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PRINTER'S NO. 1666
THE GENERAL ASSEMBLY OF PENNSYLVANIA
SENATE BILL
No.
1231
Session of
2024
INTRODUCED BY BAKER, TARTAGLIONE, PENNYCUICK, J. WARD, COSTA,
MILLER AND SANTARSIERO, MAY 31, 2024
REFERRED TO JUDICIARY, MAY 31, 2024
AN ACT
Amending Title 20 (Decedents, Estates and Fiduciaries) of the
Pennsylvania Consolidated Statutes, in trusts, further
providing for definitions - UTC 103, for trust instrument
controls and mandatory rules - UTC 105, for governing law -
UTC 107, for situs of trust, for nonjudicial settlement
agreements - UTC 111, for charitable purposes; enforcement -
UTC 405, for trust for care of animal - UTC 408, for
noncharitable trust without ascertainable beneficiary - UTC
409, for reformation to correct mistakes - UTC 415, for
modification to achieve settlor's tax objectives - UTC 416,
for spendthrift provision - UTC 502, for creditor's claim
against settlor - UTC 505(a), for overdue distribution - UTC
506, for revocation or amendment of revocable trust - UTC
602, for trustee's duties and powers of withdrawal - UTC 603,
for accepting or declining trusteeship - UTC 701, for
trustee's bond - UTC 702, for cotrustees - UTC 703, for
vacancy in trusteeship and appointment of successor - UTC
704, for resignation of trustee and filing resignation, for
compensation of trustee - UTC 708, for duty to administer
trust - UTC 801, for duty of loyalty - UTC 802, for powers to
direct - UTC 808, for duty to inform and report, for
discretionary powers and for powers of trustees - UTC 815,
providing for directed trusts, further providing for remedies
for breach of trust--UTC 1001, providing for nonjudicial
account settlement and further providing for reliance on
trust instrument - UTC 1006, for exculpation of trustee - UTC
1008, for certification of trust - UTC 1013 and for title of
purchaser.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. The definitions of "interests of the
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beneficiaries" and "spendthrift provision" in section 7703 of
Title 20 of the Pennsylvania Consolidated Statutes are amended
and the section is amended by adding definitions to read:
§ 7703. Definitions - UTC 103.
The following words and phrases when used in this chapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
* * *
"Breach of trust." A violation by a trustee or trust
director of a duty that the trustee or trust director owes to a
beneficiary of the trust.
* * *
"Interests of the beneficiaries." The beneficial interests
provided in the [trust instrument] terms of a trust.
* * *
"Power of appointment." A power given to a person by the
terms of a trust, exercisable in a nonfiduciary capacity, to
grant and define a beneficial interest in trust property or to
grant a power of appointment over the trust property.
* * *
"Spendthrift provision." A [provision in a trust instrument]
term of a trust that restrains both voluntary and involuntary
transfer of a beneficiary's interest.
"Terms of a trust." Either of the following:
(1) Except as otherwise provided in paragraph (2), the
manifestation of the settlor's intent expressed in the trust
instrument.
(2) The trust's provisions, as established, determined
or amended by a trustee or other person in accordance with
applicable law, by a court order or by a nonjudicial
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settlement agreement under section 7710.1 (relating to
nonjudicial settlement agreements - UTC 111) or rules of
construction.
* * *
Section 2. Sections 7705 heading, (a), (b) introductory
paragraph, (2) and (7), 7707, 7708(a), (b) heading and
introductory paragraph and (f), 7710.1(b) and (d)(1), 7735(b)
and (c), 7738(b) and (c), 7739(2) and (3), 7740.5, 7740.6,
7742(b), 7745 introductory paragraph, 7746(b) and 7752(a), (c)
and (e) of Title 20 are amended to read:
§ 7705. Trust [instrument] controls; mandatory rules - UTC 105.
(a) Trust [instrument] controls.--Except as provided in
subsection (b), the [provisions] terms of a trust [instrument]
prevail over any contrary provisions of this chapter.
(b) Mandatory rules.--Notwithstanding a contrary provision
in the terms of the trust [instrument], the following rules
apply:
* * *
(2) [The] Subject to sections 7780.20 (relating to duty
and liability of directed trustee - UDTA 9), 7780.22
(relating to no duty to monitor, inform or advise - UDTA 11)
and 7780.23 (relating to application of cotrustee - UDTA 12),
the duty of a trustee to act in good faith and in accordance
with the terms and purposes of the trust as set forth in
section 7771 (relating to duty to administer trust - UTC
801).
* * *
(7) The power of the court under section 7768(b)
(relating to compensation of trustee - UTC 708) to adjust a
trustee's compensation specified in the terms of the trust
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[instrument].
* * *
§ 7707. Governing law - UTC 107.
The meaning and effect of the [provisions] terms of a trust
[instrument] shall be determined by:
(1) the law of the jurisdiction designated in the terms
of the trust [instrument], but the mandatory rules of section
7705(b) (relating to trust [instrument] controls; mandatory
rules - UTC 105) shall govern if different from the law of
the designated jurisdiction [designated in the trust
instrument]; or
(2) in the absence of an effective designation in the
terms of the trust [instrument], the law of the jurisdiction
in which the settlor is domiciled when the trust becomes
irrevocable.
§ 7708. Situs of trust.
(a) Specified in trust [instrument].--Without precluding
other means for establishing a sufficient connection with the
designated jurisdiction, [provisions] the terms of a trust
[instrument] designating the situs of the trust are valid and
controlling if:
(1) a trustee's principal place of business is located
in or a trustee is a resident of the designated jurisdiction;
(2) all or part of the trust administration occurs in
the designated jurisdiction; [or]
(3) one or more of the beneficiaries resides in the
designated jurisdiction[.]; or
(4) a trust director's principal place of business is
located in or a trust director is a resident of the
designated jurisdiction.
