The fees assessed by Community Trust pay for the costs of operating its trust programs. Services for most individual trusts are priced below cost. Professional investment advice is included in all trustee fees, as is the cost of our Clinical Relationship Coordinator, annual accountings, and all other costs of administration, other than tax returns, which are billed at actual cost.
Fees are billed at the end of each quarter (March 31, June 30, September 30 and December 31), based upon the principal balance of the trust on the last day of the quarter. The amount billed each quarter is one-fourth of the annual fee.
Fee for Pooled Trust Accounts
Fees for Pooled Trust accounts are charged on a schedule, as follows:
| Balance | Fee |
|---|---|
| $1 to $80,000 | 3.0% |
| $80,001 to $120,000 | 2.5% |
| $120,001 to $200,000 | 1.75% |
| Over $200,000 | 1.25% |
Fee for Individual Special Needs Trusts
1.25% of principal per year.
Tax Preparation
There are two types of tax returns that Community Trust prepares each year, based upon how the IRS views the trust.
Grantor Trusts
If a trust benefits the same person who created it, the IRS calls that a “grantor trust,” and all of the income and expenses of the trust pass through directly to the beneficiary. For those kinds of trusts (which includes almost all of our Pooled Trusts), the trustee’s job is simply to report the income and expenses. We do this in a document called a “Grantor Letter.” If, as a result of trust income, the beneficiary actually owes tax (which is very, very rare), Community Trust will distribute funds from the trust account to pay the tax.
Complex Trusts
The other type of trust that the IRS recognizes is a “complex trust.” This is any trust that is made by someone other than the beneficiary, and which gives the trustee discretion to distribute income or to hold it in trust, as the trustee sees fit. Many of our individual SNTs are complex trusts. In addition, when a beneficiary passes away, the trust become a complex trust for the remainder of the year in which death occurred. We therefore must file two tax returns for that trust.
A complex trust pays its own taxes, using IRS Form 1041 and Massachusetts Form 2. Since tax rates for trusts are higher than most individual tax rates, it usually is best if whatever distributions were made during the year are treated as income of the trust. Treating them as income distributions allows the trust to deduct the income, and the beneficiary then must report it. But again, the individual pays a much lower tax rate. If, as a result of trust income, the beneficiary actually owes tax, Community Trust will distribute funds from the trust account to pay the tax.
Tax Prep Fees
The only fees that Community Trust charges for taxes are the actual amount billed by the accounting firm that does the taxes. For 2019, these amounts were:
| Trust Type | Fee |
|---|---|
| Grantor Trusts | Annual Grantor Letter: $130 Final Return (after death): $150 |
| Complex Trusts | $355 per return |
