| CORRECTIVE REPRINT |
| PRIOR PRINTER'S NOS. 38, 190 | PRINTER'S NO. 195 |
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| THE GENERAL ASSEMBLY OF PENNSYLVANIA |
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| SENATE BILL |
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| INTRODUCED BY GREENLEAF, TARTAGLIONE, RAFFERTY, FERLO, BROWNE, COSTA, O'PAKE AND KITCHEN, JANUARY 20, 2009 |
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| SENATOR GREENLEAF, JUDICIARY, AS AMENDED, FEBRUARY 10, 2009 |
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| AN ACT |
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1 | Amending Title 20 (Decedents, Estates and Fiduciaries) of the |
2 | Pennsylvania Consolidated Statutes, in intestate succession, |
3 | further providing for forfeiture; in wills, further providing |
4 | for modification of wills; in grant of letters, further |
5 | providing for advertisement of grant of letters; in |
6 | administration and personal representatives, further |
7 | providing for duty of personal representative; in |
8 | apportionment of death taxes, further providing for |
9 | enforcement of contribution or exoneration of Federal estate |
10 | tax; in powers of attorney, further providing for |
11 | implementation of power of attorney; in estates, further |
12 | providing for applicability of rule against perpetuities and |
13 | for modification of conveyance by divorce and for effect of |
14 | divorce on designation of beneficiaries; in trusts, further |
15 | providing for notice of representation, for creditor's claim |
16 | against settlor, for actions contesting validity of revocable |
17 | trusts, for claims and distribution after settlor's death, |
18 | for trustee's duty to inform and report, for illustrative |
19 | powers of trustee and for limitation of action against |
20 | trustee; in principal and income, further providing for power |
21 | to convert to unitrust and for retirement benefits, |
22 | individual retirement accounts, deferred compensation, |
23 | annuities and similar payments; and making conforming |
24 | amendments to Title 15. |
25 | The General Assembly of the Commonwealth of Pennsylvania |
26 | hereby enacts as follows: |
27 | Section 1. Sections 2106(a), 2507(2), 3162, 3301(c), 3706, |
28 | 5603(p) and (q), 6107.1, 6111.1, 6111.2, 7725 and 7745 of Title |
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1 | 20 of the Pennsylvania Consolidated Statutes are amended to |
2 | read: |
3 | § 2106. Forfeiture. |
4 | (a) Spouse's share.-- |
5 | (1) A spouse who, for one year or upwards previous to |
6 | the death of the other spouse, has willfully neglected or |
7 | refused to perform the duty to support the other spouse, or |
8 | who for one year or upwards has willfully and maliciously |
9 | deserted the other spouse, shall have no right or interest |
10 | under this chapter in the real or personal estate of the |
11 | other spouse. |
12 | (2) A spouse shall have no right or interest under this |
13 | chapter in the real or personal estate of the other spouse |
14 | if: |
15 | (i) the other spouse dies domiciled in this |
16 | Commonwealth during the course of divorce proceedings; |
17 | (ii) no decree of divorce has been entered pursuant |
18 | to 23 Pa.C.S. § 3323 (relating to decree of court); and |
19 | (iii) grounds have been established as provided in |
20 | 23 Pa.C.S. § 3323(g). |
21 | * * * |
22 | § 2507. Modification by circumstances. |
23 | Wills shall be modified upon the occurrence of any of the |
24 | following circumstances, among others: |
25 | * * * |
26 | (2) Divorce or pending divorce.--[If the testator is |
27 | divorced from the bonds of matrimony after making a will, |
28 | any] Any provision in [the] a testator's will in favor of or |
29 | relating to [his] the testator's spouse [so divorced] shall |
30 | [thereby] become ineffective for all purposes unless it |
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1 | appears from the will that the provision was intended to |
2 | survive [the divorce.] a divorce, if the testator: |
3 | (i) is divorced from such spouse after making the |
4 | will; or |
5 | (ii) dies domiciled in this Commonwealth during the |
6 | course of divorce proceedings, no decree of divorce has |
7 | been entered pursuant to 23 Pa.C.S. § 3323 (relating to |
8 | decree of court) and grounds have been established as |
9 | provided in 23 Pa.C.S. § 3323(g). |
10 | * * * |
11 | § 3162. Advertisement of grant of letters. |
12 | (a) Notice generally.--The personal representative, |
13 | immediately after the grant of letters, shall cause notice |
14 | thereof to be given in one newspaper of general circulation |
15 | published at or near the place where the decedent resided or, in |
16 | the case of a nonresident decedent, at or near the place where |
17 | the letters were granted, and in the legal periodical, if any, |
18 | designated by rule of court for the publication of legal |
19 | notices, once a week for three successive weeks, together with |
20 | his name and address; and in every such notice, he shall request |
21 | all persons having claims against the estate of the decedent to |
22 | make known the same to him or his attorney, and all persons |
23 | indebted to the decedent to make payment to him without delay. |
24 | (b) Proofs of advertisement to trustee.--A personal |
25 | representative who has advertised the grant of letters and |
26 | received the notice required by section 7780.3(c) (relating to |
27 | duty to inform and report) shall promptly send copies of the |
28 | proofs of that advertisement to the trustee. |