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(b) Unspecified in trust [instrument].--If the terms of a
trust [instrument does] do not specify a situs:
* * *
(f) Successor trustee.--In connection with a transfer of the
trust's situs, the trustee may transfer some or all of the trust
property to a successor trustee designated in the terms of a
trust [instrument] or appointed pursuant to section 7764
(relating to vacancy in trusteeship; appointment of successor -
UTC 704).
* * *
§ 7710.1. Nonjudicial settlement agreements - UTC 111.
* * *
(b) General rule.--Except as otherwise provided in
subsection (c), all beneficiaries [and trustees of], all
trustees and other persons, if any, who have an interest in a
matter relating to a trust may enter into a binding nonjudicial
settlement agreement with respect to [any matter involving the
trust] the matter. The rules of Subchapter C (relating to
representation) shall apply to a settlement agreement under this
section. Persons having interests in the matter shall be the
same as indispensable parties to a court action seeking the same
result.
* * *
(d) Matters that may be resolved.--Matters that may be
resolved by a nonjudicial settlement agreement include the
following:
(1) The interpretation or construction of the
[provisions] terms of a trust [instrument].
* * *
§ 7735. Charitable purposes; enforcement - UTC 405.
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* * *
(b) Selection by court.--If the [provisions] terms of a
charitable trust [instrument] do not indicate or authorize the
trustee to select a particular charitable purpose or
beneficiary, the court may select one or more charitable
purposes or beneficiaries. The selection must be consistent with
the settlor's intention to the extent it can be ascertained.
(c) Proceeding to enforce trust.--A proceeding to enforce a
charitable trust may be brought by the settlor during the
settlor's lifetime or at any time by the Attorney General, a
charitable organization expressly named in the terms of the
trust [instrument] to receive distributions from the trust or
any other person who has standing to do so.
§ 7738. Trust for care of animal - UTC 408.
* * *
(b) Enforcement.--A trust authorized by this section may be
enforced by a person appointed in the terms of the trust
[instrument] or, if no person is so appointed, by a person
appointed by the court. A person having an interest in the
welfare of the animal may request the court to appoint a person
to enforce the trust or to remove a person appointed.
(c) Limitation.--Property of a trust authorized by this
section may be applied only to its intended use, except to the
extent the court determines that the value of the trust property
exceeds the amount required for the intended use. Except as
otherwise provided in the terms of the trust [instrument],
property not required for the intended use must be distributed
to the settlor if then living, otherwise to the settlor's
successors in interest.
§ 7739. Noncharitable trust without ascertainable beneficiary -
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UTC 409.
Except as otherwise provided in section 7738 (relating to
trust for care of animal - UTC 408) or by another statute:
* * *
(2) A trust authorized by this section may be enforced
by a person appointed in the terms of the trust [instrument]
or, if no person is so appointed, by a person appointed by
the court.
(3) Property of a trust authorized by this section may
be applied only to its intended use, except to the extent the
court determines that the value of the trust property exceeds
the amount required for the intended use. Except as otherwise
provided in the terms of the trust [instrument], property not
required for the intended use must be distributed to the
settlor if then living, otherwise to the settlor's successors
in interest.
§ 7740.5. Reformation to correct mistakes - UTC 415.
The court may reform the terms of a trust [instrument], even
if unambiguous, to conform to the settlor's probable intention
if it is proved by clear and convincing evidence that both the
settlor's intent [as expressed in] and the terms of the trust
[instrument was] were affected by a mistake of fact or law,
whether in expression or inducement. The court may provide that
the modification have retroactive effect.
§ 7740.6. Modification to achieve settlor's tax objectives -
UTC 416.
The court may modify the terms of a trust [instrument] in a
manner that is not contrary to the settlor's probable intention
in order to achieve the settlor's tax objectives. The court may
provide that the modification have retroactive effect.
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§ 7742. Spendthrift provision - UTC 502.
* * *
(b) Creation.--A term of a trust [instrument] providing that
the interest of a beneficiary is held subject to a "spendthrift
trust," or words of similar import, is sufficient to restrain
both voluntary and involuntary transfer of the beneficiary's
interest.
* * *
§ 7745. Creditor's claim against settlor - UTC 505(a).
Whether or not the terms of a trust [instrument contains]
contain a spendthrift provision and notwithstanding section 7744
(relating to discretionary trusts; effect of standard - UTC
504):
* * *
§ 7746. Overdue distribution - UTC 506.
* * *
(b) Definition.--As used in this section, the term
"mandatory distribution" means a distribution of income or
principal that the trustee is required by the terms of the trust
[instrument] to make to a beneficiary, including a distribution
upon the termination of the trust. The term excludes a
distribution that is subject to the exercise of the trustee's
discretion regardless of whether the terms of the trust
[instrument includes] include a support or other standard to
guide the trustee in making distribution decisions or provides
that the trustee "may" or "shall" make discretionary
distributions, including distributions pursuant to a support or
other standard.
§ 7752. Revocation or amendment of revocable trust - UTC 602.
(a) Power to revoke or amend.--The settlor may revoke or
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amend a trust unless the terms of the trust [instrument]
expressly [provides] provide that the trust is irrevocable.
* * *
(c) How to revoke or amend.--The settlor may revoke or amend
a revocable trust only:
(1) by substantial compliance with a method provided in
the terms of the trust [instrument]; or
(2) if the terms of the trust [instrument does] do not
provide a method or the method provided in the terms of the
trust [instrument] is not expressly made exclusive, by a
later writing, other than a will or codicil, that is signed
by the settlor and expressly refers to the trust or
specifically conveys property that would otherwise have
passed according to the terms of the trust [instrument].
