Lorenz v. Salvation Army

Opinion

GUSTAFSON, J. Petitioner is the trustee of a testamentary trust. On January 15, 1970, petitioner rendered an account for the calendar year 1969 and asked for compensation of $3,450 for himself and expenses of $2,300 for fees for his attorney. The account was approved, but the court allowed compensation of $2,500 to petitioner and expenses of $1,500 for fees for his attorney. Petitioner appeals.

The trust estate at the beginning of the year consisted of cash in the amount of $12,753.07 and stocks of a fair market value in excess of $500,000. During the year petitioner received interest on the cash in a savings and loan association and dividends on the stock in the total amount of $30,589.62. He made quarterly distributions to the two life beneficiaries in the total sum of $21,061.68. The stocks in the trust estate at the end- of the year were the same stocks as were there at the beginning except that [221]a stock split was received from one corporation and a stock dividend (with respect to which petitioner paid $25.68 to acquire a fractional share) was received from another corporation.

Petitioner’s attorney prepared and filed the account and petition (13 pages), prepared quarterly accountings for the beneficiaries and supplied information to the accountant who prepared the income tax return.

The compensation of a trustee of a testamentary trust is governed by section 1122 of the Probate Code and the compensation of a trustee of a nontestamentary trust is governed by section 2274 of the Civil Code. If the will or the declaration of trust does not specify the trustee’s compensation, each section provides that “the trustee shall be entitled to such compensation as may be reasonable under the circumstances.” Here the will of the decedent did not specify the trustee’s compensation. The first question on appeal is, therefore, whether the compensation fixed by the court for the trustee was a manifest abuse of the broad discretion reposed in the court to determine what amount is “reasonable under the circumstances.”

Among factors to be considered in determining the compensation allowable to a trustee are (1) the gross income of the trust estate, (2) the success or failure of the administration of the trustee, (3) any unusual skill or experience which the trustee in question may have brought to his work, (4) the fidelity or disloyalty displayed by the trustee, (5) the amount of risk and responsibility assumed by the trustee, (6) the time consumed by the trustee in carrying out the trust, (7) the custom in the community as to allowances to trustees by settlors or courts and as to charges exacted by trust companies and banks, (8) the character of the work done in the course of administration, whether routine or involving skill and judgment, and (9) any estimate which the trustee has given of the value of his own services. (Estate of McLaughlin (1954) 43 Cal.2d 462 [274 P.2d 868].)