29 | § 3301. Duty of personal representative. |
30 | * * * |
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1 | (c) Time for filing.--The personal representative shall file |
2 | his inventory no later than the date he files his account or the |
3 | due date, including any extension, for the filing of the |
4 | inheritance tax return for the estate, whichever is earlier. Any |
5 | party in interest in the estate may request the filing of an |
6 | inventory at an earlier date by writing delivered to the |
7 | personal representative or his attorney in which event an |
8 | inventory shall be filed within three months after the |
9 | appointment of the personal representative or within 30 days |
10 | after the request, whichever is later. The court[, upon cause |
11 | shown,] may direct the [filing of] personal representative to |
12 | file an inventory of estate assets at any time. |
13 | § 3706. Enforcement of contribution or exoneration of Federal |
14 | estate tax. |
15 | (a) Duty to pay.--Parties liable for apportionment of the |
16 | Federal estate tax, whether residents or nonresidents of this |
17 | Commonwealth, shall pay the amounts apportioned against them |
18 | [respectively.] at the time the Federal estate tax is due, |
19 | without regard to any extension of time for paying such tax. |
20 | (b) [Duty] Power of fiduciary.--The fiduciary charged with |
21 | the duty to pay the Federal estate tax may recover from parties |
22 | liable to apportionment the amounts of Federal estate tax |
23 | [apportionable] apportioned to them [respectively]. If the |
24 | fiduciary pays the tax apportioned against another party, the |
25 | fiduciary may recover from the other party the tax payment so |
26 | advanced, together with interest of 5% per annum from the date |
27 | of payment. |
28 | (c) Suspending distribution.--Distribution or delivery of |
29 | property to any party, other than a fiduciary charged with a |
30 | duty to pay the Federal estate tax, shall not be required of any |
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1 | fiduciary until [the Federal estate tax apportionable with |
2 | respect thereto is paid or, if the Federal estate tax has not |
3 | been determined and apportionment made, until adequate security |
4 | for payment is furnished to the fiduciary making the |
5 | distribution or delivery.] that party pays the Federal estate |
6 | tax apportioned to that party. |
7 | (d) Court decrees.--[The] Notwithstanding subsections (a) |
8 | and (b), the court, upon petition or at an accounting or in any |
9 | appropriate action or proceeding, shall make such decrees or |
10 | orders as it shall deem advisable apportioning the Federal |
11 | estate tax. The court may direct a fiduciary to collect the |
12 | apportioned amounts from the property or interests in his |
13 | possession of any parties against whom apportionment has been |
14 | made and may direct all other parties against whom the Federal |
15 | estate tax has been or may be apportioned or from whom any part |
16 | of the Federal estate tax may be recovered to make payment of |
17 | the apportioned amounts to the fiduciary. When a fiduciary holds |
18 | property of a party liable to apportionment insufficient to |
19 | satisfy the apportioned Federal estate tax, the court may direct |
20 | that the balance of the apportioned amount of Federal estate tax |
21 | shall be paid to the fiduciary by the party liable. Should an |
22 | overpayment of the Federal estate tax be made by any party or on |
23 | his behalf, the court may direct an appropriate reimbursement |
24 | for the overpayment. If the court apportions any part of the |
25 | Federal estate tax against any party interested in |
26 | nontestamentary property or among the respective interests |
27 | created by any nontestamentary instrument, the court, in its |
28 | discretion, may assess against those properties or interests an |
29 | equitable share of the expenses incurred in connection with the |
30 | determination and apportionment of the Federal estate tax. If |
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1 | the fiduciary cannot recover the Federal estate tax apportioned |
2 | against a party benefited, the unrecovered amount shall be |
3 | charged in such manner as the court may determine. |
4 | § 5603. Implementation of power of attorney. |
5 | * * * |
6 | (p) Power to engage in insurance transactions.--A power to |
7 | "engage in insurance transactions" shall mean that the agent |
8 | may: |
9 | (1) Purchase, continue, renew, convert or terminate any |
10 | type of insurance (including, but not limited to, life, |
11 | accident, health, disability or liability insurance) and pay |
12 | premiums and collect benefits and proceeds under insurance |
13 | policies. |
14 | (2) Exercise nonforfeiture provisions under insurance |
15 | policies. |
16 | (3) In general, exercise all powers with respect to |
17 | insurance that the principal could if present; however, the |
18 | agent cannot designate himself beneficiary of a life |
19 | insurance policy unless the agent is the spouse, child, |
20 | grandchild, parent, brother or sister of the principal. An |
21 | agent and a beneficiary of a life insurance policy shall be |
22 | liable as equity and justice may require to the extent that, |
23 | as determined by the court, a beneficiary designation made by |
24 | the agent is inconsistent with the known or probable intent |
25 | of the principal. |
26 | (q) Power to engage in retirement plan transactions.--A |
27 | power to "engage in retirement plan transactions" shall mean |
28 | that the agent may contribute to, withdraw from and deposit |