* * *
(e) Agent.--A settlor's powers with respect to revocation or
amendment of the nondispositive provisions of or withdrawal of
property from a trust may be exercised by an agent under a power
of attorney only to the extent expressly authorized by the terms
of the trust [instrument] or the power. The agent under a power
of attorney that expressly authorizes the agent to do so may
amend the dispositive provisions of a revocable trust as the
court may direct.
* * *
Section 3. Section 7753(a) of Title 20 is amended and the
section is amended by adding a subsection to read:
§ 7753. Trustee's duties; powers of withdrawal - UTC 603.
(a) Power of settlor.--Regardless of the legal capacity of
the settlor, the rights of the beneficiaries are subject to the
control of, and the duties of the trustee are owed exclusively
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to, the settlor [while] to the extent a trust is revocable.
* * *
(c) Direction contrary to trust terms.--While a trust is
revocable, the trustee may follow a written direction of the
settlor that is contrary to the terms of the trust. To the
extent a trust is revocable by a settlor in conjunction with
other persons, the trustee may follow a written direction from
the settlor and those persons that is contrary to the terms of
the trust.
Section 4. Sections 7761(a), 7762(a) and (c), 7763(a.1), (c)
and (g), 7764(b), (c)(1) and (d)(1), 7765(a.1)(2), 7768(a) and
(b), 7771, 7772(b)(1) and 7778 of Title 20 are amended to read:
§ 7761. Accepting or declining trusteeship - UTC 701.
(a) Accepting trusteeship.--Except as otherwise provided in
subsection (c), a person designated as trustee accepts the
trusteeship:
(1) by substantially complying with a method of
acceptance provided in the terms of the trust [instrument];
or
(2) if the terms of the trust [instrument does] do not
provide a method or the method provided in the terms of the
trust [instrument] is not expressly made exclusive, by
accepting delivery of the trust property, exercising powers
or performing duties as trustee or by otherwise indicating
acceptance of the trusteeship.
* * *
§ 7762. Trustee's bond - UTC 702.
(a) When required.--A trustee shall give bond to secure
performance of the trustee's duties only if the court finds that
a bond is needed to protect the interests of the beneficiaries
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or is required by the [provisions] terms of the trust
[instrument] and the court has not dispensed with the
requirement.
* * *
(c) Institutional trustees.--An institution qualified to do
trust business in this Commonwealth need not give bond even if
required by the terms of the trust [instrument].
§ 7763. Cotrustees - UTC 703.
* * *
(a.1) When no majority.--When a dispute arises among
trustees as to the exercise or nonexercise of any of their
powers and there is no agreement by a majority of them, unless
otherwise provided by the terms of the trust [instrument], the
court in its discretion, upon petition filed by any of the
trustees or any party in interest, aided if necessary by the
report of a master, may direct the exercise or nonexercise of
the power as it deems necessary for the best interest of the
trust.
* * *
(c) Performance.--[A] Subject to section 7780.23 (relating
to application to cotrustee - UDTA 12), a cotrustee shall
participate in the performance of a trustee's function unless
the cotrustee is unavailable to perform the function because of
absence, illness, disqualification under the law or other reason
or the cotrustee has properly delegated the performance of the
function to another trustee.
* * *
(g) Reasonable care.--[Each] Subject to section 7780.23,
each trustee shall exercise reasonable care to:
(1) prevent a cotrustee from committing a breach of
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trust involving fraud or self-dealing; and
(2) compel a cotrustee to redress a breach of trust
involving fraud or self-dealing.
* * *
§ 7764. Vacancy in trusteeship; appointment of successor - UTC
704.
* * *
(b) Filling of vacancy.--A vacancy in a trusteeship need not
be filled if one or more cotrustees remain in office and the
terms of the trust [instrument does] do not require that it be
filled. A vacancy shall be filled if the trust has no remaining
trustee.
(c) Filling vacancy for noncharitable trust.--A vacancy in a
trusteeship of a noncharitable trust that is required to be
filled shall be filled in the following order of priority:
(1) by a person designated in or pursuant to the
[provisions] terms of the trust [instrument] to act as
successor trustee;
* * *
(d) Filling vacancy for charitable trust.--A vacancy in a
trusteeship of a charitable trust that is required to be filled
shall be filled in the following order of priority:
(1) by a person designated in or [under] pursuant to the
[provisions] terms of the trust [instrument] to act as
successor trustee;
* * *
§ 7765. Resignation of trustee; filing resignation.
(a.1) General rule.--A trustee may resign:
* * *
(2) without court approval if authorized to resign by
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the terms of the trust [instrument]; or
* * *
§ 7768. Compensation of trustee - UTC 708.
(a) If unspecified.--If neither the terms of a trust
[instrument] nor a separate written agreement signed by the
settlor or anyone who is authorized by the terms of the trust
[instrument] to do so specifies the trustee's compensation, the
trustee is entitled to compensation that is reasonable under the
circumstances. Neither a compensation provision in the terms of
a trust [instrument] nor a fee agreement governs compensation
payable from trust principal unless it explicitly so provides.
(b) If specified; adjustment.--If the terms of a trust
[instrument] or written fee agreement signed by the settlor or
anyone who is authorized by the terms of the trust [instrument]
to do so specifies a trustee's compensation, the trustee is
entitled to the specified compensation. The court may allow
reasonable compensation that is more or less than that specified
if:
(1) the duties of the trustee have become substantially
different from those contemplated when the trust was created
or when the fee agreement was executed;
(2) the compensation specified in the terms of the trust
[instrument] or fee agreement would be unreasonable; or
(3) the trustee performed extraordinary services, and
the [trust instrument or fee agreement does not specify the]
trustee's compensation for those services is not specified in
the terms of the trust or fee agreement.
