The application by D.D. and Lewis K., court-appointed trustees of the S.D. Supplemental Needs Trust No.1, for an order approving their proposed budget, allowing funds to be expended on behalf of S.D. for the period of December 17, 2010 to December 31, 2011, on an "as needed" basis, is denied without prejudice. Movants' further request for payment in accordance with the proposed compensation agreement to Lewis K., co-trustee, as set fort in his affidavit sworn to on June 17, 2011 to be paid from the assets of S.D., is denied. The request to authorize the co-trustee to pay attorneys' fees for legal services performed and disbursements made on S.D.'s behalf subsequent to January 18, 2011, is denied without prejudice.

An Infant Compromise Order in this action was signed by this court on December 17, 2010. Pursuant to said Compromise Order, a total of $185,145.95 was ordered to be deposited into an account at Bank of America to fund a Supplemental Needs Trust. By order dated January 31, 2011, this court removed Bank of America as co-trustee and appointed Lewis K. to serve as co-trustee of the Supplemental Needs Trust, along with D.D., S.D.'s father. Lewis K., now seeks an order of this court approving funds to be expended on behalf of the infant plaintiff commencing on December 17, 2010 and ending on December 31, 2011, on an "as needed" basis. The infant plaintiff is now eleven (11) years of age.

The application for approval of the proposed annual budget is denied. First, notice of the instant application was not given to the Department of Social Services as required by 18 NYCRR §360.45, which requires that notice be given to the social services district in advance of any transactions tending to substantially deplete the principal of the trust. Substantial depletion is defined as 5% for trusts over $100,000 and up to $500,000, 18 NYCRR §360.45 (b)(1)(iii)( c).

Even if notice had been given to the Department of Social Services, the application for [*2]approval of the proposed budget allowing funds to be expended on behalf of S.D. would still be denied.

The proposed budget includes expenditures at an estimated total annual cost of $10,750.00 broken down as follows:

1- Personal Care and entertainment expenses (toiletries, personal grooming, recreational activities):$1,500.00

2- Medical and dental expenses not covered by Medicaid: $500.00

3- Vacations and Trips: $1,000

4- Birthday and holiday gifts for family and friends: $250.00

5- Professional Fees (Accounting & Co-Trustee): $3,000.00

6 - Supplemental Clothing: $1,500.00

7- Transportation Expenses: $500.00

8 - Driving Lessons: $0

9 - Education (including tuition, books, transportation, Room & Board): $2,500.00

The application by the co-trustees is flawed in that Lewis K. avers that said budget is an "annual budget" but then states that it is "for the period between December 17, 2010 and December 30, 2011." (Exhibit D, Affidavit of Proposed Budget, para. 3). As such, it is unclear to this court if the co-trustees are seeking to have the aforesaid budget approved on an annual basis or simply for the calendar year commencing on December 17, 2010 and ending on December 30, 2011. Moreover, certain expenditures such as gifts to family and friends in the amount of $250.00 and transportation expenses in the amount of $500.00 appear to be inappropriate and/or excessive for an eleven-year-old child. Additionally, a request for educational expenses for tuition, books, room and board in the amount of $2,500.00 without explanation as to whether the infant attends a private school, is unreasonable. Accordingly, this court cannot approve such a budget without further information and an explanation from the co-trustees.

The application by the co-trustee Lewis K., for an order approving the Trustee Compensation Agreement annexed to the moving papers as Exhibit A is also denied. Said "Compensation Agreement" states that Lewis K. has agreed to act as co-trustee of the S.D. Supplemental Needs Trust #1 and lists the terms and conditions of the compensation. Specifically, the agreement entitles Lewis K. to compensation for the calendar year 2011 as [*3]follows:

"...at a rate of $150.00 per hour (the "Compensation Rate"), for all services performed as required by the Trust. Travel time to and from any location required to fulfill obligations as Co-Trustee shall be billed at the Compensation Rate. Billing will be in 15 minute increments. The Compensation Rate shall increase annually on the 1st day of January of each year by the greater of five (5%) or the COLA percentage applicable to monthly Social Security and SSI benefits announced by the Social Security Administration during the immediately preceding October. The Co-Trustee shall be reimbursed for all reasonable costs and expenses incurred during the performance of the Services."

The proposed budget submitted by the co-trustees also includes an estimated annual cost of $3,000 for professional fees for accounting and the co-trustee. However, this court never authorized the co-trustee to receive his compensation pursuant to a compensation agreement. The Infant Compromise order signed by this court on December 17, 2010 states, in pertinent part, that the trustee "shall take no annual commissions/compensation for any year until that year's annual account is filed, reviewed by the Court Examiner, and approved by the court." (Infant Compromise Order, p. 4). Additionally, the Infant Compromise Order states that "...the Trustee shall be considered by the Court to have the same responsibilities as a Guardian of the property in Article 81 of the Mental Hygiene Law..." (Infant Compromise Order, p. 4).

Compensation for a trustee in Article 81 proceedings and a trustee of a Supplemental Needs Trust is typically granted at the same rate as that provided under Surrogate's Court Procedure Act (SCPA) §2309. Absent any Court Order or provision in the Infant Compromise Order permitting the trustee to be compensated in accordance with a compensation agreement, the request by Lewis K. for this court to approve compensation to him in accordance with the agreement annexed to the moving papers is denied. Compensation to Lewis K. shall be in accordance with SCPA §2309 and as approved by this court.

Finally, the request by the co-trustees for compensation to their attorney for legal services performed and disbursements made on S.D.'s behalf subsequent to January 18, 2011, shall be considered upon submission of a future application by the co-trustees of a more appropriate proposed budget for expenditures to be made on behalf of S.D.

This constitutes the decision and order of this court.

Dated: September 21, 2011

J.S.C.