Fiduciary Compensation

In past BLOGS, we have been focusing on estate planning.  You have made some big decisions or have at least started to think about your planning.  As you have been thinking, the thought may have crossed your mind about your fiduciary receiving compensation for their efforts.  Well, think no more about it. 

In New Jersey and New York, there are formulas in the statutes as to compensation for executors/administrators, for agents under a power of attorney, and for trustees.  Commissions are calculated on the value of the assets at specified times as well as on income earned. 

Since the commissions are statutory, there is little room for disputing the payment unless the fiduciary has failed to carry out their duties. 

However, in Pennsylvania, there is no specific formula in the statutes.  They go by a “reasonable” standard which is patterned after a case referred to as the Johnson Estate decided several years ago. 

These calculations will produce the maximum amount of commissions allowable.  The fiduciary can opt to take less than the maximum.  While the commission can be a deduction for an estate or a trust, any commission payment becomes taxable as ordinary income to the fiduciary for income tax payments. 

If there is a corporate fiduciary, they are entitled to a commission which may be calculated slightly differently than an individual fiduciary.

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent, an Accredited Estate Planner®, and a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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