* * *
§ 7771. Duty to administer trust - UTC 801.
Upon acceptance of a trusteeship, the trustee shall
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administer the trust in good faith, in accordance with its
[provisions] terms and purposes and the interests of the
beneficiaries and in accordance with applicable law.
§ 7772. Duty of loyalty - UTC 802.
* * *
(b) Effect of conflict of interest.--Subject to the rights
of persons dealing with or assisting the trustee as provided in
section 7790.2 (relating to protection of person dealing with
trustee - UTC 1012), a sale, purchase, exchange, encumbrance or
other disposition of property between a trust and either the
trustee in the trustee's individual capacity or one of the
persons identified in subsection (c) is voidable by a court upon
application by a beneficiary affected by the transaction unless:
(1) the transaction was authorized by the terms of the
trust [instrument];
* * *
§ 7778. Powers to direct [- UTC 808].
[(a) Direction of settlor.--While a trust is revocable, the
trustee may follow a written direction of the settlor that is
contrary to the trust instrument.
(b) Compliance with power.--If a trust instrument confers
upon a person other than the settlor of a revocable trust power
to direct certain actions of the trustee, the trustee shall act
in accordance with a written exercise of the power unless the
attempted exercise is manifestly contrary to the trust
instrument or the trustee knows the attempted exercise would
constitute a serious breach of a fiduciary duty that the person
holding the power owes to the beneficiaries of the trust.
(c) Modification or termination of trust.--A trust
instrument may confer upon a trustee or other person a power to
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modify or terminate the trust.
(d) Fiduciary relationship.--A person other than a
beneficiary who holds a power to direct certain actions of a
trustee is presumptively a fiduciary who, as such, is required
to act in good faith with regard to the purposes of the trust
and the interests of the beneficiaries. The holder of a power to
direct is liable for any loss that results from breach of the
holder's fiduciary duty.]
(e) Directed trust.--If the terms of a trust provide that a
person who is not a trustee may direct a trustee to take or not
take certain actions, or that a person who is not a trustee may
change the terms of the trust, Subchapter H.1 (relating to
directed trusts) applies.
Section 5. Section 7780.3(a) and (k) introductory paragraph
of Title 20 are amended and subsection (i) is amended by adding
a paragraph to read:
§ 7780.3. Duty to inform and report.
(a) Duty to respond to requests.--A trustee shall promptly
respond to a reasonable request by the settlor of a trust or by
a beneficiary of an irrevocable trust for information related to
the trust's administration. A trustee shall promptly respond to
the Department of [Public Welfare's] Human Services' reasonable
request for information related to the trust's administration
when a settlor or beneficiary is a resident in a State-owned
facility or an applicant for or recipient of cash or medical
assistance from the Commonwealth and the department certifies in
writing that it has obtained a currently valid consent for the
disclosure of such information from the settlor or beneficiary
of the trust. A trustee may rely upon the department's
certification without investigating its accuracy.
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* * *
(i) Contents of notice.--Except as provided in subsection
(g), any notice under this section shall be written and convey
the following information:
* * *
(6) The name, address and telephone number of each trust
director.
* * *
(k) Notice to settlor's appointee.--The terms of a trust may
provide that the settlor [of a trust] may [in the trust
instrument] appoint one or more persons or a succession of
persons to receive, on behalf of one or more named current
beneficiaries of the trust, the notices required by this
section. The trustee giving the notice required by this section
to that appointee satisfies the trustee's duty to give to the
named current beneficiary the notice required by this section
if:
* * *
Section 6. Sections 7780.4 and 7780.5(a) of Title 20 are
amended to read:
§ 7780.4. Discretionary powers.
The trustee shall exercise a discretionary power in good
faith and in accordance with the [provisions] terms and purposes
of the trust and the interests of the beneficiaries,
notwithstanding the breadth of discretion granted to a trustee
[in] by the terms of the trust [instrument], including the use
of such terms as "absolute," "sole" or "uncontrolled."
§ 7780.5. Powers of trustees - UTC 815.
(a) Exercise of power.--Except as otherwise provided in the
terms of the trust [instrument] or in other provisions of this
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title, a trustee has all the powers over the trust property that
an unmarried competent owner has over individually owned
property and may exercise those powers without court approval
from the time of creation of the trust until final distribution
of the assets of the trust.
* * *
Section 7. Chapter 77 of Title 20 is amended by adding a
subchapter to read:
SUBCHAPTER H.1
DIRECTED TRUSTS
Sec.
7780.11. Short title of subchapter.
7780.12. Definitions - UDTA 2.
7780.13. Application - UDTA 3.
7780.14. Exclusions - UDTA 5.
7780.15. Powers of trust director and shared powers - UDTA 6.
7780.16. Trust director for investments.
7780.17. Trust protector.
7780.18. Limitations on powers of trust director - UDTA 7.
7780.19. Duty and liability of trust director - UDTA 8.
7780.20. Duty and liability of directed trustee - UDTA 9.
7780.21. Duty to provide information to trust director or
directed trustee - UDTA 10.
7780.22. No duty to monitor, inform or advise - UDTA 11.
7780.23. Application to cotrustee - UDTA 12.
7780.24. Limitation of action against trust director - UDTA 13.
7780.25. Defenses in action against trust director - UDTA 14.
7780.26. Jurisdiction over trust director - UDTA 15.
7780.27. Office of trust director - UDTA 16.
§ 7780.11. Short title of subchapter.
