New York trustee fees are based on commissions – they are not done on a flat basis. The trustee gets two kinds of fees: annual fees and paying out fees.
The annual fees
A trustee gets yearly commissions for managing the trust. When it comes to annual commissions, a specific amount is provided by law. The amount varies with the size of the trust. The payout schedule of NY trustee fees is as follows:
- $10.50 per $1,000 of the first $400,000 of the principal of the trust
- $4.50 per $1,000 of the next $600,000 of the principal, and
- $3.00 per $1,000 of the rest of the trust
Here is our calculator to assist with the math:
New York trustee fees are not always easy to calculate. Acting on trustee commissions without an estate attorney can lead to undesirable results. This page provides some basic rules on trustee commissions, but it is not recommended to take legal action based on a website.
The fees for paying out
For any money paid out of the trust, the trustee gets a paying-out commission in the amount of one percent (1%).
Are NY trustee fees payable annually?
A trustee is entitled to annual fees. The trustee can elect to take their fee payouts either at the beginning or at the end of the year. The trustee can also elect either a calendar or fiscal year, or any 12 month period. But only once a year.
Payment of the commission is paid out partially by the income and partially by the principal of the trust. That’s the law.
Besides the annual payout, there is also a commission-based fee that is paid to trustees for the money they pay out of the trust. The trustee is entitled to 1% of the amount that is being paid out from the trust. This amount is in addition to the annual commission that trustees collect.
What you need to know about trustee fees in New York
Acting as a trustee is a job that can take a lot of time and effort. Trustees are allowed to take commissions, as compensation for the time that they spend handling the trust. Having an understanding of how trust commissions work is an essential part of acting as a trustee, yet they can get complicated.
Calculating commissions incorrectly can end up getting a trustee into hot water if it ends up that he made a mistake in his favor. Whenever someone makes you a trustee, you should make sure that you have a New York estate attorney on your side to assist you in your duties to make sure that you do things in accordance with the law.
Allocating commissions when there is more than one trustee
Trustee fees are further complicated when there is more than one trustee. The number of trustees makes a difference in how trust commissions are distributed. This, in turn, depends on the value of the trust.
- For trusts under $100,000, each trustee gets the full commission.
- For trusts that are $100,000-$400,000, if there are one or two trustees, then each trustee is entitled to the full commission, and in cases where there are more than two trustees, the commission is divided up amongst all of the trustees.
- For trusts worth more than $400,000, and there are one to three trustees, then each trustee is entitled to the full commission amount. The commission is split up amongst all the trustees in cases where there is more than three.
Trustee commissions for a partial year
Do you get annual commissions if you were a trustee for less than a year? How about if there is commissionable property is in the trust for less than a year? SCPA § 2309 (2), par. 2 allows the proportionate reduction of the annual commission if the period is less than 12 months.
Although there is no case law or precedent on this matter, SCPA § 2309 (2), par. 2 seems to expressly provide for a proportionate reduction of commissions if the applicable period is less than 12 months:
The computation shall be made on the basis of a 12-month period but the amount so computed payable to a trustee shall be proportionately reduced or increased for any payments made in partial distribution of the trust or the receipt of any additional property into the trust within such period and shall be proportionately reduced in any period for which such commissions are payable to the trustee if the period is less than 12 months.
Thus, there is legal basis to allow prorated annual commissions for a trustee who serves for less than a year or twelve (12) months. It is unclear, however, whether the prorating should be done on a per day or per month basis. As between the two, it is believed that the former method would lead to a more accurate prorating of the annual commission.
Trustee commissions are taxable income
It’s important to remember that all trustee commissions are taxable income. If you are a beneficiary, it may make sense to waive commissions (if possible – ask your accountant), in order to save money on income taxes.
New York trustee commissions can be difficult to calculate. And if you have been appointed trustee, commissions are just one of the complicated matters that you will have to deal with as part of your duties. You are required to provide reports to the court every year, and you could get into legal trouble if it ended up that the trust commission is calculated incorrectly.
Having a New York estate attorney who is skilled in trust matters on your side is the best way to make sure that you fulfill your duties as trustee in the best way possible. We at the Law Offices of Albert Goodwin are here for you. We have offices in New York, NY, Brooklyn, NY and Queens, NY. You can call us at 718-509-9774 or send us an email at firstname.lastname@example.org.
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Does the 1% fee only apply to final distributions, or does it also apply to (for example) nursing home payments and other bills? Thanks!
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