SAN FRANCISCO — Frank Mulberg, the appellee in trustee compensation case Amster vs. Mulberg that the California First District Court of Appeal recently heard, told the Northern California Record that the case has a lot of value even though the appeals court did not publish its decision.
"This is a very important case even though it is unpublished in that the law throughout this state is that trustees cannot rely upon their contractual right to compensation stated in written contracts and trust instruments," Mulberg said. "The trustee in this case filed a petition for rehearing, request for publication and petition for review with the California Supreme Court. All were denied summarily. The law in the State of California concerning trustee compensation is that local rules restrict what a trustee may charge by way of written contract."
The appeals court decided not to award attorneys' fees but allowed Mulberg's request for tax costs.
"The thrust of this case is that a probate judge has the absolute discretion by use of local rule irrespective of the existence of statutory and case law otherwise when a written contract concerning trustee compensation exists, even by trust instrument, to modify and reduce trustee compensation established by contract," Mulberg said.
Mulberg said he served as a trustee from September 2011 to April 2014.
"The trust instrument provided that an attorney or CPA could bill at their customary hourly rate when acting as trustee, which I did," Mulberg said. "The cap or limitation on trustee billing was that it could not exceed what a corporate trustee would charge for the same services provided. Evidence was provided at trial as to what a corporate trustee would charge based on two corporate trustee's fee schedules for the same services provided by the trustee, but it was completely ignored by the court, and instead, the Marin judge applied a Marin County local rule limiting the trustee's compensation to 1 percent annual fee based on carry value and not fair market of the assets.