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This subchapter shall be known and may be cited as the
Directed Trust Act.
§ 7780.12. Definitions - UDTA 2.
The following words and phrases when used in this subchapter
shall have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Directed trust." A trust for which the terms of the trust
grant a power of direction.
"Directed trustee." A trustee that is subject to a trust
director's power of direction.
"Power of direction." As follows:
(1) A power over a trust granted to a person by the
terms of the trust to the extent the power is exercisable
while the person is not serving as a trustee.
(2) The term includes a power over the investment,
management or distribution of trust property or other matters
of trust administration and, in the case of a trust
protector, may include powers to modify the terms of the
trust.
(3) A power of direction includes incidental powers that
are appropriate and necessary to the exercise or nonexercise
of the power of direction. The rules specified in this
subchapter govern the exercise of such incidental powers.
"Trust director." As follows:
(1) A person that is granted a power of direction by the
terms of a trust to the extent the power is exercisable while
the person is not serving as a trustee.
(2) A beneficiary or settlor of a trust may serve as a
trust director of the trust.
"Trust protector." A trust director authorized by the terms
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of a trust to modify one or more terms of the trust.
"Willful misconduct." As follows:
(1) Intentional conduct that is malicious, designed to
defraud or unconscionable.
(2) Mere negligence, gross negligence and recklessness
do not constitute "willful misconduct."
§ 7780.13. Application - UDTA 3.
(a) General rule.--This subchapter applies to a trust,
whenever and wherever created, that is governed by Pennsylvania
law.
(b) Exclusion.--This subchapter has no application to
decisions or actions that occurred before the effective date of
this subchapter.
§ 7780.14. Exclusions - UDTA 5.
This subchapter does not apply to:
(1) A power of appointment.
(2) A power held by the settlor or a beneficiary of a
trust to appoint or remove a trustee or a trust director
unless the terms of the trust provide that the power is
exercisable by the settlor or beneficiary acting as a trust
director.
(3) A settlor's power over a trust to the extent the
settlor may revoke the trust.
(4) A power of a beneficiary over a trust to the extent
the exercise or nonexercise of the power affects the
beneficial interest of:
(i) the beneficiary; or
(ii) another beneficiary who is represented by the
beneficiary under Subchapter C (relating to
representation) with respect to the exercise or
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nonexercise of the power.
(5) A power over a trust that must be held in a
nonfiduciary capacity to achieve the settlor's tax objectives
under 26 U.S.C. (relating to Internal Revenue Code), as
amended, and regulations issued thereunder, as amended.
§ 7780.15. Powers of trust director and shared powers - UDTA 6.
(a) Grant of powers.--The terms of a trust may grant a power
of direction to one or more trust directors. A power of
direction may extend to any one or more of a trustee's powers,
subject to section 7780.18 (relating to limitations on powers of
trust director - UDTA 7).
(b) Shared powers.--Trust directors that share powers may
act by majority decision unless the terms of the trust provide
otherwise.
§ 7780.16. Trust director for investments.
The explicit appointment by the terms of a trust of a "trust
director for investments," accompanied by a citation to this
section, grants to the trust director the following powers
unless the terms of the trust provide otherwise:
(1) To direct the trustee, or veto the trustee's
recommendations, as to the investment of the trust's assets.
(2) To direct the trustee, or veto the trustee's
recommendations, as to the voting of proxies and the exercise
of other voting powers associated with the trust's assets.
(3) To select, change and determine reasonable
compensation of one or more investment advisors or managers,
and authorize or engage them to perform any of the investment
duties of a trustee or trust director.
(4) To determine the frequency and methodology for
valuing trust assets.
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(5) To exercise, or veto the trustee's exercise of, any
other investment power the trustee has or might have.
(6) To perform other acts relating to the investment of
the trust's assets as the terms of the trust specify.
§ 7780.17. Trust protector.
(a) General rule.--The terms of a trust may expressly grant
to a trust director powers, alone or together with powers to
direct a trustee's actions, to modify the terms of a trust. In
that event, the trust director is a trust protector.
(b) Illustrative powers.--Among the powers the terms of a
trust may grant explicitly to a trust protector are the
following:
(1) To increase, decrease or otherwise modify what is
distributable to one or more beneficiaries of the trust.
(2) To terminate the trust and direct how the trustee
shall distribute the trust property to or in further trust
for any one or more of the beneficiaries.
(3) To expand, modify, limit or terminate a power of
appointment, and to grant a power of appointment to a
beneficiary of the trust on terms as the trust protector
specifies.
(4) The powers described in section 8104 (relating to
trustee's power to adjust) to adjust between income and
principal and to convert the trust to a unitrust in
accordance with section 8105 (relating to power to convert to
unitrust).
(5) To convert a trust in whole or in part to a special
needs trust, or provide that a special needs trust shall
arise or be established at a specific time or upon the
occurrence of an event with respect to some or all of the
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trust's assets.
(6) To appoint or remove trustees, investment advisors
and investment managers, and prescribe a plan of succession
for future holders of any of these offices.
(7) To appoint or remove trust directors, specify their
powers and modify the powers of a trust director.
(8) To appoint one or more successor trust protectors,
and prescribe a plan of succession for future holders of that
office.
(9) To renounce, release, limit or modify any power
given to a trustee by the terms of the trust or by law.
(10) To resolve disagreements among trustees.
(11) To change the trust's situs or governing law, or
both.
(12) To apply to a court of competent jurisdiction to
interpret any terms of the trust or pass upon an action that
the trust protector, another trust director or a trustee
proposes to take or not take.
