NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A6046
SPONSOR: Buchwald TITLE OF BILL: An act to amend the surrogate's court procedure act,
in relation to the commissions of donees of a power in trust, including
donees of a power during minority
This is one in a series of measures being introduced at the request of
the Chief Administrative Judge upon the recommendation of his Surro-
gate's Court Advisory Committee.
This measure would amend the Surrogate's Court Procedure Act to create
rules governing the commissions of donees of powers in trust, including
donees of powers during minority, identical to the existing rules
governing commissions of trustees.
The concept of a "power in trust" is long established in New York law.
Current law in section 10-3.1(b) of the EPTL refers to "a power during
minority to manage property vested in an infant" as one of the powers
which is not a power of appointment but to which the provisions of arti-
cle 10 generally apply. Such a donee is included in the definition of
"fiduciary" in the EPTL (section 2-1.7) and in the SCPA (section
103(21)) (both referring to "donee of a power during minority").
It is clear, however, that donees of a power in trust are not limited to
donees holding the power during the minority of the beneficiary.
Although the express statutory references to powers in trust refer only
to powers to manage property vested in an infant, EPTL 10-10.1, which
expressly retain as the law of New York the common law of powers except
as modified by article 10, the statement by the Bennett Commission that
this provision does not invalidate other powers not specifically
mentioned,* and case law**, clearly indicate that a power in trust to
manage property vested in an incapacitated person does exist under New
York law.
The question of compensation of such donees of powers during minority
and powers in trust to manage property vested in an incapacitated person
and presumably of any other donees of powers in trust that may exist
under New York common law is not clearly answered by our statutes.
Matter of Chase Manhattan Bank (Golding)*** authorized advance payment
of commissions under SCPA 2311 to a corporate trustee acting as donee of
a power to manage property during minority under a lifetime trust. The
court also ordered that the calculation of commissions was to be made
under section 2307 of the SCPA, which governs payments to fiduciaries
other than trustees because the donee was not a trustee. The court did
suggest that it would be more appropriate to calculate commissions under
sections 2308 and 2309 of the SCPA, which govern commissions of trus-
tees. Today section 2312 of the SCPA, governing the commissions of
corporate trustees, must be added to the list of potentially applicable
provisions.
This proposal amends the SCPA to make the provisions applicable to trus-
tees' commissions applicable to all donees of powers in trust. The
specific sections of the SCPA to be amended are 2306, 2307, 2308, 2309,
2312, and 2313.
The amendments to sections 2308, 2309, and 2312 use the language "donee
of a power in trust" in order to make sure that every sort of power in
trust that could still exist under the common law is included in the new
provisions. Each section has also been amended to make it clear that the
new language includes donees of powers during minority. The phrase
"donee of a power in trust" has been added to every reference to "trus-
tee" except in those provisions dealing with trustees of charitable
trusts and those providing for the transition from the previous rules
governing commissions. Because donees of a power in trust will be enti-
tled to trustees' commissions only from the enactment of these amend-
ments, the transition rules are not relevant. The term "property subject
to the power in trust" has been used as the equivalent of "trust proper-
ty" and the term "calendar year" has been added to references to "trust
year" because the property subject to the power does indeed belong to
the beneficiary of the power, the items of income and deduction attrib-
utable to it would be included in the beneficiary's gross income
reported on IRS form 1040 and the tax year would indeed be the calendar
year.
This measure would have no fiscal impact upon the State and would be
applicable to donees of powers during minority and of other powers in
trust effective on the first day of January next succeeding the date on
which this measure becomes law, thus avoiding the need for proration of
commissions in the initial year of the new regime.
2015-16 LEGISLATIVE HISTORY:
OCA 2015-17
Assembly 9879 (M. of A. Buchwald) (PASSED)
*4th Report of Temporary State Comm. on Modernization, Revision and
Simplification of Law of Estates, Fourth Report, N.Y. Legis. Doc., 1965,
No. 19, at 24.
**See Matter of Schaper, 151 Misc.2d 923 (Sur. Ct. New York County 1991)
***129 Misc.2d 952 (Sur. Ct. New York County 1985).
