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Record supports capping trustee fees at 1.5 percent

June 19, 2015

A trial court did not err when it concluded that a community foundation which took over acting as trustee of a charitable trust will have its fees capped at 1.5 percent of the trust’s annual assets, the Indiana Court of Appeals ruled Friday.

Johnson Superior Court approved Johnson County Community Foundation taking over as trustee from J.P. Morgan Bank after the bank sought to be removed from the role because of the small size of the trust. The trust was established by Marion and Eve Peeples to provide scholarships to students from Franklin High School who sought to study certain areas at Franklin aaCollege. The bank hired JCCF to manage the scholarship program before JCCF took over as trustee in 2013.

At a hearing, JCCF President Gail Richards testified that the foundation would not need more than 1.5 percent of the trust’s annual assets to operate the trust. The trial court approved that cap as well as required the JCCF to receive court approval before engaging in the service of certain third-parties, such as attorneys, under certain circumstances. The judge noted how the trustee fees were too high while J.P. Morgan was trustee.

JCCF filed a motion to correct error, but the judge left those two conditions in place. In  In the Matter of the Trust Created Under the Last Will and Testament of Marion A. Peeples, Deceased, Johnson County Community Foundation as Successor Trustee of the Marion A. Peeples Foundation Charitable Trust, 41A01-1412-TR-513, the Court of Appeals did so as well. The judges noted that Richards testified that 1.5 percent would be enough at the initial hearing and did not provide evidence as to why the JCCF later need 2 percent, as she argued in the motion to correct error. In addition, the 1.5 percent is a “soft cap” and can be adjusted as long as the JCCF can prove the need to do so, Judge Cale Bradford noted.

The JCCF also did not present any testimony as to any specific need for third-party services, which can be approved as long as the JCCF demonstrates need.  
 

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