29 | funds in any type of retirement plan (including, but not limited |
30 | to, any tax qualified or nonqualified pension, profit sharing, |
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1 | stock bonus, employee savings and retirement plan, deferred |
2 | compensation plan or individual retirement account), select and |
3 | change payment options for the principal, make roll-over |
4 | contributions from any retirement plan to other retirement plans |
5 | and, in general, exercise all powers with respect to retirement |
6 | plans that the principal could if present. However, the agent |
7 | cannot designate himself beneficiary of a retirement plan unless |
8 | the agent is the spouse, child, grandchild, parent, brother or |
9 | sister of the principal. An agent and a beneficiary of a |
10 | retirement plan shall be liable as equity and justice may |
11 | require to the extent that, as determined by the court, a |
12 | beneficiary designation made by the agent is inconsistent with |
13 | the known or probable intent of the principal. |
14 | * * * |
15 | § 6107.1. Applicability of rule against perpetuities. |
16 | (a) Traditional rule.--Sections 6104 (relating to rule |
17 | against perpetuities), 6105 (relating to rule against |
18 | perpetuities; disposition when invalidity occurs), 6106 |
19 | (relating to income accumulations; when valid) and 6107 |
20 | (relating to income accumulations; disposition when invalidity |
21 | occurs): |
22 | (1) shall apply to every interest created before January |
23 | 1, 2007; but |
24 | (2) shall not apply to any interest created after |
25 | December 31, 2006. |
26 | (b) Modern rule.--All of the following apply to every |
27 | interest created after December 31, 2006: |
28 | (1) [No] Except as provided in paragraph (3), no |
29 | interest shall be void as a perpetuity. |
30 | (2) No direction or authorization to [accumulated] |
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1 | accumulate income shall be void as a perpetuity. |
2 | (3) If a power of appointment is exercised to create a |
3 | new power of appointment, any interest created by the |
4 | exercise of the new power of appointment is invalid if it |
5 | does not vest within 360 years of the creation of the |
6 | original power of appointment, unless the exercise of the new |
7 | power of appointment expressly states that this provision |
8 | shall not apply to the interests created by the exercise. |
9 | (4) Void interests shall be disposed of in the manner |
10 | provided in section 6105. |
11 | § 6111.1. Modification by divorce or pending divorce. |
12 | [If the conveyor is divorced from the bonds of matrimony |
13 | after making a conveyance, any] Any provision in [the] a |
14 | conveyance which was revocable by [him] a conveyor at the time |
15 | of [his] the conveyor's death and which was to take effect at or |
16 | after [his] the conveyor's death in favor of or relating to [his |
17 | spouse so divorced shall thereby] the conveyor's spouse shall |
18 | become ineffective for all purposes unless it appears in the |
19 | governing instrument that the provision was intended to survive |
20 | [the divorce.] a divorce, if the conveyor: |
21 | (1) is divorced from such spouse after making the |
22 | conveyance; or |
23 | (2) dies domiciled in this Commonwealth during the |
24 | course of divorce proceedings, no decree of divorce has been |
25 | entered pursuant to 23 Pa.C.S. § 3323 (relating to decree of |
26 | court) and grounds have been established as provided in 23 |
27 | Pa.C.S. § 3323(g). |
28 | § 6111.2. Effect of divorce or pending divorce on designation |
29 | of beneficiaries. |
30 | [If a person domiciled in this Commonwealth at the time of |
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1 | his death is divorced from the bonds of matrimony after |
2 | designating his spouse as beneficiary of a life insurance |
3 | policy, annuity contract, pension or profit-sharing plan or |
4 | other contractual arrangement providing for payments to his |
5 | spouse, any designation in favor of his former spouse which was |
6 | revocable by him after the divorce shall become ineffective for |
7 | all purposes and shall be construed as if such former spouse had |
8 | predeceased him unless it appears from the wording of the |
9 | designation, a court order or a written contract between the |
10 | person and such former spouse that the designation was intended |
11 | to survive the divorce.] |
12 | (a) Applicability.--This section is applicable if an |
13 | individual: |
14 | (1) is domiciled in this Commonwealth; |
15 | (2) designates the individual's spouse as beneficiary of |
16 | the individual's life insurance policy, annuity contract, |
17 | pension or profit-sharing plan or other contractual |
18 | arrangement providing for payments to the spouse; and |
19 | (3) either: |
20 | (i) at the time of the individual's death is |
21 | divorced from the spouse; or |
22 | (ii) dies during the course of divorce proceedings, |
23 | no decree of divorce has been entered pursuant to 23 |
24 | Pa.C.S. § 3323 (relating to decree of court) and grounds |
25 | have been established as provided in 23 Pa.C.S. § |
26 | 3323(g). |
27 | (b) General rule.--Any designation described in subsection |
28 | (a)(2) in favor of the individual's spouse or former spouse that |
29 | was revocable by the individual at the individual's death shall |
30 | become ineffective for all purposes and shall be construed as if |
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1 | the spouse or former spouse had predeceased the individual, |
