Charles W. Ranson
Expert Witness
Wealth Management and Trust & Estates
Robert Rauschenberg Trustee Fee Determination Expert Witness
Judge rules on reasonable trustee fees in the matter of Robert Rauschenberg Trust in the amount of $24,600,000.
In June 2014 in the Circuit Court of Florida Twentieth Court (Lee County), Probate Division Case File No. 08-CP-2479, Judge Rosman presiding heard the case to determine reasonable trustee fees in the matter of the Robert Rauschenberg Trust.
Robert Rauschenberg, one of the world’s most important pop artists of the 20th century, www.rauschenbergfoundation.org, passed away in May 2008.
2d DCA says YES to $24.6 million in trustee fee (Antúnez Probate & Trust Litigation Blog post)
Case Rauschenberg Trust Fee Determination Litigation
I was engaged as an expert witness by Foley and Lardner in Orlando, Florida, the attorneys representing the trustees, to opine on reasonable trustee fees. My review of the case files determined a gross estate value of $918 million (IRS Form 706 Estate Tax Return plus $313 million in intellectual property not listed on the 706). The trust property consisted of over 7600 individual pieces of art, over 1100 photographs, real estate portfolio, and an extensive portfolio of intellectual property, securities, life insurance policies and cash. After four years of administration the trustees distributed to the beneficiaries trust assets valued at between $2.041 billion and $2.283 billion.
Mr. Rauschenberg appointed three trustees to administer the trust after his death. Each of the trustees possessed unique and special knowledge and experience to successfully administer the trust, which held an extensive body of artwork for the benefit of the beneficiaries. Each of the trustees had working knowledge of the art market at the highest levels and executed a strategy that preserved and grew the value of the trust assets during the four years of administration that included the turbulent global financial crisis of 2008-2009. In addition, each of the trustees had knowledge of other noted artists’ estates that had experienced significant deterioration of value of the trust assets. The trustees had a good working relationship with the beneficiaries (Rauschenberg Foundation) during the administration with one exception — trustee fees. The trustees’ petitioned the court for $60 million in trustee fees, which was strongly opposed by the beneficiary foundation, suggesting that a fractional amount of that number would be appropriate.
In Florida when an irrevocable trust is silent on the issue of trustee fees and the trustees and the beneficiaries cannot come to an agreement on reasonable trustee fees the probate court of jurisdiction of the decedent’s residence — in this case Lee County Florida — will hold a hearing and hear evidence from the trustees, the beneficiaries, and their fact and experts witnesses and once the court has heard all of the evidence the judge will determine and order trustee fees to be paid.
In determining reasonable trustee fees Florida statute and case law relies primarily on Florida statute 736.0708 and the 1958 Supreme Court of Florida case, West Coast Hospital Association v. Florida National Bank.
West Coast Hospital Association v. Florida National Bank case law defines 11 parameters to be considered including: the amount of capital income received and distributed by the trustees, wages or salary customarily granted to agents or servants performing similar work, success or failure of the administration of the trust, unusual skills or expertise which the trustees in question may have provided, the fidelity or lack thereof displayed by the trustees, the risk and responsibility assumed by the trustees, the time commitment required, the custom in the community as to allowances to trustees by settlers or courts and as to charges exacted by trust companies and banks, the character of the work done in the course of the administration whether routine or involving skill and judgment, any estimate which the trustees have given of the value of their services, and payments made to the trustees and intended to be applied toward their compensation.
After carefully reviewing all of the documents provided to me by hiring counsel and considering the 11 factors described above, applying my years of experience as a senior level officer of a (Florida) bank trust company with extensive knowledge of pricing large complex trust and investment relationships I wrote an expert report for the court, was deposed by opposing counsel, and testified at trial as to reasonable trustee fees in this case.