Do you want to know how to get paid for serving as trustee of a trust in New York? Start by looking at the Trust document.
When looking to get paid for serving as a Trustee of a Trust in New York, compensation details may be outlined in the trust document. The document can be an “inter vivos” trust or a testamentary trust. The Trust document can, in some cases, make reference to the Surrogate’s Court Procedure Act (SCPA) Section 2309, which provides a commission schedule for compensation.
In order to understand how to Get Paid for Serving as Trustee of a Trust in New York, take the following steps:
1. Review the Trust Document: Begin by carefully examining the trust document, the legal instrument governing the trust’s terms and conditions. This document should outline the compensation for the Trustee, specifying whether compensation is allowed and, if so, how it should be calculated. In the absence of terms outlining compensation, the compensation is governed by New York SCPA 2309.
2. SCPA Section 2309 Commission Schedule: In New York, SCPA Section 2309 provides a commission schedule for compensation, especially relevant for Trustees. This schedule outlines a percentage-based commission on the value of the trust assets. It is crucial to refer to this section when determining the appropriate compensation for the Trustee’s services.
Here is the gist of SCPA 2309:
Pursuant to Section 2309(1), the Trustee is entitled to commissions in the amount of 1% of the property that the Trustee pays out.
Moreover, pursuant to Section 2309(2), annual commissions are calculated as follows:
(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.
In addition, if there is more than $400,000 in the Trust, each Trustee is entitled to a separate commission. If there is less than $400,000 the Trustees share one commission.
In addition, if the Trustee has to collect rent, then the Trustee is entitled to additional commissions of 5% on rent collected.
3. Professional Trustees: The document will typically state that a Corporate Trustee is entitled to its own compensation schedule. Indeed, if the trust document permits, professional Trustees such as banks or trust companies may charge a fee and that fee can be based on the SCPA Section 2309 commission schedule or on their own schedule. Typically, this fee is calculated as a percentage of the total value of the trust assets and may vary depending on the size and complexity of the trust.
4. Individual Trustees: For individual Trustees, the trust document may specify a fee structure, including a fixed fee, an hourly rate, or a percentage of the trust assets, possibly aligning with the SCPA Section 2309 commission schedule. It’s essential to follow the guidelines outlined in both the trust document and the SCPA for fair and reasonable compensation.
5. Court Approval: In cases where disputes arise among beneficiaries, seeking court approval for compensation may be necessary. The court will consider factors such as the SCPA Section 2309 commission schedule, the complexity of the trust, and prevailing market rates. There are two ways to get court approval for commissions. The first is to fix the Account of the Trustees (SCPA 2205) and the second is to petition for advance payment of commissions (SCPA 2310).
What Else Do I Have to Do To Get Paid for Serving as Trustee of a Trust In New York?
Maintain good Record-keeping: Regardless of the compensation arrangement, meticulous record-keeping of time and expenses related to trust administration is crucial. These records serve as documentation in case of challenges or questions regarding compensation.
Can I Just Take the Money?
No. You cannot just take the money and get paid for serving as Trustee of a Trust in New York. Communication with Beneficiaries and Notice of Commissions is key. It is very important to maintain transparent communication with beneficiaries, keeping them informed about actions taken as a Trustee, including any fees or compensation received.
Indeed, before taking Commissions, at the bare minimum SCPA 2309(4) requires that the Trustee provide a summary statement to the beneficiaries. You cannot just take the commissions. Legally, you have to provide a statement showing all receipts of income and principal during the period on which the commissions calculation is based. This transparency helps build trust and minimizes potential conflicts.
Given the intricacies of trust law, it is advisable to consult with a legal professional experienced in New York trust matters to ensure compliance with state laws, the trust document, and SCPA Section 2309 commission calculations. We can help you get paid for serving as Trustee of a Trust in New York.
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