Appeals from the Superior Court of the District of Columbia, (GDN 39-03 & TRP 9-05), (Hon. Peter H. Wolf & Hon. Ronald P. Wertheim, Trial Judges).
The opinion of the court was delivered by: Kramer, Associate Judge
Before REID, KRAMER, and FISHER, Associate Judges.
Appellant Evan J. Krame is the trustee for two special needs trusts, the D.M.B. Special Needs Trust and the Dion Baker Special Needs Trust. He argues that in each case the trial judge erred in denying his requests for compensation expressed as a percentage of the assets of the trust being administered and failed adequately to consider the evidence offered in support of the requested fees. He further argues that Judge Wolf abused his discretion in sanctioning him and in amending the D.M.B. Special Needs Trust. We affirm.
A. The D.M.B. Special Needs Trust
The D.M.B. Special Needs Trust ("D.M.B. Trust") was created as a result of a settlement from a mother's lawsuit against a hospital on behalf of her minor son. It was created in lieu of a guardianship for the proceeds as provided in D.C. Code § 21-120 (b) (2001).*fn1 Judge Joan Zeldon approved the proposed trust, which had been drafted by appellant, on the conditions that a guardian be appointed; that the trustee file annual accounts with the court; and that the trustee's compensation "be reasonable, which may be established with the assistance of standards of local trustee practice, subject to approval by the court." Appellant was made the trustee for the D.M.B. Trust.
The D.M.B. Trust provides that the trustee's compensation shall be calculated as follows:
A Trustee shall be entitled to reasonable compensation for his or her services as a Trustee hereunder, consistent with industry standards, which may be expressed as a percentage of Trust assets. All trustee compensation is subject to review by the Superior Court, to be approved if reasonable and modified if unreasonable. In considering the reasonableness of fees reported in the accounting of the Trustee, the Court may consider the industry practice and any other factors.
1. The First D.M.B. Trust Accounting
Appellant's first account reflected compensation calculated as 1% of the Trust's assets ($3,396.39). The accounting also reflected quarterly fees paid to the Trustee's investment advisor, "Choice." The accounting was approved on March 2, 2005, by Judge Wertheim. No issue is presented as to this compensation award.
2. The Second D.M.B. Trust Accounting (06-PR-1064)
Appellant's second account, filed on December 5, 2005, reflected compensation again calculated as 1% of the Trust's assets ($6,737.88). Judge Wolf rejected the account because he found that appellant had not supported his request for fees with appropriate documentation delineating the services performed on behalf of the trust, thus preventing the judge from determining the reasonableness of the fees requested.. Accordingly, Judge Wolf ordered appellant to file a "thorough explanation" of his fees "so that the court may determine their reasonableness."
In response, appellant conceded that courts "have the inherent power to review the compensation paid trustees from trust assets" for "reasonableness," but argued that his flat 1% fee was reasonable because institutional trustees charge 1%. Noting also that Special Needs Trusts require specialized knowledge regarding governmental benefits, he asserted his own considerable skill and experience as a trustee or guardian. He did not, however, explain how his fee was reasonable in relation to the work performed for the D.M.B Trust, nor how a percentage-based fee is superior to an hourly-based fee in fairly compensating the attorney consistently with the needs of the Trust.*fn2 Instead, he asserted only that an hourly charge might cause the family of the beneficiary to "hesitate to call upon the Trustee for assistance if concerned that the hours expended by the Trustee would increase the fees charged"- without acknowledging concerns that a flat 1% fee based on trust assets might engender. Judge Wolf again ordered him to file a "thorough explanation" of his fees "so that the court may determine their reasonableness." In response, appellant likened his practice to "the trust department of any bank or institutional trustee, albeit on a somewhat smaller scale," and noted that his $6,737.88 request would work out to some 22.5 hours if charged at his normal $300 per hour rate. He then valued the estate ...