SENATE AMENDED
PRIOR PRINTER'S NO. 2723 PRINTER'S NO. 4466
No. 2060 Session of 2001
INTRODUCED BY LEWIS, BENNINGHOFF, BUNT, CAPPELLI, CIVERA, CLARK,
COLAFELLA, CREIGHTON, DeLUCA, J. EVANS, FAIRCHILD, FEESE,
FICHTER, FRANKEL, FREEMAN, GABIG, GEIST, HARHAI, HASAY,
HERMAN, HERSHEY, HESS, HORSEY, JADLOWIEC, MACKERETH, MAJOR,
MANN, McCALL, McILHATTAN, R. MILLER, S. MILLER, PIPPY,
SATHER, SAYLOR, SCHRODER, SEMMEL, SHANER, B. SMITH, SOLOBAY,
STEELMAN, SURRA, TANGRETTI, E. Z. TAYLOR, TIGUE, TRELLO,
WANSACZ, WATSON, C. WILLIAMS, WOGAN, M. WRIGHT, YOUNGBLOOD,
YUDICHAK, COLEMAN, ROSS, ADOLPH, J. TAYLOR, DEWEESE, GRUCELA,
DALLY, THOMAS, G. WRIGHT AND PALLONE, OCTOBER 23, 2001
SENATOR BRIGHTBILL, RULES AND EXECUTIVE NOMINATIONS, IN SENATE,
RE-REPORTED AS AMENDED, OCTOBER 9, 2002
AN ACT
1 Amending Title 20 (Decedents, Estates and Fiduciaries) of the
2 Pennsylvania Consolidated Statutes, further providing for
3 distribution of property of absentee and for notice to <--
4 absentee. THE PRUDENT INVESTOR RULE; CODIFYING EXISTING LAW <--
5 SETTING FORTH THE APPLICABILITY OF PROVISIONS RELATING TO
6 DIVERSIFICATION; AND MAKING A REPEAL.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Sections 5703 and 5704 of Title 20 of the <--
10 Pennsylvania Consolidated Statutes are amended to read:
11 § 5703. Distribution of property of absentee.
12 Upon the entry of a decree establishing the death of a person
13 domiciled in the Commonwealth, based in whole or in part upon
14 his absence from his place of residence, the real and personal
15 property of the absentee shall be administered by his personal
1 representative as in the case of other decedents. However, the
2 personal representative shall make no distribution of such
3 property to the persons entitled thereto by will or by
4 intestacy, nor shall such persons acquire indefeasible title
5 thereto, except under decree of court. The court, in awarding
6 distribution, shall require that a refunding bond, with or
7 without security and in such form and amount as the court shall
8 direct, shall be executed by each distributee and filed with the
9 clerk, except that the court may waive the bond requirement
10 where there is a finding that the absentee was exposed to a
11 specific peril of death. The bond shall be conditioned that, if
12 it shall later be established that the absentee was in fact
13 alive at the time of distribution, the distributee upon demand
14 will return the property received by him or, if it has been
15 disposed of, will make such restitution therefor as the court
16 shall deem equitable. Should a distributee not execute the bond,
17 the court shall appoint a trustee to receive and hold his share
18 until further order of the court.
19 § 5704. Notice to absentee.
20 The court, if satisfied concerning the interest of the
21 petitioner, shall cause to be advertised in a newspaper of
22 general circulation in the county of the absentee's last known
23 residence and in the legal journal, if any, designated by rule
24 of court for publication of legal notices, once a week for four
25 successive weeks or for such shorter period as the court may
26 deem appropriate, and to be otherwise advertised as the court
27 according to the circumstances of the case shall deem advisable,
28 the fact of such application, together with notice that on a
29 specified day, which shall be at least two weeks after the last
30 appearance of any such advertisement, the court, or a master
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1 appointed by the court for that purpose, will hear evidence
2 concerning the alleged absence, including the circumstances and
3 duration thereof. Where there is a finding by the court that the
4 absentee was exposed to a specific peril of death, the period of
5 notice as required by this section shall be no more than once a
6 week for two successive weeks.
7 Section 2. This act shall take effect immediately.
8 SECTION 1. SECTION 7203(C)(6) OF TITLE 20 OF THE <--
9 PENNSYLVANIA CONSOLIDATED STATUTES IS AMENDED AND THE SECTION IS
10 AMENDED BY ADDING A SUBSECTION TO READ:
11 § 7203. PRUDENT INVESTOR RULE.
