[192 NJSuper Page 226] The Manufacturers Hanover Trust Company as sole surviving trustee of two separate trusts under the last will and testament of Mary J. Riker, sought approval of its first intermediate accounting on each trust. The trusts were established under Article Sixth (a) and Article Sixth (b) of the will. They are designated hereinafter as the "A" Trust and the "B" Trust. The period of the accounting for the "A" Trust was from February 26, 1971 to April 19, 1981, and for the "B" Trust from February 26, 1971 to May 14, 1981. The accounts were approved as stated.
Corpus commissions on the "A" Trust of $35,978.72 were allowed and on the "B" Trust, $21,945.55. Reserved for decision was this issue: Should commissions on the final account be computed in accordance with N.J.S.A. 3A:10-2 or N.J.S.A. 3B:18-28? Implicated in that decision is N.J.S.A. 3B:18-33 -- the "transitional" statute which applies to trusts in being prior to February 29, 1980 but which are administered and terminate subsequent to that date. A review of the recent history of fiduciary corpus commissions is helpful to determine legislative intent and to resolve the issue.
At the time the trusts were funded, the trustee looked to N.J.S.A. 3A:10-2 in anticipating what corpus commissions might ultimately be earned and allowed to reimburse it for the responsibilities and duties of the office. That statute provided for commissions of 5% on corpus of trusts up to $100,000 in value and, on the value in excess of $100,000, a percentage not to exceed 5% as allowed by the court, depending on services rendered and responsibility assumed. (Counsel have assumed that for trust estates of the magnitude involved here and for purposes of illustrative calculations set forth in arguing the meaning and intent of the statutes, an allowance of 3 1/2% would be probable.)
In the case of trusts whose administration extended beyond 25 years, the statute provided that for each year thereafter the trustee was entitled to additional annual corpus commissions not to exceed 1/5 of 1% of corpus. On the final accounting the court would, within the limitations of the statute, allow corpus commissions "according to actual service rendered". Against this amount, allowances previously authorized on intermediate accounts were deducted as payments received on account.*fn1 In long-term administrations, the difficult problem for the court was not calculation of the total commissions to be allowed on the
final accounting, but rather what commissions were prudent to allow on intermediate accountings. In re Moore's Estate, 50 N.J. 131 (1967).
In 1972 N.J.S.A. 3A:10-2 was amended to permit a trustee to take annual commissions not to exceed $1,100 without court approval. However, it was clear that on the next intermediate or final accounting those amounts received were to be credited against the commissions fixed and allowed by the court. In 1979 (effective February 29, 1980), N.J.S.A. 3A:10-2 was further amended to allow as annual corpus commissions to be taken without court approval an amount equal to 1/5 of 1% of corpus. Such annual commissions taken without court approval were "subject to review on intermediate and final accountings" and if found to exceed commissions allowable according to this basic structure set forth above, might "be disallowed" by the court.
In 1979 (also effective February 29, 1980) the Legislature enacted N.J.S.A. 3A:10-2.1 which in subsections (b) and (c) provided:
On the settlement of accounts fiduciaries acting as trustees under a will . . . shall be entitled to commissions over and above their actual expenses as in this section provided.
b.*fn2 Fiduciaries may annually, without court allowance, take commissions on corpus . . . in the amount of 5/10 of 1% of the first $100,000.00 of value of corpus, 3/10 of 1% of the next $100,000.00 of value, and 2/10 of 1% of the value in excess of $200,000.00. . .
c.*fn3 In addition to the annual commissions on corpus, upon termination of the trust . . . or upon distribution of assets from the trust . . . the fiduciary may take a commission on corpus distributed . . . The amount of commissions to be taken are as follows:
(1) If the distribution of corpus occurs within 5 years of the date when such corpus came into the hands of the fiduciary, an amount equal to the annual commissions on corpus authorized pursuant to subsection b. of this section, but not actually taken by the fiduciary, plus an amount equal to 2% of the value of the corpus distributed.
