you’re already serving in that role and have questions about how compensation is divided, an Atlanta estate planning lawyer at Slowik Estate Planning can walk you through your options. We also help clients with International Estate Planning when trust assets or beneficiaries span multiple countries, which can add another layer of complexity to trustee compensation questions.

Why Getting Compensation Right Matters for Your Estate Plan

Trustee compensation isn’t just a technical detail. It affects the people you care about most. If compensation is too high, it reduces what beneficiaries receive. If it’s too low, a trustee may feel resentful or may not put in the effort the trust requires. Getting this balance right is part of a thoughtful, complete estate plan.

Think about a real-world scenario (for illustration purposes only): a parent sets up a trust for three adult children and names a family friend as trustee. The friend agrees to serve without pay. Years later, the trust has grown and the friend is spending 10 hours a week managing it. Without clear compensation terms, the friend has no legal claim to a fee under the trust document and must negotiate with the beneficiaries. This kind of situation is avoidable with good planning upfront.

Georgia law under O.C.G.A. Title 53, Chapter 12 gives trustees real rights, but those rights work best when the trust document is clear and complete. The trust instrument is the first document courts and beneficiaries look to. Vague or missing terms lead to disputes, delays, and legal costs that eat into the trust’s value.

Beyond compensation, trustees also carry significant fiduciary duties under Georgia law. They must act in the best interest of the beneficiaries, keep detailed records, and avoid self-dealing. Under O.C.G.A. § 53-12-300 and related provisions in Article 14 of the Revised Georgia Trust Code, a breach of those duties can result in personal liability. That’s a serious risk, and it’s one more reason to have a well-drafted trust and to work with a knowledgeable attorney throughout the administration process.

At Slowik Estate Planning in Atlanta, Georgia, we help clients with all aspects of trust planning, including compensation structures that make sense for their specific situation. We also assist with Estate Tax Planning in Atlanta Georgia and Asset Protection strategies that work alongside your trust to protect what you’ve built. If you have questions about trustee compensation, reimbursement, or any part of your estate plan, contact us today to schedule a consultation.

FAQs About Trustee Compensation and Reimbursement in Georgia

Does a trustee in Georgia have to accept compensation?

No. A trustee can choose to waive compensation entirely. This is common when a family member serves as trustee for a smaller trust. However, even a trustee who waives their fee is still entitled to reimbursement for reasonable expenses they paid out of pocket during trust administration. Waiving a fee and waiving reimbursement are two separate decisions, and a trustee should be clear about which one they are agreeing to.

What happens if the trust document says nothing about trustee compensation?

Georgia law fills the gap. Under O.C.G.A. § 53-12-210, when the trust instrument has no compensation terms and there is no separate written agreement, the trustee and all qualified beneficiaries can agree on compensation by unanimous consent without going to court. If they can’t agree, any qualified beneficiary can petition the court to approve a compensation arrangement. If none of those options apply, the statutory fee schedule under Georgia law governs what the trustee receives.

Can a trustee be paid for hiring professionals to help administer the trust?

Yes. Trustees are not expected to do everything themselves. Under O.C.G.A. § 53-12-213, a trustee is entitled to reimbursement for reasonable expenses properly incurred in trust administration. This includes fees paid to accountants, attorneys, and other professionals needed to manage the trust properly. The trustee should keep receipts and documentation for all such expenses in case they are ever questioned by a beneficiary or a court.

Can beneficiaries challenge a trustee’s compensation or reimbursement claims?

Yes, beneficiaries have the right to question whether a trustee’s fees or claimed expenses are reasonable. If a dispute arises, a court can review the trustee’s records and determine whether the compensation or reimbursement is appropriate. This is one reason why trustees should keep careful, detailed records of all time spent and money paid. A trustee who can show exactly what they did and what it cost is in a much stronger position if their fees are ever challenged.

Does trustee compensation affect estate taxes or income taxes?

It can. Trustee compensation is generally taxable income to the trustee and may be deductible by the trust, depending on the type of trust and applicable tax rules. The tax treatment can vary based on whether the trust is revocable or irrevocable, and whether it is a grantor trust under federal tax rules. For example, IRS guidance including Rev. Rul. 2023-2 addresses how income and deductions are treated in grantor trusts. Because the tax implications can be significant, it’s important to discuss trustee compensation with both an estate planning attorney and a tax professional. Slowik Estate Planning works with clients in Atlanta, Georgia to make sure these issues are addressed as part of a complete estate plan.

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