(13) Any other or different power that the settlor
expressly grants to the trust protector.
(c) Limitation.--Unless the terms of the trust expressly
provide otherwise, no trust protector may exercise a power in a
manner that would benefit the trust protector personally or vest
in the trust protector a taxable power of appointment described
in 26 U.S.C. § 2041 (relating to powers of appointment) or 2514
(relating to powers of appointment) , as amended, or the
corresponding provision of any later Federal tax statute.
(d) Notice to qualified beneficiaries.--A trust protector
shall notify the trustees and the qualified beneficiaries of the
trust in writing of the trust protector's exercise of a power
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with respect to the trust unless the terms of the trust
explicitly direct that no such notice be given.
(e) Conflicts.--If the terms of a trust grant the same power
to both a trust protector and a trust director that is not a
trust protector and do not provide a different rule, the trust
protector shall control the exercise of the power.
§ 7780.18. Limitations on powers of trust director - UDTA 7.
In the exercise or nonexercise of powers affecting the
following, a trust director is subject to the same rules as a
trustee that holds the same power regarding:
(1) A payback provision in the terms of a trust
necessary to comply with the reimbursement requirements of
Medicaid law in 42 U.S.C. § 1396p(d)(4)(A) (relating to
liens, adjustments and recoveries, and transfers of assets) ,
as amended, and regulations issued thereunder, as amended.
(2) A charitable interest in a trust, including notice
regarding the interest to the Office of Attorney General.
§ 7780.19. Duty and liability of trust director - UDTA 8.
(a) Scope.--Except as provided in subsections (b) and (c),
with respect to a power of direction, a trust director has the
same fiduciary duty and liability in the exercise or nonexercise
of the power if the power:
(1) may be exercised by only one trust director, as a
sole trustee in a like position and under similar
circumstances; or
(2) is shared with a trustee or another trust director,
as a cotrustee in a like position and under similar
circumstances.
(b) Licensed or certified trust directors.--If a trust
director is licensed, certified or otherwise authorized or
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permitted by law other than this subchapter to provide health
care in the ordinary course of the trust director's business or
practice of a profession, to the extent that the trust director
acts in that capacity, the trust director is not subject to duty
or liability under this subchapter unless the terms of the trust
provide otherwise.
(c) Effect of terms of the trust.--The terms of a trust may
vary a trust director's duty or liability to the same extent
that the terms of the trust may vary the duty or liability of a
trustee in a like position and under similar circumstances.
§ 7780.20. Duty and liability of directed trustee - UDTA 9.
(a) Duty to comply with power of direction.--Subject to
subsection (b), a directed trustee shall take reasonable action
to comply with a trust director's exercise or nonexercise of a
power of direction, and the directed trustee shall not be liable
for that action.
(b) Exception for willful misconduct.--A directed trustee
shall not comply with a trust director's exercise or nonexercise
of a power of direction to the extent that, by doing so, the
directed trustee would engage in willful misconduct.
(c) When release from liability ineffective.--An exercise of
a power of direction under which a trust director purports to
release a trustee or another trust director from liability for
breach of trust is ineffective:
(1) to the extent that it would relieve the trustee or
the other trust director of liability for a breach of trust
committed in bad faith or with reckless indifference to the
purposes of the trust or the interests of the beneficiaries;
(2) if the release was induced by improper conduct of
the trustee or the other trust director in procuring the
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release; or
(3) if, at the time of the release, the trust director
that exercised the power did not know of the material facts
relating to the breach.
(d) Petition for declaratory judgment.--A directed trustee
that has reasonable doubt about its duty under this section may
petition the court for a declaratory judgment.
(e) Additional duties and liabilities.--The terms of the
trust may impose a duty or liability on a directed trustee in
addition to the duties and liabilities prescribed by this
section.
§ 7780.21. Duty to provide information to trust director or
directed trustee - UDTA 10.
(a) Duty of directed trustee.--Subject to section 7780.22
(relating to no duty to monitor, inform or advise - UDTA 11), a
directed trustee shall provide information to a trust director
to the extent that the information is reasonably related to
powers or duties of the:
(1) directed trustee; and
(2) trust director, or the powers or duties of another
trust director over which the trust director may exercise
authority.
(b) Duty of trust director.--Subject to section 7780.22, a
trust director shall provide information to a directed trustee
or another trust director to the extent that the information is
reasonably related to the powers or duties of the:
(1) trust director; and
(2) directed trustee, or the other trust director or a
trust director over which the other trust director may
exercise authority.
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(c) Limitation on liability of directed trustee.--A directed
trustee that acts in reliance upon information provided by a
trust director is not liable for a breach of trust to the extent
that the breach resulted from the reliance unless the
information was outside the scope of the trust director's
authority or the directed trustee engages in willful misconduct
by doing so.
(d) Limitation on liability of trust director.--A trust
director that acts in reliance upon information provided by a
directed trustee or another trust director is not liable for a
breach of trust to the extent that the breach resulted from the
reliance unless the trust director engages in willful misconduct
by doing so.
§ 7780.22. No duty to monitor, inform or advise - UDTA 11.
(a) Directed trustee.--Unless the terms of the trust provide
otherwise:
(1) A directed trustee does not have a duty to:
(i) monitor a trust director; or
(ii) inform or advise a settlor, beneficiary,
cotrustee or trust director as to any matter on which the
directed trustee might not have acted as the trust
director acted or as to any matter on which the directed
trustee might have acted but the trust director did not
act.
(2) By taking an action described in paragraph (1), a
directed trustee does not thereby assume a duty that is
excluded by paragraph (1).
