Trustee’s Compensation and Right of Indemnity Self-Quiz
Bennett is
a trustee for property held in trust for his two nephews, Aaron and Jack.
The trust agreement stipulated that the trustee is to receive a 5% commission
(based on the trust value) for administering the trust. The value of the
trust assets usually averaged $100,000. Bennett decided to pay himself
$8,000, given the extra duties he has performed. How much commission should
Bennett receive?
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Winona conveyed
her small Santa Monica, CA home to Nancy (as trustee) to hold it in trust
for and to pay the income to Yves. The house is right on the beach and
in good repair. Several months before Winona died, she completely renovated
the house. Since the home is small, it is rentable for a much smaller
amount than other homes in the neighborhood. Nancy feels that if she adds
another room to the home, she could rent it for a much higher rate. Yves
does not feel the addition is necessary. Nancy contracts to have a new
room installed for $55,000. Afterwards, the house is rented for $3,500
per month, instead of $2,500 per month. Nancy should be reimbursed from
the trust for this expense.
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