12 * * *
13 (C) CONSIDERATIONS IN MAKING INVESTMENT AND MANAGEMENT
14 DECISIONS.--IN MAKING INVESTMENT AND MANAGEMENT DECISIONS, A
15 FIDUCIARY SHALL CONSIDER, AMONG OTHER THINGS, TO THE EXTENT
16 RELEVANT TO THE DECISION OR ACTION:
17 * * *
18 (6) AN ASSET'S SPECIAL RELATIONSHIP OR SPECIAL VALUE, IF
19 ANY, TO THE PURPOSES OF THE TRUST OR TO ONE OR MORE OF THE
20 BENEFICIARIES, INCLUDING, IN THE CASE OF A CHARITABLE TRUST,
21 THE SPECIAL RELATIONSHIP OF THE ASSET AND ITS ECONOMIC IMPACT
22 AS A PRINCIPAL BUSINESS ENTERPRISE ON THE COMMUNITY IN WHICH
23 THE BENEFICIARY OF THE TRUST IS LOCATED AND THE SPECIAL VALUE
24 OF THE INTEGRATION OF THE BENEFICIARY'S ACTIVITIES WITH THE
25 COMMUNITY WHERE THAT ASSET IS LOCATED;
26 * * *
27 (D) REQUIREMENTS FOR CHARITABLE TRUSTS HOLDING A CONTROLLING
28 INTEREST IN CERTAIN PUBLICLY TRADED BUSINESS CORPORATIONS.--
29 (1) NOTWITHSTANDING ANY OTHER LEGAL REQUIREMENT OR
30 PROCESS WHICH MAY INCLUDE COURT REVIEW OF THE ACTIVITIES OF A
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1 CHARITABLE TRUST, A FIDUCIARY FOR A CHARITABLE TRUST WITH
2 BENEFICIARIES AT A PRINCIPAL LOCATION WITHIN THIS
3 COMMONWEALTH HOLDING A CONTROLLING INTEREST IN A PUBLICLY
4 TRADED BUSINESS CORPORATION RECEIVED AS AN ASSET FROM THE
5 SETTLOR SHALL NOT CONSUMMATE ANY INVESTMENT OR MANAGEMENT
6 DECISION EXECUTING A CHANGE IN THE TRUST'S CONTROL OF THAT
7 CORPORATION, BY SALE, MERGER, CONSOLIDATION OR OTHERWISE,
8 WITHOUT:
9 (I) SERVING NOTICE UPON THE ATTORNEY GENERAL AT
10 LEAST 60 DAYS PRIOR TO EXECUTING THE CHANGE IN CONTROL;
11 AND
12 (II) DIRECTING THAT AT LEAST 30 DAYS' PRIOR NOTICE
13 OF THE EXECUTION OF THE CHANGE IN CONTROL BE PROVIDED BY
14 THE CORPORATION TO EMPLOYEES OF THE PUBLICLY TRADED
15 BUSINESS CORPORATION HELD BY THE TRUST WHO ARE LOCATED IN
16 THIS COMMONWEALTH.
17 (2) IN ADDITION TO ANY OTHER POWER OR DUTY PROVIDED BY
18 LAW, THE ATTORNEY GENERAL ALSO HAS THE POWER TO OBTAIN
19 JUDICIAL REVIEW PURSUANT TO THIS SUBSECTION IF THE ATTORNEY
20 GENERAL CONCLUDES THAT THE FIDUCIARY SHOULD BE PREVENTED FROM
21 EXECUTING SUCH A CHANGE IN CONTROL.
22 (3) IN OBTAINING JUDICIAL APPROVAL UNDER THIS
23 SUBSECTION, THE FIDUCIARY MUST PROVE BY CLEAR AND CONVINCING
24 EVIDENCE THAT EXECUTING THE CHANGE IN THE TRUST'S CONTROL OF
25 THE CORPORATION IS NECESSARY TO MAINTAIN THE ECONOMIC
26 VIABILITY OF THE CORPORATION AND PREVENT A SIGNIFICANT
27 DIMINUTION OF TRUST ASSETS OR TO AVOID AN IMPAIRMENT OF THE
28 CHARITABLE PURPOSE OF THE TRUST.
29 (4) IN THE EVENT COURT APPROVAL IS OBTAINED PURSUANT TO
30 THIS SUBSECTION, THE COURT SHALL ENSURE THAT THE PROVISIONS
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1 OF 15 PA.C.S. CH. 25 SUBCHS. I (RELATING TO SEVERANCE
