How can personal representative commissions and attorney fees be paid from a revocable trust under North Carolina law?
1. Detailed Answer
When a revocable trust becomes irrevocable upon the settlor’s death, the successor trustee steps into a fiduciary role very similar to a personal representative in probate. Under North Carolina law, the trustee may pay itself reasonable compensation (commissions) and reimburse attorney fees directly from trust assets if the trust instrument or statute authorizes it.
a. Authority to Pay Commissions and Fees
North Carolina’s Uniform Trust Code gives trustees express power to use trust funds for administrative expenses, including compensation and attorney fees:
- N.C. Gen. Stat. § 36C-1-405: Allows trustee to apply trust principal or income to pay expenses, compensation, taxes and other charges.
- Article 13 of Chapter 36C: Provides that trustees receive reasonable compensation and counsel representing the trust may be paid fees. See in particular:
- N.C. Gen. Stat. § 36C-13-101 – Trustee’s reasonable compensation.
- N.C. Gen. Stat. § 36C-13-602 – Attorney fees in trust proceedings.
b. Steps to Pay Commissions and Attorney Fees
Follow these steps to pay commissions and fees from a revocable trust:
- Review the trust instrument. Often, the settlor has detailed how and when trustee compensation and counsel fees may be paid.
- Calculate reasonable amounts. Base trustee commissions on the size of the trust estate and the complexity of administration. Base attorney fees on hours worked and the customary hourly rate in North Carolina.
- Provide notice to beneficiaries. North Carolina law requires trustees to keep beneficiaries reasonably informed. Sending a proposed accounting that lists commissions and fees helps avoid disputes.
- Obtain beneficiary consent or court approval. If beneficiaries object, the trustee may petition superior court under N.C. Gen. Stat. § 36C-12-100 to approve fees.
- Pay directly from trust assets. Once approved by beneficiaries or court, draw checks payable to the trustee (for commissions) and to counsel (for fees) from the trust account.
2. Key Takeaways
- Trustees may use trust funds to pay commissions and attorney fees under § 36C-1-405.
- Reasonable trustee compensation is governed by § 36C-13-101.
- Attorney fees in trust matters follow § 36C-13-602.
- Beneficiary notice and consent help prevent disputes over fees.
- Court approval under § 36C-12-100 is available if objections arise.
Contact Pierce Law Group
Paying commissions and attorney fees from a revocable trust requires careful reference to the trust document and North Carolina statutes. Our attorneys at Pierce Law Group guide trustees through each step and help secure beneficiary approvals or court orders when needed. Contact us to discuss your trust administration questions.
Email us at intake@piercelaw.com or call (919) 341-7055 to schedule a consultation.
