Thorpe v. Reed (Cal.App. 6th Dist., Dec. 13, 2012)

It is a well known principle of trust law that, if the trust provides for the trustee to be compensated for work performed as trustee, then the trustee is entitled only to the compensation set forth in the trust instrument. See Cal. Prob. Code §15680. So, the Court of Appeal in Thorpe v. Reed ruled that compensation was not payable to a successor trustee of a special needs trust where the trust instrument provided that no compensation was payable to any trustee. Somehow the successor trustee accepted the job as trustee knowing the trust instrument prohibited the payment of compensation, incurred over $100,000 in trustee’s fees, and, ultimately, the Court of Appeal said the successor trustee should get nothing. Tough break…but, as mentioned in the opinion, if the successor trustee thought that the compensation specified in the trust was inadequate, then he could have refused to accept the appointment. This case reminds us of the general principle of American jurisprudence that there is no involuntary servitude except as punishment for those duly convicted of a crime (i.e., the 13th Amendment to the United States Constitution). Thus, if you don’t want to work for free (as a trustee), then don’t take the job (as a trustee).

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