Dear Mr. Premack: If a bank or an attorney were deemed to be the Trustee of a Credit Trust in Texas for the benefit of a surviving spouse, what would be the average percentage that the bank or attorney could claim in the form of annual Trustee fees for a Trust? It holds in excess of $600,000.00. -- S.H.

The answer to your question applies to all types of trusts, not just those set up to avoid federal estate taxes like a credit trust. Any time you hire a professional (whether a bank, an attorney or even a CPA) you can expect to pay a fee for the services provided. When you hire a professional to act as Trustee, the fee will usually be based on that professional’s regular charges for similar services.

Banks are perhaps the most predictable in this regard. If you phone any trust department and inquire about their fees, they will tell you have they a pre-established schedule of charges. Although they reserve the legal right to modify their fee schedule, most banks charge a sliding percentage of the trust’s overall asset value.

As the trust value increases, the fee percentage typically decreases (but, even though it is a smaller percentage, the actual dollar fee for larger trusts is more because of the higher value of the principal). A broad rule of thumb for a bank trust department fee is between 1.5% down to 0.75% of the principal balance.

An attorney or a CPA may charge more or may charge less than a bank and usually won’t have a pre-set fee schedule. Thus, the trust’s creator should, before listing that professional in the trust as a Trustee, discuss the fee expectation. The trust agreement itself will then be written to authorize a fee commensurate with that expectation.

Dear Mr. Premack: My 80 year old mother is selling her house and my husband and I are selling ours. We will jointly buy a house where we will live together. How should we buy the house so it will not be considered an inheritance when my mother dies? She is paying the down payment and we are paying the balance in a mortgage. How should we set it up so that when she dies the house will belong to us and not be considered an inheritance? – P.H.

Even though the house will be jointly owned, your mother’s share is her property. You do not want it be an inheritance, but that is the traditional way that her share would be transferred to you upon her death. Her Will should be written to specifically devise her interest in the property to you as an inheritance.

What you might really be asking is this: how can we receive her share of the house without having to probate her Will? There are two possible answers:

First, eliminate her share right up front. Instead of your mother paying the down payment and being listed as a co-owner, she could gift the down payment money to you and your husband. The home purchase could be closed in your names only, so that she has no ownership interest. This idea involves some risks for your mother, but avoids probate.

Second, if she does become a co-owner, she could sign a survivorship agreement with you so that her share of the house becomes your property automatically upon her death. Survivorship rights eliminate the need for probate, but since standard real estate closings are rarely set up that way you’ll have to discuss it with the title company in advance of the closing to be sure the documentation can include survivorship rights. If not, she can visit her attorney after the closing to make similar arrangements.