2 | unless it appears the designation was intended to survive the |
3 | divorce based on: |
4 | (1) the wording of the designation; |
5 | (2) a court order; or |
6 | (3) a written contract between the individual and the |
7 | spouse or former spouse. |
8 | (c) Liability.-- |
9 | (1) Unless restrained by court order, no insurance |
10 | company, pension or profit-sharing plan trustee or other |
11 | obligor shall be liable for making payments to a spouse or |
12 | former spouse which would have been proper in the absence of |
13 | this section. |
14 | (2) Any spouse or former spouse to whom payment is made |
15 | shall be answerable to anyone prejudiced by the payment. |
16 | § 7725. Notice of representation. |
17 | A person representing another must be given written notice by |
18 | the trustee that the person is representing the other person. |
19 | [The person to whom the notice is given may decline the |
20 | representation by a writing that is given to the trustee no |
21 | later than 60 days after receipt of the trustee's notice.] A |
22 | person to whom the notice is given is presumed to accept the |
23 | representation unless the person declines the representation in |
24 | a writing delivered to the trustee no later than 30 days after |
25 | receipt of the notice. |
26 | § 7745. Creditor's claim against settlor - UTC 505(a). |
27 | Whether or not a trust instrument contains a spendthrift |
28 | provision and notwithstanding section 7744 (relating to |
29 | discretionary trusts; effect of standard - UTC 504): |
30 | (1) During the lifetime of the settlor, the property of |
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1 | a revocable trust is subject to claims of the settlor's |
2 | creditors. |
3 | (2) A judgment creditor or assignee of the settlor of an |
4 | irrevocable trust may reach the maximum amount that can be |
5 | distributed to or for the settlor's benefit. If a trust has |
6 | more than one settlor, the creditor or assignee of a |
7 | particular settlor may reach the portion of the trust |
8 | attributable to that settlor's contribution. However, the |
9 | assets of an irrevocable trust are not subject to the claims |
10 | of a creditor of the settlor solely because of the existence |
11 | of the trustee's discretionary power to pay directly to the |
12 | taxing authorities or to reimburse the settlor for any income |
13 | tax payable by the settlor attributable to trust income or |
14 | principal. |
15 | (3) After the death of the settlor and subject to the |
16 | settlor's right to direct the source from which liabilities |
17 | will be paid, the property of a revocable trust is subject to |
18 | claims of the settlor's creditors, costs of administration of |
19 | the settlor's estate, the expenses of the settlor's funeral |
20 | and disposal of remains and the family exemption to the |
21 | extent the settlor's probate estate is inadequate to satisfy |
22 | those claims, costs, expenses and exemption and no other |
23 | statute specifically exempts the property from those claims. |
24 | Section 2. Section 7754 of Title 20 is amended by adding a |
25 | subsection to read: |
26 | § 7754. Actions contesting validity of revocable trust. |
27 | * * * |
28 | (d) Competency of witnesses.--The competency of a witness in |
29 | an action contesting the validity of a revocable trust shall be |
30 | governed by the same rules that apply in actions contesting the |
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1 | validity of a will. |
2 | Section 3. Sections 7755(c), 7780.3(a), (f), (g), (i), (k) |
3 | and (l), 7780.6(a), 7785(a), 8105(d) and (e) and 8149(c) of |
4 | Title 20 are amended to read: |
5 | § 7755. Claims and distribution after settlor's death. |
6 | * * * |
7 | (c) [No personal representative.--If no personal |
8 | representative is appointed within 90 days after the settlor's |
9 | death, the trustee shall advertise the trust's existence and the |
10 | name and address of the trustee in the manner set forth in |
11 | section 3162 (relating to advertisement of grant of letters).] |
12 | Trustee's duty to advertise.-- |
13 | (1) A trustee of a revocable trust: |
14 | (i) May advertise at any time after the settlor's |
15 | death. |
16 | (ii) Shall advertise if the first advertisement of |
17 | the grant of letters by the settlor's personal |
18 | representative does not occur within 90 days after the |
19 | settlor's death. |
20 | (2) Advertisements by the trustee under this subsection |
21 | shall be in the manner set forth in section 3162 (relating to |
22 | advertisement of grant of letters) and shall include: |
23 | (i) The fact of the trust's existence. |
24 | (ii) The trustee's name and address. |
25 | (3) The personal representative of the settlor of a |
26 | revocable trust shall send to the trustee copies of the proof |
27 | of publication of the advertisement of the grant of letters. |
28 | * * * |
29 | § 7780.3. Duty to inform and report. |
30 | (a) Duty to respond to requests.--A trustee shall promptly |
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1 | respond to a [beneficiary's] reasonable request by the | <-- |
2 | settlorby: | <-- |
3 | (1) The settlor of a trust or by a beneficiary of an |
4 | irrevocable trust for information related to the trust's |
5 | administration. |
6 | (2) The Department of Public Welfare for information | <-- |
7 | related to the trust's administration when the settlor, |
8 | trustee or beneficiary is a resident in a State-owned |
9 | facility or an applicant for or recipient of cash or medical |
10 | assistance from the Commonwealth. |
11 | * * * |
