Being a Trustee of a trust carries serious responsibilities and trustees are compensated for their time. Section 2309 of the New York Surrogate’s Court Procedure Act (“SCPA”) sets forth the computation of commissions payable to trustees. Trustees can receive commissions on the amount of property that a trustee pays out and annual statutory commissions.
Pursuant to Section 2309(1) of the SCPA, a trustee may receive 1% of the property that the Trustee pays out. In addition, a trustee can get annual commissions at the following rates, as set forth in Section 2309(2) of the SCPA:
(a) $10.50 per $1,000 or major fraction thereof on the first $400,000 of principal.
(b) $4.50 per $1,000 or major fraction thereof on the next $600,000 of principal.
(c) $3.00 per $1,000 or major fraction thereof on all additional principal.
Annual commissions are calculated either at the end of the year or at the beginning of the year. Whichever option the trustee chooses, it must be consistent throughout the continuance of the trust. Trustees take annual commissions only once in a 12-month period. Any distributions made to beneficiaries reduces the commission. Additions to the trust increase the statutory commission.
Pursuant to SCPA §2309(3), annual commissions must come one-third from the income of the trust and two-thirds from the principal of the trust. If a trust has multiple trustees, the SCPA sets forth how commissions are apportioned depending on the amount of trust principal. For example, two co-trustees receive full commission if the trust principal is $100,000 or less or more than $400,000.
Trust documents can contain specific language on how a trustee will be paid. Accordingly, a trustee should review the trust document before making a distribution. Trustee commissions are often complex and difficult to calculate. There are many possible “caveats” to the calculation, depending on the trust document and circumstance. Accordingly, you should consult with an experienced estate planning attorney before undertaking such an endeavor.