2 COMPENSATION FOR EMPLOYEES TERMINATED FOLLOWING CERTAIN
3 CONTROL-SHARE ACQUISITIONS) AND J (RELATING TO BUSINESS
4 COMBINATION TRANSACTIONS - LABOR CONTRACTS) APPLY TO THE
5 EXECUTION OF A CHANGE IN THE TRUST'S CONTROL EFFECTUATED BY
6 THE FIDUCIARY OF A CHARITABLE TRUST WITH BENEFICIARIES AT A
7 PRINCIPAL LOCATION WITHIN THIS COMMONWEALTH HOLDING A
8 CONTROLLING INTEREST IN A PUBLICLY TRADED BUSINESS
9 CORPORATION RECEIVED AS AN ASSET FROM THE SETTLOR.
10 (5) A FIDUCIARY OF A CHARITABLE TRUST WITH BENEFICIARIES
11 AT A PRINCIPAL LOCATION WITHIN THIS COMMONWEALTH HOLDING A
12 CONTROLLING INTEREST IN A PUBLICLY TRADED BUSINESS
13 CORPORATION RECEIVED AS AN ASSET FROM THE SETTLOR SHALL NOT
14 BE SUBJECT TO LIABILITY FOR THE COMMERCIALLY REASONABLE SALE
15 OF CERTAIN SHARES OF THE CORPORATION NOT NECESSARY TO
16 MAINTAIN CONTROL AND FOR WHICH NO CONTROL PREMIUM IS REALIZED
17 IF THE FIDUCIARY REASONABLY DETERMINED THAT SUCH SALE WAS
18 AUTHORIZED IN A MANNER CONSISTENT WITH THE REQUIREMENTS OF
19 THIS SECTION AND OTHER APPLICABLE PROVISIONS OF THIS TITLE.
20 SECTION 2. SECTION 7204 OF TITLE 20 IS REENACTED AND AMENDED
21 TO READ:
22 § 7204. DIVERSIFICATION.
23 (A) REQUIREMENT.--EXCEPT AS PROVIDED IN SECTION 7205
24 (RELATING TO RETENTION OF INCEPTION ASSETS), A FIDUCIARY SHALL
25 REASONABLY DIVERSIFY INVESTMENTS, UNLESS THE FIDUCIARY
26 REASONABLY DETERMINES THAT IT IS IN THE INTERESTS OF THE
27 BENEFICIARIES NOT TO DIVERSIFY, TAKING INTO ACCOUNT THE
28 PURPOSES, TERMS AND OTHER CIRCUMSTANCES OF THE TRUST AND THE
29 REQUIREMENTS OF THIS CHAPTER.
30 (B) APPLICABILITY.--SUBSECTION (A) DOES NOT APPLY TO ANY OF
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1 THE FOLLOWING:
2 (1) A TRUST WHICH BECAME IRREVOCABLE PRIOR TO DECEMBER
3 25, 1999. THIS PARAGRAPH APPLIES EVEN IF THE ACTION OF THE
4 TRUSTEE OCCURS AFTER DECEMBER 25, 1999.
5 (2) A TRUST CREATED BY A REVOCABLE INSTRUMENT EXECUTED
6 PRIOR TO DECEMBER 25, 1999, IF SUCH INSTRUMENT IS NOT AMENDED
7 AFTER DECEMBER 24, 1999. THIS PARAGRAPH APPLIES EVEN IF THE
8 ACTION OF THE TRUSTEE OCCURS AFTER DECEMBER 25, 1999.
9 SECTION 3. SECTION 6(B)(2) OF THE ACT OF JUNE 25, 1999
10 (P.L.212, NO.28), ENTITLED "AN ACT AMENDING TITLE 20 (DECEDENTS,
11 ESTATES AND FIDUCIARIES) OF THE PENNSYLVANIA CONSOLIDATED
12 STATUTES, PROVIDING FOR FIDUCIARIES' INVESTMENT AND MANAGEMENT
13 OF PROPERTY HELD IN TRUST; MAKING EDITORIAL CHANGES; AND MAKING
14 A CONFORMING AMENDMENT TO TITLE 15 (CORPORATIONS AND
15 UNINCORPORATED ASSOCIATIONS)," IS REPEALED.
16 SECTION 4. THE ADDITION OF 20 PA.C.S. § 7203(D) SHALL APPLY
17 RETROACTIVELY TO CIRCUMSTANCES RELATED TO AN INVESTMENT OR
18 MANAGEMENT DECISION EXECUTING A CHANGE IN CONTROL WHERE THE
19 REVIEW OR APPROVAL OF A COMMONWEALTH AGENCY OR A COURT IS
20 PENDING ON THE EFFECTIVE DATE OF THIS SECTION.
21 SECTION 5. THE GENERAL ASSEMBLY FINDS AND DECLARES THAT THE
22 AMENDMENT OF 20 PA.C.S. § 7204 IS INTENDED TO CLARIFY EXISTING
23 LAW AND SHALL NOT BE CONSTRUED TO CHANGE EXISTING LAW.
24 SECTION 6. THIS ACT SHALL TAKE EFFECT IMMEDIATELY.
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