In the Marge Puka Irrevocable Trust document, the trustee is authorized to pay all property taxes, assessments, fees, charges, and other expenses incurred in the administration or protection of the trust.
These payments are charged against the trust property and are paid by the trustee, either out of the trust’s income or, if the income is insufficient, then out of the principal of the trust property.
This determination by the trustee regarding the payment of expenses is conclusive upon the beneficiaries.
Therefore, in this case, the trust itself, managed by the trustee, is responsible for the accounting expenses.
What Section In Document Says Trust Itself Pays For Accounting?
The section of the document that specifies the trust itself pays for accounting and other expenses is Section 10.17, titled “Payment of Taxes and Expenses.”
Section 10.17 Payment of Taxes and Expenses
Section 10.17, titled “Payment of Taxes and Expenses
Except as otherwise provided in this agreement, my Trustee is authorized to pay all property taxes, assessments, fees, charges, and other expenses incurred in the administration or protection of the trust. All payments shall be a charge against the trust property and shall be paid by my Trustee out of the income, or to the extent that the income is insufficient, then out of the principal of the trust property. The determination of my Trustee with respect to the payment of expenses shall be conclusive upon the beneficiaries.
This section states that the trustee is authorized to pay all property taxes, assessments, fees, charges, and other expenses incurred in the administration or protection of the trust.
All such payments are charged against the trust property and are to be paid by the trustee either out of the trust’s income or, if the income is insufficient, from the principal of the trust property.
Does The Trust Owe The Trustee Accounting Expenses If The Trustee Paid Out Of Pocket?
If a trustee pays for trust accounting expenses out of their own pocket, the trust typically owes the trustee reimbursement for those expenses, under several conditions:
- Permissible Expenses: The expenses must be legitimate and necessary for the administration of the trust. They should align with the responsibilities and duties of the trustee as outlined in the trust agreement and under applicable law.
- Trust Agreement Provisions: The trust document may have specific guidelines about expenses and reimbursements. If it expressly allows for the reimbursement of such expenses, the trustee has a clearer basis for being repaid.
- Fiduciary Duty: Trustees have a fiduciary duty to act in the best interest of the trust and its beneficiaries. As long as the expenses were incurred in good faith and were necessary for the proper administration of the trust, they are typically considered reimbursable.
- Documented Expenses: The trustee should have clear and detailed records of the expenses paid. Proper documentation is crucial for accountability and transparency, especially when handling trust funds.
- Trust’s Financial Status: The trust must have sufficient assets to cover these expenses. If the trust is insolvent or lacks the necessary funds, reimbursement may not be possible.