12 | (f) Notice to current beneficiaries.--No later than 30 days |
13 | after the date on which the trustee of an irrevocable trust |
14 | learns that a person who did not previously receive the notice |
15 | described in subsection (i) is a current beneficiary of the |
16 | trust, the trustee shall send the notice described in subsection |
17 | (i) to the current beneficiary if, at that time, the trustee |
18 | knows that the settlor is then deceased or has been adjudicated |
19 | incapacitated. With respect to a testamentary trust, the time |
20 | specified in this subsection commences to run when the trust is |
21 | first funded, whether or not the trust is completely funded on |
22 | that date. |
23 | (g) Change in trusteeship.--[Apart from the other |
24 | requirements of this section, the trustee shall send the notice |
25 | described in subsection (i) to the current beneficiaries each |
26 | time there is a change in trusteeship.] |
27 | (1) Each time there is a change in trusteeship of any |
28 | trust, the trustee shall notify the settlor in writing of the |
29 | change. |
30 | (2) Each time there is a change in trusteeship of any |
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1 | trust whose settlor is deceased or of an irrevocable trust |
2 | whose settlor has been adjudicated incapacitated, the trustee |
3 | shall notify the current beneficiaries in writing of the |
4 | change. |
5 | (3) Notice under this subsection shall include the |
6 | trustee's name, address and telephone number. |
7 | * * * |
8 | (i) Contents of notice.--[Any] Except as provided in |
9 | subsection (g), any notice under this section shall be written |
10 | and convey the following information: |
11 | (1) The fact of the trust's existence. |
12 | (2) The identity of the settlor. |
13 | (3) The trustee's name, address and telephone number. |
14 | (4) The recipient's right to receive upon request a copy |
15 | of the trust instrument. |
16 | (5) [The recipient's] Each current beneficiary's right |
17 | to receive, at least annually, [a written report of the |
18 | trust's assets and their market values if feasible, the |
19 | trust's liabilities and the trust's receipts and |
20 | disbursements since the date of the last such report] upon |
21 | request, periodic written financial reports concerning the |
22 | trust. |
23 | * * * |
24 | (k) Notice to settlor's appointee.--The settlor of a trust |
25 | may in the trust instrument appoint one or more persons or a |
26 | succession of persons to receive, on behalf of one or more named |
27 | current beneficiaries of the trust, the notices required by this |
28 | section. The trustee giving the notice required by this section |
29 | to that appointee satisfies the trustee's duty to give to the |
30 | named current beneficiary the notice required by this section |
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1 | if: |
2 | (1) the trustee notifies the appointee that the notice |
3 | is being given to the appointee as representing the named |
4 | current beneficiary; and |
5 | (2) the appointee does not decline to receive the notice |
6 | in a writing [that is given] delivered to the trustee no |
7 | later than [60] 30 days after receipt of the trustee's |
8 | notice. |
9 | (l) Applicability.-- |
10 | (1) If the death or adjudication of incapacity described |
11 | in subsection (b), (c), (d) or (e) occurs on or after |
12 | November 6, 2006, the time limit for notice set forth in that |
13 | subsection shall apply. |
14 | (2) If the death or adjudication of incapacity described |
15 | in subsection (b), [(c),] (d) or (e) has occurred before |
16 | November 6, 2006, the time limit for notice set forth in that |
17 | subsection shall be November 6, 2008. |
18 | (3) The notice under subsection (f) shall not be |
19 | required to be completed until two years after November 6, |
20 | 2006. |
21 | § 7780.6. Illustrative powers of trustee. |
22 | (a) Listing.--The powers which a trustee may exercise |
23 | pursuant to section 7780.5 (relating to powers of trustees - UTC |
24 | 815) include the following powers: |
25 | (1) To accept, hold, invest in and retain investments as |
26 | provided in Chapter 72 (relating to prudent investor rule). |
27 | (2) To pay or contest a claim; settle a claim by or |
28 | against the trust by compromise, arbitration or otherwise; |
29 | and release, in whole or in part, any claim belonging to the |
30 | trust. |
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1 | (3) To resolve a dispute regarding the interpretation of |
2 | the trust or the administration of the trust by mediation, |
3 | arbitration or other alternative dispute resolution |
4 | procedures. |
5 | (4) To prosecute or defend actions, claims or |
6 | proceedings for the protection of trust assets and of the |
7 | trustee in the performance of the trustee's duties. |
8 | (5) To abandon or decline to administer any property |
9 | which is of little or no value, transfer title to abandoned |
10 | property and decline to accept title to and administer |
11 | property which has or may have environmental or other |
12 | liability attached to it. |
13 | (6) To insure the assets of the trust against damage or |
14 | loss and, at the expense of the trust, protect the trustee, |
15 | the trustee's agents and the beneficiaries from liability to |
16 | third persons arising from the administration of the trust. |
17 | (7) To advance money for the protection of the trust and |
18 | for all expenses, losses and liability sustained in the |
19 | administration of the trust or because of the holding or |
20 | ownership of any trust assets. The trustee has a lien on the |
