Fee Based Compensation

PAYING YOUR TRUSTEE BASED ON A FIXED PERCENTAGE FEE CAUSES BOTH OF YOU TO WORK FOR THE SAME OBJECTIVE:  PRESERVE AND GROW THE ESTATE

There are many ways that trustees may be compensated, but not all of them are in the best interest of you and your estate.  Ideally, you and your trustee will be compensated in a way that both of you work towards the same goals.

The different types of fees that other trust companies or departments may charge are:

• Transaction fees:  These might be a fee for every investment change, or distributions to beneficiaries, or payments of expenses.  Transactions fees motivate a trustee to minimize the work the trustee does, regardless of the benefits the work brings to your or your estate.

• Termination fees:  This is the fee the trustee charges to have you discontinue their services as trustee.  It creates a very negative but real incentive to keep the trustee, since frequently these fees may be between 1% to 5% of the estate, which could be $10,000 or more.  When considering which trustee is best for you, it is a negative experience to have the current trustee tell you not to change, because they will make the change very expensive to you.

• Flat maintenance fee:  This would be a fixed dollar amount fee for some or all of the services as trustee.  For example, a fee might be $5,000 per year to handle all investments, regardless of the amount being managed.  Fixed fees do not motivate the trustee to grow the estate or to provide more services. 

At Providence First, our sole trustee compensation is a fee based on the percentage of assets under management, with a fixed minimum fee for each account.  We do not charge any flat maintenance fees, any termination fees, or any transaction fees for trust account administration.  

In addition, normally our fee is taken only quarterly, twice a year, or annually, depending on trust activity.  This allows your trust to grow uninterrupted and maximizes our incentive as trustee to grow and preserve your trust estate over time.

There are many ways to compensate your trustee, and a fixed percentage fee, such as Providence First charges, is the best way to keep both you and your trustee working for the same goal -- preserving and growing your estate.

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