Over three legislative sessions, various New York state legislators have introduced legislation seeking to increase the commission of individual trustees of wholly charitable trusts. Assembly Bill A7800 (the Proposed Legislation) was introduced in the 2021-2022 Legislative Session and currently sits in the Assembly for review. On May 21, 2021 it was referred to the Judiciary Committee for review. If enacted, the Proposed Legislation would increase the commission of an individual charitable trustee, and allow such commission to be derived from both the income and principal of a wholly charitable trust. Thus, this amendment would compensate individual trustees of wholly charitable trusts in the same manner as individual trustees of non-charitable trusts, subject to a percentage reduction as set forth below.
As the law stands currently, the Surrogate’s Court Procedure Act (the SCPA) provides default provisions when a trust, wholly charitable or non-charitable, fails to specify how to calculate a trustee’s commission. Pursuant to SCPA §2308(5)(a), which applies to trusts of persons dying on or before Aug. 31, 1956, individual trustees of wholly charitable trusts are entitled to commission equal to 6% of the trust’s annual income. Likewise, SCPA §2309(5)(a), which applies to trusts of persons dying after Aug. 31, 1956, sets an annual commission of 6% of income for individual trustees of wholly charitable trusts. In contrast, trustees of non-charitable trusts are entitled to compensation on a sliding scale based on the amount of trust principal, irrespective of the trust’s annual income. For example, if a non-charitable trust has $1,000,000 of assets, the trustee’s commission would be $6,500, regardless of the annual income. Sponsor’s Mem., 2017-18 Senate Bill S676B. However, if the same $1,000,000 of assets was held in a wholly charitable trust, and generated $1,000 of annual income, the trustee would only be entitled to $600 as their annual commission. Id.