What is the maximum fee for a third party administering pre-planned funds?

• A. A fee that does not exceed one hundredth of one percent
• B. A fee that does not exceed seventy-five hundredths of one percent of the amount of the trust fund
• C. A flat annual fee
• D. No fee may be charged

Answer: (B)

In New York, when a third party handles funds set aside for pre-planned arrangements, the fee is limited as a percentage of the fund each year. The maximum allowed is seventy-five hundredths of one percent of the trust fund amount per year. This protects the funds from being eroded by high administration costs while still allowing fair compensation for managing the account. For example, a $50,000 fund could be charged up to $375 annually.

The other options don’t fit the rule: a fee of 0.01% is far below the cap and not the maximum; a flat annual fee doesn’t reflect the percentage-based limit; and no fee would leave the administrator uncompensated, which isn’t permitted.