Source: https://nytaxattorney.com/2010/03/15/819/
Timestamp: 2019-04-22 13:03:47+00:00

Document:
FROM: David L. Silverman, Esq.
This Memorandum of Law discusses the determination of Trustee and Executor commissions under the Surrogate’s Court Procedure Act.
In New York, Executor commissions are set out by statute. Surrogate’s Court and Procedure Act (SCPA) § 2307 provides that a fiduciary other than trustee is entitled to a commission rate of 5 percent on the first $100,000 in the estate, 4 percent on the next $200,000, 3 percent on the next $700,000, 2-1/2 percent on the next $4,000,000 and 2 percent on any amount above $5,000,000. Executor commissions are in addition to the reasonable and necessary expenses actually paid by the Executor.
In general, any asset which the fiduciary takes under his administration, and with respect to he assumes a risk would be included in the decedent’s estate for calculation of the fiduciary’s commission. Damages recovered in court actions by the personal representative are general assets of the estate subject to full commissions. [29 Carmody-Wait 2D §168:19]. The value of non testamentary assets such as joint property, life insurance payable other than to the estate, Totten Trust accounts) are not included in the commission base. Property transferred by the decedent in his lifetime in trust, is not part of the testamentary estate, and not included in the commission base. However, if the assets of the trust are paid to the estate or used to pay claims, expenses, taxes or other estate charges, those assets will be subject to commissions.
Executor commissions are paid after administration of the estate upon the settlement of the account of the fiduciary under SCPA § 2307(1). SCPA § 2310 and § 2311 permit advance payment of executor commissions by application and approval of the Surrogate’s Court. A fiduciary may request an advance payment on account of commissions to which the fiduciary would be entitled if he were then filing an account. Commissions paid to an Executor are considered taxable income, and must be reported on the Executor’s income tax return.
On the settlement of the account of any trustee under the will of a person dying after August 31, 1956, or under a[n] [inter vivos] trust . . .the court must allow to him his reasonable and necessary expenses actually paid by him . . . and in addition it must allow the trustee for his services as trustee a commission from principal for paying out all sums of money constituting principal at the rate of 1 per cent.
Therefore, the trustee is entitled to a commission of 1 percent for all money paid out of the marital trust.
(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 thereon on the next $600,000 of principal.
(c) $3.00 per $1,000 or major fraction thereof on all additional principal.
Annual commissions may be computed either at the end of the year or, at the option of the trustee, at the beginning of the year; provided, that the option selected shall be used throughout the period of the trust. The computation is made on the basis of a 12-month period but shall be adjusted for upward or downward for any payments made in partial distribution of the trust or the receipt of any new property into the trust within that period.
SCPA § 2309(3) provides that annual commissions shall be paid one-third from the income of the trust and two-thirds from the principal, unless the will or trust otherwise directs.
The trustee is required to furnish annually as of a date no more than 30 days prior to the end of the trust year to each beneficiary currently receiving income, and to any other beneficiary interested in the income and to any person interested in the principal of the trust who shall made a demand therefor, a statement showing the principal assets on hand on that date, and at least annually a statement showing all receipts of income and principal during the period including the amount of any commissions retained by the trustee. SCPA § 2309(4) provides that a trustee shall not be deemed to have waived any commissions by reason of his failure to retain them when he becomes entitled thereto; provided however that commissions payable from income for any given trust year shall be allowed and retained only from income derived from the trust during that year and shall not be supplied from income on hand in respect to any other trust year.
The will of John Smith names three trustees. The following paragraphs discuss the effect of multiple trustees on the determination of trustee commissions.
SCPA § 2309(6)-(a) provides that, “subject to 2313,” if gross value of the trust exceeds $400,000 and there is more than one trustee, each trustee is entitled to full compensation for paying out principal allowed herein to a sole trustee unless there are more than 3.
a. Amounts to $400,000 or more and there is more than one trustee each trustee is entitled to a full commission allowed herein to a sole trustee unless there are more than three trustees.
b. Amounts to between $100,000 and $400,000, each trustee is entitled to a full commission unless there are more than two trustees, in which case commissions must be apportioned according to the services rendered, unless the trustees shall have agreed in writing otherwise.
c. Amounts to less than $100,000, one full trustee commission must be apportioned among all trustees according to the services rendered.
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References: § 2307
 §168
 § 2307
 § 2310
 § 2311
 § 2309
 § 2309
 § 2309