(2) If distribution of the corpus occurs between 5 and 10 years of the date when the corpus came into the hands of the fiduciary, an amount equal to the annual commissions on corpus authorized pursuant to subsection b. of this section, but not actually received by the fiduciary, plus an amount equal to 1 1/2% of the value of the corpus distributed.
(3) If the distribution of corpus occurs more than 10 years after the date the corpus came into the hands of the fiduciary, an amount equal to the annual commissions on corpus authorized pursuant to subsection b. of this section, but not actually received by the fiduciary, plus an amount equal to 1% of the value of the corpus distributed.
N.J.S.A. 3B:18-27 provides:
Commissions taken as provided in N.J.S.A. 3B:18-25 shall be subject to review on intermediate and final accountings, and to extent that aggregate commissions so taken exceed the commissions allowable under this article they may be disallowed.
N.J.S.A. 3B:18-32 (recognizing the overlapping in trust administration caused by the 1979 amendments) provides:
With respect to fiduciaries' annual corpus commissions, the rates set forth in this article shall apply for all annual periods ending after February 29, 1980. (Emphasis added)
N.J.S.A. 3B:18-33 addressed the question of computation of total final commission to be received by a trustee in this fashion:
With respect to the computation of corpus commissions pursuant to N.J.S.A. 3B:18-28 as to all corpus held by a fiduciary on February 29, 1980, the commissions which may be taken shall be at the rate authorized as of the date the corpus was received by the fiduciary, and the "annual commissions authorized" to be taken for yearly periods ending prior to February 29, 1980, shall be at the rate authorized by the applicable law in effect during that yearly period.
Here, prior to February 29, 1980, pursuant to N.J.S.A. 3A:10-2, the Trustee had taken on account of commissions to be sought on the "A" Trust $7,392.00 and on the "B" Trust, $7,035.04. Subsequent to February 29, 1980, pursuant to N.J.S.A. 3A:10-2.1 (now N.J.S.A. 3B:18-25) as provided by N.J.S.A. 3B:18-32 and prior to presenting its intermediate accounts the trustee had paid to itself additional annual commissions on the "A" Trust of $6,711.52 and on the "B" Trust of $4,379.90.
The guardian ad litem and trust beneficiaries contend that a fair reading of N.J.S.A. 3B:18-33 leads to the conclusion that where the trust corpus was created prior to February 29, 1980, total commissions are governed by N.J.S.A. 3A:10-2; that total commissions are to be fixed on the final accounting based on 5% of the first $100,000 of corpus and not more than 5% on the
excess over $100,000. It is their position that credit against that final amount must be given by the trustee for annual amounts taken pursuant to N.J.S.A. 3A:10-2 c or 3A:10-2.1 b (now N.J.S.A. 3B:18-25) and allowances made on intermediate accounts.
On the other hand, the trustee contends for a meaning of N.J.S.A. 3B:18-33 leading to the following result. Any trust in being prior to February 29, 1980 would be treated, for commission purposes, under N.J.S.A. 3A:10-2, but only up to February 29, 1980. Thereafter and until the final accounting, corpus commissions would be calculated under N.J.S.A. 3B:18-25 and 28. This position would require a court, in effect, to treat February 29, 1980 as the termination date of the trust for the purpose of calculating commissions due to that point, even though in fact the trust might continue for many years thereafter. That position under the facts of this case gives the trustee a very substantial increase in ultimate commissions over that it might have originally anticipated. The "final" commissions computable as of February 29, 1980 would be based upon the 5% under N.J.S.A. 3A:10-2. From that date, the trustees would be entitled to take the far more generous annual commissions permitted under N.J.S.A. 3B:18-25 plus the termination commission under N.J.S.A. 3B:18-28. An example of commissions resulting from the two methods of calculating commissions is illuminating:
Assuming a trust corpus of $2,000,000 the calculations of ultimate commissions for differing time ...