Keeping trust records in New York: the ledger behind the statements

Separate, and in the trustee's name

EPTL 11-1.6 provides that every fiduciary keeps property received as fiduciary separate from the fiduciary's individual property and conducts every transaction affecting it in the fiduciary's name as fiduciary. Mingling the trust's funds with one's own is among the cases in which the Surrogate's Court may act against a fiduciary without process (SCPA 719).

A separate trust account under the trust's own taxpayer identification number is the ordinary way to meet the rule, and it makes every later statement easier to prepare.

Two columns: principal and income

EPTL 11-A-1.3 provides that receipts and disbursements are allocated between principal and income as the instrument directs, then as the article provides, with any discretion exercised impartially. A ledger kept in two columns from the first day records each entry once, in the right place.

Commissions follow the same columns: unless the instrument explicitly provides otherwise, annual commissions are charged one-third to income and two-thirds to principal (SCPA 2309(3)).

The statements and the account

The annual statements of SCPA 2309(4) are built directly from the ledger: the principal assets on hand as of the statement date, and all receipts of income and principal, with the commissions retained and how they were computed. The final account closes the administration from the same records — settled informally by an instrument signed by everyone who would be cited (SCPA 315(8)), or judicially (SCPA 2208).

What to keep with the entries

Statements, closing documents, invoices, appraisals, the values of the assets when the trust began, and a short note of the reason for each discretionary decision. The Prudent Investor Act judges a decision by the facts and circumstances at the time it was made (EPTL 11-2.3), and the record made at the time is how a later reader sees them.

The statutes, verbatim

• Property held as fiduciary to be kept separate

  EPTL 11-1.6 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Fiduciary duties; general principles

  EPTL 11-A-1.3 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• Commissions of trustees, of donees of powers during minority and of donees of powers in trust under wills of persons dying, or lifetime trusts established, after August 31, 1956

  SCPA 2309 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

• In what cases letters may be suspended, modified or revoked, or a lifetime trustee removed or his powers suspended or modified, without process

  SCPA 719 ↗

  Clear, simple explanation; the verbatim statute text is not yet attested in our library. See the official statute via the link above.

Common questions

Frequently asked questions

Does a New York trustee need a separate bank account?

EPTL 11-1.6 requires trust property to be kept separate from the trustee's own and every transaction to be conducted in the trustee's name as fiduciary; a separate trust account is the ordinary way to meet it, and mingling is a ground on which the court may act (SCPA 719).

What records does a New York trustee need for the annual statements?

Enough to show the principal assets on hand at the statement date and all receipts of income and principal, with the commissions retained and their basis (SCPA 2309(4)).

How are principal and income kept apart in New York?

As the instrument directs, then as EPTL Article 11-A provides, with any discretion exercised impartially among the beneficiaries (EPTL 11-A-1.3).

General information about New York law, not legal advice.