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Who cares
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Sponsors
Senator · Senate District 42
No co-sponsors yet.
History
- Referred to judiciary
Full text
The text isn't available here yet. Check nysenate.gov.
Sponsor's memo
BILL NUMBER:S7182
Title of bill
An act to amend the estates, powers and trusts law, in relation to the prudent investor act
Purpose
To clarify the effect that a trustee's adjustment under EPTL U-2.3(b)(5) of trust property from the trust's principal account to its income account (or vice-versa) has on the calculation of trustee commissions.
Summary of provisions
The bill amends EPTL 11-2.3(b)(5) to provide that a trustee's exercise of the power to adjust between principal and income of a trust, whether such adjustment is made from income to principal or from principal to income, constitutes a re-characterization of the transferred asset for purposes of calculating commissions under SCPA Article 23.
Justification
The trustees and beneficiaries lack statutory direction regarding the proper calculation of trustee commissions when a trustee exercises a discretionary power to adjust under EPTL 11-2.3(b)(5) between principal and income to enable the trustee to make appropriate present and future distributions to trust beneficiaries. Depending on the type of a trust, trustee calculates commissions by reference to either the trust's income or principal. Thus, any adjustment between principal and income during a given year potentially affects the calculation of trustee commissions. For example, commissions for a non-charitable trust generally are based on the trust's principal. To the extent that, in a given year, a trustee makes an adjustment from principal to income, the value of the trust's principal account will be reduced. Consequently, some trustees treat such adjustment as a recharacterization of the adjusted amount (here, from principal to income) to reduce trustee commissions. However, other trustees calculate commissions by ignoring the reality of such adjustment, resulting in an artificially high principal account to increase commissions. This inconsistent treatment can become particularly problematic when two co-trustees disagree on the proper calculation of their commissions. The bill eliminates such confusion and potential for conflict. It clarifies that the transferred amount is re-characterized as either income or principal, depending on the adjustment, and should be reflected as such in the calculation of trustee commissions. This result is consistent with (i) the Principal and Income Act, (ii) the Prudent Investor Act, and (iii) the 2008 technical corrections to the Prudent Investor Act.
Legislative history
New bill.
Fiscal impact
None.
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.