Living Trust Settlement - Where Did Granny's Trust's Worth End Up?

December 24, 2004
By Kathy Curtis

"Sufferin' succotash!" Sylvester yelled out in court upon hearing the settlement amount. Why was Granny's living trust settlement so much less than her trust's worth? How come Tweety was awarded more than him? To Sylvester, it all seemed unfair and frustrating.

The amount of a living trust's settlement can seem unwarranted to the uninformed eye. Why do interested parties working on behalf of the one who created the trust get paid for their duties? How can a benefactor work as a trustee and get compensated for his performed responsibilities?

Fortunately, for characters like Sylvester, many court settlements list these details.

§ Property And Possession Fees - Many assets working inside the trust are still subject to fees upon the owner's passing. Assets such as real estate property will require real estate fees that are stated in the settlement. Income is also subject to taxation.

§ The Trust's Value - Many states will excise a federal estate tax when the worth of the trust is above a certain amount. This amount varies from state to state and usually ranges around $1 million to $1.5 million.

§ Party Fees - The parties working on behalf of the trust and holding certain titles, such as the successor Trustee, receive a reasonable compensation for performed duties. Trustees are responsible for distributing assets as outlined by the grantor and overseeing any court proceedings. Trustees in many situations are also benefactors. This additional trustee fee usually boosts their inheritance (which among some relations like between Sylvester and Tweety can cause friction). Other related parties include attorneys and banks. Many nursing homes are not permitted to charge and collect fees.

§ Probate - Not every state exempts trusts from probate practices. This tax is taken from the trust's worth and can affect a trusted asset's estimated value. In most circumstances, the court decides which asset will pay for the probate.