21 | trust assets as against the beneficiary for an advance under |
22 | this paragraph, including interest on the advance. |
23 | (8) To pay taxes, assessments, compensation of the |
24 | trustee and employees and agents of the trustee and other |
25 | expenses incurred in the administration of the trust. |
26 | (9) To receive additions to the assets of the trust. |
27 | (10) To sell or exchange any real or personal property |
28 | at public or private sale, without obligation to repudiate an |
29 | otherwise binding agreement in favor of better offers. If the |
30 | trustee has been required to give bond, no proceeds of the |
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1 | sale of real estate, including proceeds arising by the reason |
2 | of involuntary conversion, shall be paid to the trustee |
3 | until: |
4 | (i) the court has made an order excusing the trustee |
5 | from entering additional security; or |
6 | (ii) the court has made an order requiring |
7 | additional security and the trustee has entered the |
8 | additional security. |
9 | (11) To enter for any purpose into a lease as lessor or |
10 | lessee with or without option to purchase or renew for a term |
11 | within or extending beyond the term of the trust. |
12 | (12) To grant options for sales or leases of a trust |
13 | asset and acquire options for the acquisition of assets, |
14 | including options exercisable after the trust terminates. |
15 | (13) To join in any reorganization, consolidation, |
16 | merger, dissolution, liquidation, voting trust plan or other |
17 | concerted action of securityholders and to delegate |
18 | discretionary duties with respect thereto. |
19 | (14) To vote a security, in person or by general or |
20 | limited proxy, with or without power of substitution. |
21 | (15) To borrow funds and mortgage or pledge trust assets |
22 | as security for repayment of the funds borrowed, including |
23 | repayments after the trust terminates. |
24 | (16) To make loans to and buy property from the personal |
25 | representatives of the settlor and the settlor's spouse. |
26 | Loans under this paragraph shall be adequately secured, and |
27 | the purchases under this paragraph shall be for fair market |
28 | value. |
29 | (17) To partition, subdivide, repair, improve or develop |
30 | real estate; enter into agreements concerning the partition, |
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1 | subdivision, repair, improvement, development, zoning or |
2 | management of real estate; impose or extinguish restrictions |
3 | on real estate; dedicate land and easements to public use; |
4 | adjust boundaries; and do anything else regarding real estate |
5 | which is commercially reasonable or customary under the |
6 | circumstances. |
7 | (18) With respect to possible liability for violation of |
8 | environmental law: |
9 | (i) to inspect or investigate property the trustee |
10 | holds or has been asked to hold or property owned or |
11 | operated by an organization in which the trustee holds or |
12 | has been asked to hold an interest, for the purpose of |
13 | determining the application of environmental law with |
14 | respect to the property; |
15 | (ii) to take action to prevent, abate or otherwise |
16 | remedy any actual or potential violation of environmental |
17 | law affecting property held directly or indirectly by the |
18 | trustee, whether taken before or after the assertion of a |
19 | claim or the initiation of governmental enforcement; |
20 | (iii) to decline to accept property into trust or |
21 | disclaim a power with respect to property that is or may |
22 | be burdened with liability for violation of environmental |
23 | law; |
24 | (iv) to compromise claims against the trust which |
25 | may be asserted for an alleged violation of environmental |
26 | law; and |
27 | (v) to pay the expense of inspection, review, |
28 | abatement or remedial action to comply with environmental |
29 | law. |
30 | (19) To operate, repair, maintain, equip and improve any |
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1 | farm or farm operation; to purchase and sell livestock, |
2 | crops, feed and other property that is normally perishable; |
3 | and to purchase, use and dispose of farm equipment and employ |
4 | one or more farm managers and others in connection with farm |
5 | equipment and pay them reasonable compensation. |
6 | (20) To make ordinary or extraordinary repairs or |
7 | alterations in buildings or other structures; demolish |
8 | improvements; and raze existing or erect new party walls or |
9 | buildings. |
10 | (21) To enter into a lease or arrangements for |
11 | exploration and removal of minerals or other natural |
12 | resources or enter into a pooling or utilization agreement. |
13 | (22) To exercise all rights and incidents of ownership |
14 | of life insurance policies held by the trust, including |
15 | borrowing on policies, entering into and terminating split- |
16 | dollar plans, exercising conversion privileges and rights to |
17 | acquire additional insurance and selecting settlement |
18 | options. |
19 | (23) To employ a custodian; hold property unregistered |
20 | or in the name of a nominee, including the nominee of any |
21 | institution employed as custodian, without disclosing the |
22 | fiduciary relationship and without retaining possession and |
23 | control of securities or other property so held or |
24 | registered; and pay reasonable compensation to the custodian. |
25 | (24) To apply funds distributable to a beneficiary who |
26 | is, in the trustee's opinion, disabled by illness or other |