(b) Trust director.--Unless the terms of the trust provide
otherwise:
(1) A trust director does not have a duty to:
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(i) monitor a trustee or another trust director over
which the trust director has no authority; or
(ii) inform or advise a settlor, beneficiary,
cotrustee or other trust director as to any matter on
which the trust director might not have acted as a
trustee or other trust director acted or as to any matter
on which the trust director might have acted but the
trustee or another trust director did not act.
(2) By taking an action described in paragraph (1), a
trust director does not thereby assume a duty that is
excluded by paragraph (1).
§ 7780.23. Application to cotrustee - UDTA 12.
The terms of a trust may assign different duties and
standards of care to different trustees and, in doing so,
relieve a trustee from liability with respect to a duty assigned
to another trustee to the same extent that, in a directed trust,
a directed trustee is relieved from duty and liability with
respect to a trust director's power of direction under sections
7780.20 (relating to duty and liability of directed trustee -
UDTA 9), 7780.21 (relating to duty to provide information to
trust director or directed trustee - UDTA 10) and 7780.22
(relating to no duty to monitor, inform or advise - UDTA 11).
§ 7780.24. Limitation of action against trust director - UDTA
13.
(a) Commencement of action.--An action against a trust
director for breach of trust must be commenced within the same
limitation period as under section 7785 (relating to limitation
of action against trustee) for an action for breach of trust
against a trustee in a like position and under similar
circumstances.
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(b) Effect of report or accounting.--A report or accounting
has the same effect on the limitation period for an action
against a trust director for breach of trust that the report or
accounting would have under section 7785 in an action for breach
of trust against a trustee in a like position and under similar
circumstances.
§ 7780.25. Defenses in action against trust director - UDTA 14.
In an action against a trust director for breach of trust,
the trust director may assert the same defenses that a trustee
in a like position and under similar circumstances could assert
in an action for breach of trust against the trustee.
§ 7780.26. Jurisdiction over trust director - UDTA 15.
(a) Effect of acceptance of appointment.--By accepting an
appointment as a trust director, the trust director submits to
personal jurisdiction of the courts of this Commonwealth
regarding any matter related to a power or duty of the trust
director.
(b) Other methods of obtaining jurisdiction.--This section
does not preclude other methods of obtaining jurisdiction over a
trust director.
§ 7780.27. Office of trust director - UDTA 16.
Unless the terms of the trust provide otherwise, the rules
applicable to a trustee apply to a trust director regarding the
following matters:
(1) Acceptance or declining under section 7761 (relating
to accepting or declining trusteeship - UTC 701), except that
if a trustee requests in writing that a person designated as
a trust director accept that role in writing and the person
does not do so in writing within 60 days after receipt of the
trustee's request, the person shall be deemed to have
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rejected the appointment to serve as a trust director.
(2) Giving of bond to secure performance under section
7762 (relating to trustee's bond - UTC 702).
(3) Reasonable compensation under section 7768 (relating
to compensation of trustee - UTC 708).
(4) Resignation under section 7765 (relating to
resignation of trustee; filing resignation), or upon at least
30 days' advance notice in writing to the qualified
beneficiaries of the trust, the settlor if sui juris and all
trustees.
(5) Removal under section 7766 (relating to removal of
trustee - UTC 706).
(6) Vacancy and appointment of a successor under section
7764 (relating to vacancy in trusteeship; appointment of
successor - UTC 704), except that if a trust director does
not accept an appointment or there is a vacancy in the
position, the powers and duties of the trustee or another
trust director shall be determined as if the office of the
nonaccepting trust director had not been created.
Section 8. Section 7781(a) of Title 20 is amended to read:
§ 7781. Remedies for breach of trust - UTC 1001.
[(a) What constitutes breach of trust.--A violation by a
trustee of a duty the trustee owes to a beneficiary is a breach
of trust.]
* * *
Section 9. Title 20 is amended by adding a section to read:
§ 7785.1. Nonjudicial account settlement.
(a) Election.--A trustee may elect to proceed under this
section to obtain a nonjudicial settlement of account when:
(1) the trust terminates in whole or in part;
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(2) the trustee ceases or intends to cease to serve for
any reason; or
(3) the trustee seeks discharge for an interim
accounting period when the trust is continuing.
(b) Mandatory notice.--Within a reasonable time after a
trustee elects to proceed under this section, the trustee shall
give notice of a request for nonjudicial account settlement in
the manner and to the extent required by section 7709(a), (b)
and (c) (relating to methods and waiver of notice - UTC 109) to:
(1) the qualified beneficiaries of the trust;
(2) any other beneficiary who has sent the trustee a
written request for notice;
(3) any person who has the notification rights of a
beneficiary under section 7710 (relating to notice; others
treated as beneficiaries - UTC 110); and
(4) any cotrustee, trust director or similar fiduciary
or successor trustee.
(c) Permissive notice.--The trustee may also provide notice
to any other person who the trustee reasonably believes may have
an interest in the trust.
(d) Representation.--Whether notice is mandatory or
permissive, the trustee may give notice to a representative in
accordance with Subchapter C (relating to representation). The
time period for the presumption of the representative's
acceptance of the representation shall be deemed to run
concurrently with the notice period provided under this section.
(e) Contents of notice.--The notice under subsection (b) or
(c) shall provide:
(1) The reason for providing notice under this section.
(2) To the extent applicable, the proposed distribution
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of the net assets of the trust, including the distributees
and proportions to be distributed.
(3) To the extent applicable, an estimate of
disbursements anticipated to be made prior to distribution,
including legal fees and trustee fees, if any.
