Opinion ID: 2572766
Heading Depth: 2
Heading Rank: 2

Heading: The Trustee's Determination Of Trust Income Was Reasonable Because Income Includes Real Property Taxes.

Text: In In re the Estate of Bishop, 53 Haw. 604, 499 P.2d 670 (1972), we held that commercial property taxes were income for the purposes of calculating a trustee's fee. [9] We explained as follows: Amounts paid by lessees as `rents' are `in the nature of revenue [or] income.' The fact that some portion of the amount received must be paid to the State for taxes does not change the nature of the amount received. Were we to accept the [alternative] position, we would be constrained to deduct all expenses from all amounts received and compute commissions on the basis of the Estate's net income. Such is not the intent of the statute. Id. at 606, 499 P.2d at 672. See also In re Wharton's Trust Estate, 28 Haw. 502, 509 (1925) (Inasmuch ... as the taxes payable by the tenant in this case are, in our opinion, a part of the rental for the use of the demised premises, the trustee is entitled to charge the commission ordinarily allowed for the collection thereof[.]). In In re the Estate of Bishop, over thirty years ago, we expressed our concern over rising property values and the corresponding rise in property taxes and trustees' fees. Id. at 606, 499 P.2d at 672. However, we held that [t]he question of whether the formula used in computing trustees' commissions should be re-examined... is a legislative problem, and we are unable to reduce the amount of commissions awarded in the absence of legislative action.  Id. (emphasis added). As discussed supra, this court may review the reasonableness of a trustee's determination as to what constitutes trust income. In the instant case, the Trustee's determination that the property tax payments were income was reasonable: we have repeatedly held that, pursuant to the statutes on trustees' fees, property tax collections constitute income. In re the Estate of Bishop, 53 Haw. at 605-06, 499 P.2d at 672; In re Wharton's Trust Estate, 28 Haw. at 509. Furthermore, HRS § 607-18 provides that a trustee shall be allowed as commissions specified percentages on trust income. (Emphasis added.) Therefore, our conclusion that the Trustee's determination that the property tax moneys constituted income ends our authority to review the Trustee's fees. Unlike charitable trusts (where the legislature has given the courts discretion to review the reasonableness of a trustee's fee, see HRS § 607-20 (Supp.2003)), the legislature has provided a specific statutory schedule for trustees' fees for private trusts. In the absence of legislative action that changes the definition of income or the statutory fee schedule, we must uphold the Trustee's commissions as lawful. [10]