27 | cause and unable properly to manage the funds directly for |
28 | the beneficiary's benefit or to pay such funds for |
29 | expenditure on the beneficiary's behalf to: |
30 | (i) the beneficiary; |
|
1 | (ii) a guardian of the beneficiary's estate; |
2 | (iii) an agent acting under a general power of |
3 | attorney for the beneficiary; or |
4 | (iv) if there is no agent or guardian, a relative or |
5 | other person having legal or physical custody or care of |
6 | the beneficiary. |
7 | (25) To pay funds distributable to a minor beneficiary |
8 | to the minor or to a guardian of the minor's estate or to |
9 | apply the funds directly for the minor's benefit. |
10 | (26) To do any of the following: |
11 | (i) Pay any funds distributable to a beneficiary who |
12 | is not 21 years of age or older to: |
13 | (A) the beneficiary; |
14 | (B) an existing custodian for the beneficiary |
15 | under Chapter 53 (relating to Pennsylvania Uniform |
16 | Transfers to Minors Act) or under any other state's |
17 | version of the Uniform Transfers to Minors Act; |
18 | (C) an existing custodian for the beneficiary |
19 | under the former Pennsylvania Uniform Gifts to Minors |
20 | Act or under any other state's version of the Uniform |
21 | Gifts to Minors Act; or |
22 | (D) a custodian for the beneficiary appointed by |
23 | the trustee under Chapter 53. |
24 | (ii) Apply the funds for the beneficiary. |
25 | (27) To pay calls, assessments and other sums chargeable |
26 | or accruing against or on account of securities. |
27 | (28) To sell or exercise stock subscription or |
28 | conversion rights. |
29 | (29) To continue or participate in the operation of any |
30 | business or other enterprise and to effect incorporation, |
|
1 | merger, consolidation, dissolution or other change in the |
2 | form of the organization of the business or enterprise. |
3 | (30) To select a mode of payment under a qualified |
4 | employee benefit plan or a retirement plan payable to the |
5 | trustee and exercise rights under the plan. |
6 | (31) To distribute in cash or in kind or partly in each |
7 | and allocate particular assets in proportionate or |
8 | disproportionate shares. |
9 | (32) To appoint a trustee to act in another jurisdiction |
10 | with respect to trust property located in the other |
11 | jurisdiction, confer upon the appointed trustee all the |
12 | powers and duties of the appointing trustee, require that the |
13 | appointed trustee furnish security and remove the appointed |
14 | trustee. |
15 | (33) To exercise elections with respect to Federal, |
16 | State and local taxes. |
17 | [(33)] (34) To execute and deliver instruments which |
18 | will accomplish or facilitate the exercise of the trustee's |
19 | powers. |
20 | * * * |
21 | § 7785. Limitation of action against trustee. |
22 | (a) Imposed by trustee's written reports.-- |
23 | (1) A beneficiary [may not challenge a transaction or |
24 | assert] is barred from challenging a transaction or asserting |
25 | a claim against a trustee for breach of trust [on the basis |
26 | of a transaction] if: |
27 | (i) the trustee provided the beneficiary [with a |
28 | written report of the trust's assets and their market |
29 | values if feasible, the trust's liabilities and the |
30 | trust's receipts and disbursements for the year in which |
|
1 | the transaction occurred and for each of the four |
2 | subsequent calendar years] at least annually with |
3 | periodic written financial reports concerning the trust; |
4 | (ii) the transaction was disclosed [in the first of |
5 | the five reports] in a report to which subparagraph (i) |
6 | refers or such report provided sufficient information so |
7 | that the beneficiary knew or should have known of the |
8 | potential claim or should have inquired into its |
9 | existence; |
10 | (iii) [the beneficiary did not notify the trustee in |
11 | writing within six months after receiving the fifth |
12 | annual report that the beneficiary objects to the |
13 | transaction and provide the basis in writing for that |
14 | objection] in the 30 months after a report to which |
15 | subparagraph (ii) refers was sent by the trustee to the |
16 | beneficiary, the beneficiary did not notify the trustee |
17 | in writing that the beneficiary challenges the |
18 | transaction or asserts a claim and provides in writing |
19 | the basis for that challenge or assertion; and |
20 | (iv) all reports were accompanied by a conspicuous |
21 | written statement describing the effect of this |
22 | paragraph. |
23 | (2) A claim not barred by paragraph (1) may nevertheless |
24 | be barred by subsection (b). |
25 | * * * |
26 | § 8105. Power to convert to unitrust. |
27 | * * * |
28 | (d) Post conversion.--After a trust is converted to a |
29 | unitrust, all of the following apply: |
30 | (1) The trustee shall follow an investment policy |
|
1 | seeking a total return for the investments held by the trust, |
2 | whether the return is to be derived: |
3 | (i) from appreciation of capital; |
4 | (ii) from earnings and distributions from capital; |
5 | or |
6 | (iii) from both. |
7 | (2) The trustee shall make regular distributions in |
8 | accordance with the governing instrument construed in |
9 | accordance with the provisions of this section. |
10 | (3) The term "income" in the governing instrument shall |
11 | mean an annual distribution (the unitrust distribution) equal |
12 | to 4% (the payout percentage) of the net fair market value of |
13 | the trust's assets, whether such assets would be considered |
14 | income or principal under other provisions of this chapter, |
