Managing a trust involves various responsibilities and efforts to ensure the proper administration of the trust assets and the fulfillment of the grantor’s (creator of the trust) intentions. One aspect of trust management that often comes into play is trustee commissions. In Maryland, trustee commissions are regulated by specific guidelines that are laid out in the Maryland Trust Act.
What Are Trustee Commissions?
Trustee commissions, also known as trustee fees, refer to the compensation paid to trustees for their work in managing and administering a trust. Acting as a trustee involves numerous responsibilities such as overseeing trust assets, managing any investments and following the investment standards laid out by the trust, making distributions to beneficiaries, and adhering to the terms of the trust agreement. Trustee commissions serve as a way to acknowledge and compensate trustees for the time and effort they invest in these tasks.
It is important to note that trustee commissions are different from personal representative commissions. Personal representative commissions are paid to the personal representative of a decedent’s estate. This is calculated from the assets going through probate. The trustee commission is paid to the trustee of a trust and is calculated from the assets held in the trust. Though the trustee and the personal representative may be the same person, these are two distinct commissions and are regulated under different statutes.
The Maryland Trust Act
Maryland, like many other states, has specific regulations regarding the payment and calculation of trustee commissions. The Maryland Trust Act outlines the rules and guidelines for trustee compensation in our state. Under Maryland law, trustees are entitled to reasonable compensation for their services. The Maryland Trust Act provides the formulas to calculate the maximum amount of commissions that a trustee is permitted to take. The calculation is complicated. It is a tiered percentage-based system that looks at the principal of the trust, the income into the trust, rental income into the trust, the sale of real property that was titled in the trust, and distributions made from the trust. The sum of the numbers from the calculations for all of these categories gives you the maximum allowable commission for that year.
Trustee Commissions in Maryland play a crucial role in ensuring that trustees are fairly compensated for their efforts in managing and administering trusts. These commissions are subject to the guidelines set forth by the Maryland Trust Act and are calculated based on the factors discussed previously. By adhering to these regulations, Maryland’s trust system strives to balance the interests of trustees and beneficiaries while upholding the integrity of trust administration.