Jan252026
Probate Q&A Series

How do we get a clear, itemized fee breakdown for a trust setup that includes both short-term pass-through distributions and ongoing sub-trust administration? – North Carolina

Short Answer

In North Carolina, the cleanest way to get an itemized fee picture is to (1) request the trustee’s written compensation method and a sample annual trust report that shows receipts, disbursements, and trustee fees, and (2) ask for a separate, written schedule of one-time “setup/termination/transfer” charges versus ongoing administration and investment-management charges for each sub-trust. If the trust terms do not set compensation and the trustee’s annual compensation exceeds 0.4% of principal value, North Carolina law allows the trustee to give formal notice of the fee amount or calculation method, and qualified beneficiaries generally have a short window (20 days) to ask the clerk of superior court to review reasonableness.

Understanding the Problem

In North Carolina probate and trust administration, the decision point is whether a corporate trustee’s proposed charges for a testamentary trust can be broken into clear categories—one-time work to “pass through” near-term distributions and fund separate sub-trusts, versus ongoing work to administer and report on those sub-trusts over time. The question usually comes up when a family compares staying with a current trust provider versus moving the trust to a different corporate trustee, and needs a side-by-side fee breakdown that matches the trust’s distribution plan.

Apply the Law

North Carolina law generally allows a trustee to be paid reasonable compensation unless the trust instrument sets a different fee arrangement. A trustee also has reporting and information duties to qualified beneficiaries, which is the practical lever for getting a fee breakdown that is detailed enough to compare providers. If beneficiaries dispute the reasonableness of trustee compensation in a trust proceeding, the clerk of superior court is the usual forum that reviews trustee fees.

Key Requirements

  • Identify what controls compensation: First determine whether the will/trust language sets trustee compensation or incorporates a fee schedule; if it does, that usually controls.
  • Request the trustee’s fee method and reporting detail: A qualified beneficiary can request information about the nature and amount of trust property and can expect periodic reporting that shows receipts, disbursements, and fees in a way that can be reviewed.
  • Know the review path and timing: If the trustee proposes compensation above a statutory threshold when the trust does not specify compensation, the trustee can give notice of the amount or calculation method, and qualified beneficiaries may seek review with the clerk of superior court within a short deadline.

What the Statutes Say

Analysis

Apply the Rule to the Facts: Here, the will creates a testamentary trust with two tracks: (1) near-term pass-through distributions outright to some children, and (2) longer-term administration in separate sub-trusts for other shares. A meaningful fee breakdown should therefore separate (a) one-time work to marshal assets, calculate and make the outright distributions, and fund each sub-trust, from (b) recurring annual charges for each sub-trust (administration, investment management, tax reporting coordination, statements/annual reports, and distribution processing). If the trust terms do not clearly set compensation, North Carolina’s “reasonable compensation” framework and the notice/review process help beneficiaries insist on a transparent method that can be compared across corporate trustees.

Process & Timing

  1. Who asks: A qualified beneficiary (or a beneficiary’s legal representative). Where: First, directly with the current trustee/corporate trust department; if needed, a trust proceeding can be filed with the Clerk of Superior Court in the county with proper venue for the trust. What: A written request for (i) the trustee’s compensation schedule or calculation method, (ii) a sample annual trust report showing receipts, disbursements, and trustee fees, and (iii) a written estimate that separates one-time “distribution/funding/transfer” charges from ongoing sub-trust administration charges.
  2. Get the breakdown in “apples-to-apples” categories: Ask both the current provider and any proposed successor corporate trustee to quote the same categories: onboarding/setup; asset review and retitling; distribution processing (including multiple beneficiaries); sub-trust funding; annual administration; investment management; special assets; termination/transfer-out fees; and any minimum annual fee per sub-trust. Request that each category state whether it is a flat fee, hourly, or percentage-based, and what asset value is used for percentage calculations.
  3. If the fee is disputed: If the trustee’s compensation is not specified by the trust and the trustee gives a statutory notice of compensation amount/method above the threshold, a qualified beneficiary can file a proceeding for review of reasonableness with the clerk of superior court within the statutory window. The clerk can review whether the compensation is reasonable under the circumstances and comparable to similar services.

Exceptions & Pitfalls

  • The trust document may override the default rules: If the will/trust sets compensation (or incorporates a corporate trustee fee schedule by reference), the analysis starts there, and the “reasonable compensation” default may not apply the same way.
  • Bundled pricing hides the real cost of sub-trusts: A common problem is a single “all-in” percentage that does not show whether each sub-trust will be charged a separate minimum fee, separate tax reporting coordination costs, or separate termination fees later.
  • Confusing trustee fees with trust expenses: Even with a clear trustee fee, the trust can also pay reasonable administrative expenses (for example, outside legal work, accounting, appraisals, or special-asset management). A useful breakdown separates trustee compensation from reimbursable expenses and shows which expenses are expected in the first year (funding/distributions) versus later years (ongoing sub-trust administration).
  • Not asking for the “method” in writing: For comparison shopping, the most important deliverable is often the written method of computation (what percentage, what valuation date, what assets are included, and how distributions affect the fee base), not just a dollar estimate.
  • Missing the review window: If a statutory compensation notice is issued, waiting too long can forfeit the easiest procedural path to have the clerk review reasonableness.

Conclusion

In North Carolina, a clear, itemized fee breakdown for a testamentary trust with both pass-through distributions and ongoing sub-trust administration usually comes from a written request for the trustee’s compensation method and a sample annual report that itemizes receipts, disbursements, and fees, plus a separate written schedule that splits one-time distribution/funding work from recurring sub-trust charges. If compensation is not set by the trust and the trustee gives a statutory notice for compensation above 0.4% annually, the next step is to file a review proceeding with the clerk of superior court within 20 days.

Talk to a Probate Attorney

If a family is weighing whether to keep trust administration with a current corporate trustee or move to a different trustee and needs a fee breakdown that separates short-term distributions from long-term sub-trust administration, our firm has experienced attorneys who can help clarify the request, compare proposals, and flag timing issues. Call us today at [919-341-7055].

Disclaimer: This article provides general information about North Carolina law based on the single question stated above. It is not legal advice for your specific situation and does not create an attorney-client relationship. Laws, procedures, and local practice can change and may vary by county. If you have a deadline, act promptly and speak with a licensed North Carolina attorney.

Category: Probate Q&A Series

Author: Pierce Law

Pierce Law Group is a North Carolina law firm focused on probate administration, real estate partition matters, and surplus funds claims across North Carolina. We know these situations often come with stress, family dynamics, and time-sensitive decisions—so we prioritize clear communication, steady guidance, and a practical plan from day one. Our goal is to make a complicated process feel manageable, while protecting what matters most to you.