15 | averaged over the lesser of: |
16 | (i) the [three] preceding years in the smoothing |
17 | period selected by the trustee; or |
18 | (ii) the period during which the trust has been in |
19 | existence. |
20 | (e) Discretion of trustee.--The trustee may, in the |
21 | trustee's discretion from time to time, determine all of the |
22 | following: |
23 | (1) The effective date of a conversion to a unitrust. |
24 | (2) The provisions for prorating a unitrust distribution |
25 | for a short year in which a beneficiary's right to payments |
26 | commences or ceases. |
27 | (3) The frequency of unitrust distributions during the |
28 | year. |
29 | (4) The effect of other payments from or contributions |
30 | to the trust on the trust's valuation. |
|
1 | (5) Whether to value the trust's assets annually or more |
2 | frequently. |
3 | (5.1) Whether to average the net assets of the trust |
4 | over a smoothing period of three, four or five years. |
5 | (6) What valuation dates to use. |
6 | (7) How frequently to value nonliquid assets and whether |
7 | to estimate their value. |
8 | (8) Whether to omit from the calculations trust property |
9 | occupied or possessed by a beneficiary. |
10 | (9) Any other matters necessary for the proper |
11 | functioning of the unitrust. |
12 | * * * |
13 | § 8149. Retirement benefits, individual retirement accounts, |
14 | deferred compensation, annuities and similar |
15 | payments. |
16 | * * * |
17 | (c) Allocation when internal net income of fund is readily |
18 | ascertained.-- |
19 | (1) If no portion of a payment from a separate fund held |
20 | exclusively for the benefit of the trust is allocable to |
21 | income under subsections (a) and (b) but the internal net |
22 | income of the fund determined as if the fund were a separate |
23 | trust subject to Subchapters [B (relating to decedent's |
24 | estate or terminating income interest) through] A (relating |
25 | to preliminary provisions; power to adjust; power to convert |
26 | to unitrust), B (relating to decedent's estate or terminating |
27 | income interest), C (relating to apportionment at beginning |
28 | and end of income interest), D (relating to allocation of |
29 | receipts during administration of trust) and E (relating to |
30 | allocation of disbursements during administration of trust) |
|
1 | is readily ascertainable by the trustee, the internal net |
2 | income of the fund shall be considered to be the income |
3 | earned by the fund, and the portion of the payment equal to |
4 | the then undistributed net income of the fund realized since |
5 | the trust acquired its interest in the fund shall be deemed |
6 | to be a distribution of such income and shall be allocated to |
7 | the trust income account. |
8 | (2) The balance of any such payment shall be allocated |
9 | to principal. |
10 | (3) The power to adjust under section 8104 (relating to |
11 | trustee's power to adjust), the power to convert to a |
12 | unitrust under section 8105 (relating to power to convert to |
13 | unitrust) and the provisions governing express trusts under |
14 | section 8107 (relating to express trusts) shall apply to |
15 | retirement benefits covered by this subsection which are |
16 | payable to a trust. These powers may be exercised separately |
17 | and independently by the payee trustee or in the governing |
18 | instrument as between the retirement benefits and the trust |
19 | as if they were separate trusts subject to this chapter. |
20 | * * * |
21 | Section 4. Sections 5547(b) and 5548(b) of Title 15 are |
22 | amended to read: |
23 | § 5547. Authority to take and hold trust property. |
24 | * * * |
25 | (b) Nondiversion of certain property.--Property committed to |
26 | charitable purposes shall not, by any proceeding under Chapter |
27 | 59 (relating to fundamental changes) or otherwise, be diverted |
28 | from the objects to which it was donated, granted or devised, |
29 | unless and until the board of directors or other body obtains |
30 | from the court an order under 20 Pa.C.S. [Ch. 61 (relating to |
|
1 | estates)] Ch. 77 Subch. D (relating to creation, validity, |
2 | modification and termination of trust) specifying the |
3 | disposition of the property. |
4 | § 5548. Investment of trust funds. |
5 | * * * |
6 | (b) Use and management.--Except as otherwise permitted under |
7 | 20 Pa.C.S. [Ch. 61 (relating to estates)] Ch. 77 Subch. D |
8 | (relating to creation, validity, modification and termination of |
9 | trust), the board of directors or other body shall apply all |
10 | assets thus received to the purposes specified in the trust |
11 | instrument. The directors or other body shall keep accurate |
12 | accounts of all trust funds, separate and apart from the |
13 | accounts of other assets of the corporation. |
14 | * * * |
15 | Section 5. The amendment of 20 Pa.C.S. § 6107.1 shall apply |
16 | to any interest created after December 31, 2006. |
17 | Section 6. (a) The following provisions shall be |
18 | retroactive to November 6, 2006: |
19 | (1) The amendment of 20 Pa.C.S. § 7745. |
20 | (2) The amendment of 20 Pa.C.S. § 7780.3(l)(2). |
21 | (3) The amendment of 20 Pa.C.S. § 7780.6(a). |
22 | (b) The amendment of 20 Pa.C.S. § 6107.1 shall be |
23 | retroactive to January 1, 2007. |
24 | Section 7. This act shall take effect as follows: |
25 | (1) The following provisions shall take effect |
26 | immediately: |
27 | (i) This section. |
28 | (ii) Sections 5 and 6 of this act. |
29 | (iii) The amendment of 20 Pa.C.S. §§ 6107.1, 7745, |
30 | 7780.3(l)(2) and 7780.6(a). |
|
1 | (2) The remainder of this act shall take effect in 60 |
2 | days. |
|