(4) Trust account statements showing all transactions,
the fair market value of all assets and realized and
unrealized gains and losses on assets held in the account for
30 months prior to the date a trust terminates, the cessation
of the trustee's service or statement of intent to cease to
serve, or the end of the interim accounting period, or for
the entire term of the trust if the term of the trust is
shorter than the 30-month period.
(5) A statement that the trustee seeks settlement of the
account of the trust, including the period of time for which
the trustee seeks discharge of the account of the trust, and
that clearly and conspicuously states that claims against a
trustee under Subchapter I (relating to liability of trustees
and rights of persons dealing with trustees) and section 7754
(relating to actions contesting validity of revocable trust),
if applicable, will be forever barred if no objections are
received within the time period described in subsection (g).
(6) The name and mailing address of the trustee.
(7) The name and telephone number of a person who may be
contacted for additional information.
(f) Distributions.--To the extent applicable, distributions
from a terminating trust, and any fees and expenses due or
anticipated as of the date that the settlement of account is
requested, may be held by or on behalf of the trustee until the
settlement of account is approved or deemed approved as provided
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by this section.
(g) Objection.--A person provided notice under subsection
(b) or (c) may object to the settlement of account by giving
written notice to the trustee within 60 days after the notice
was sent. If a person given notice under subsection (b) or (c)
makes timely objections to the settlement of account, the
trustee or the person making the objections may:
(1) submit the written objection to the court and
commence a proceeding for its resolution; or
(2) resolve the objection by nonjudicial settlement
agreement under section 7710.1 (relating to nonjudicial
settlement agreements - UTC 111) or otherwise.
(h) Approval.--If no timely objections are raised under
subsection (g), or objections are resolved as provided by
subsection (g), the settlement of account shall be deemed
approved and any assets held in trust shall, within a reasonable
time thereafter, be distributed subject to payment of expenses
as provided in subsection (f) or shall continue to be
administered in trust subject to payment of expenses.
(i) Reliance.--The trustee may rely upon the written
statement of a person receiving notice that the person does not
object.
(j) Limitation of action and preclusive effect.--
(1) When a settlement of account is deemed approved
under this section for a terminated trust or with respect to
the duties of a trustee who ceased to serve or stated an
intent to cease to serve, each person who was sent notice as
provided by subsection (b) or (c) is barred from bringing a
claim against the trustee or challenging the distribution of
assets of the trust to the same extent and with the same
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preclusive effect as if the court had entered a final,
unappealable order approving the trustee's final account.
(2) When a settlement of account for a trustee seeking
final settlement of an interim trust account is deemed
approved under this section, each person who was sent notice
as provided by subsection (b) or (c) is barred from bringing
a claim against the trustee for the period of the interim
trust account to the same extent and with the same preclusive
effect as if the court had entered a final, unappealable
order approving the trustee's interim trust account.
(k) Representation.--The provisions of Subchapter C shall
apply to an account settlement under this section.
(l) Filing account.--Nothing in this section shall preclude
a trustee from proceeding under section 7797 (relating to filing
accounts) or 7710.1.
Section 10. Sections 7786, 7788(a) introductory paragraph,
7790.3(d) and (f) and 7794 of Title 20 are amended to read:
§ 7786. Reliance on trust instrument - UTC 1006.
A trustee who acts in reasonable reliance on the [express
provisions] terms of the trust as expressed in the trust
instrument is not liable to a beneficiary for a breach of trust
to the extent the breach resulted from the reliance.
§ 7788. Exculpation of trustee - UTC 1008.
(a) When exculpatory provision unenforceable.--A [provision]
term of a trust [instrument] relieving a trustee of liability
for breach of trust is unenforceable to the extent that it:
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§ 7790.3. Certification of trust - UTC 1013.
* * *
(d) Dispositive trust provisions.--A certification of trust
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need not contain the dispositive [provisions] terms of the trust
[instrument].
* * *
(f) Reliance on certification.--A person who acts in
reliance upon a certification of trust without knowledge that
the representations contained in the certification are incorrect
is not liable to any person for so acting and may assume without
inquiry the existence of the facts contained in the
certification. Knowledge of the [provisions] terms of the trust
[instrument] may not be inferred solely from the fact that a
copy of all or part of the trust instrument is held by the
person relying upon the certification.
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§ 7794. Title of purchaser.
If the trustee has given a bond as required in accordance
with this title, any sale, pledge, mortgage or exchange by a
trustee, whether pursuant to a decree or to the exercise of a
power conferred by the terms of a trust [instrument] or of a
power under this title, shall pass the full title of the trust
in the property, unless otherwise specified. Persons dealing
with the trustee shall have no obligation to see to the proper
application of the cash or other assets given in exchange for
the property of the trust. A sale or exchange by a trustee
pursuant to a decree under section 3353 (relating to order of
court) shall have the effect of a judicial sale as to the
discharge of liens, but the court may decree a sale or exchange
freed and discharged from the lien of any mortgage otherwise
preserved from discharge by existing law if the holder of the
mortgage consents by writing filed in the proceeding. No sale,
mortgage, exchange or conveyance shall be prejudiced by the
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subsequent dismissal of the trustee. No sale, mortgage, exchange
or conveyance by a testamentary trustee shall be prejudiced by
the terms of a will or codicil thereafter probated if the person
dealing with the trustee did so in good faith.
Section 11. The letters "UTC" in section headings refer to
the Uniform Trust Code. The letters "UDTA" in section headings
refer to the Uniform Directed Trust Act. The number that follows
these letters refers to a particular section of the applicable
uniform act. If a section in 20 Pa.C.S. has these references,
that section shall be construed and applied consistent with 1
Pa.C.S. §§ 1927 and 1939.
Section 12. This act shall take effect in 90 days.
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