20c7701h

 

 

CHAPTER 77

TRUSTS

 

Subchapter

A.  General Provisions

B.  Judicial Proceedings

C.  Representation

D.  Creation, Validity, Modification and Termination of Trust

E.  Creditor's Claims; Spendthrift and Discretionary Trusts

F.  Revocable Trusts

G.  Office of Trustee

H.  Duties and Powers of Trustee

I.  Liability of Trustees and Rights of Persons Dealing with Trustees

J.  Miscellaneous Provisions

 

Enactment.  Chapter 77 was added July 7, 2006, P.L.625, No.98, effective in 120 days.

Cross References.  Chapter 77 is referred to in section 6114 of this title; sections 5547, 5548, 5550, 8620, 8818, 9115, 9135 of Title 15 (Corporations and Unincorporated Associations).

 

 

SUBCHAPTER A

GENERAL PROVISIONS

 

Sec.

7701.  Short title of chapter - UTC 101.

7702.  Scope of chapter - UTC 102.

7703.  Definitions - UTC 103.

7704.  Knowledge - UTC 104.

7705.  Trust instrument controls; mandatory rules - UTC 105.

7706.  Common law of trusts; principles of equity - UTC 106.

7707.  Governing law - UTC 107.

7708.  Situs of trust.

7709.  Methods and waiver of notice - UTC 109.

7710.  Notice; others treated as beneficiaries - UTC 110.

7710.1. Nonjudicial settlement agreements - UTC 111.

7710.2.  Rules of construction - UTC 112.

 

Cross References.  Subchapter A is referred to in section 7701 of this title.

20c7701s

§ 7701.  Short title of chapter - UTC 101.

Subchapters A (relating to general provisions) through I (relating to liability of trustees and rights of persons dealing with trustees) shall be known and may be cited as the Uniform Trust Act.

20c7702s

§ 7702.  Scope of chapter - UTC 102.

This chapter applies to express trusts, charitable and noncharitable, and trusts created pursuant to a statute, judgment or decree that requires the trust to be administered in the manner of an express trust.

20c7703s

§ 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:

"Action."  With respect to an act of a trustee, includes a failure to act.

"Beneficiary."  A person that:

(1)  has a present or future beneficial interest in a trust, vested or contingent; or

(2)  in a capacity other than that of trustee or protector, holds a power of appointment over trust property.

"Charitable trust."  A trust, or portion of a trust, created for a charitable purpose described in section 7735(a) (relating to charitable purposes; enforcement - UTC 405).

"Current beneficiary."  A person 18 years of age or older to or for whom income or principal of a trust must be distributed currently or a person 25 years of age or older to or for whom income or principal of a trust may, in the trustee's discretion, be distributed currently.

"Guardian."  A person other than a guardian ad litem who is appointed by the court to make decisions regarding the property of an individual.

"Interests of the beneficiaries."  The beneficial interests provided in the trust instrument.

"Jurisdiction."  With reference to a geographic area, a country, state or county.

"Power of withdrawal."  The unrestricted power of a beneficiary, acting as a beneficiary and not as a trustee, to transfer to himself or herself the entire legal and beneficial interest in all or a portion of trust property. However, a power to withdraw the greater of the amount specified in section 2041(b)(2), 2503(b) or 2514(e) of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 2041(b)(2), 2503(b) or 2514(e)), or any lesser amount determined by reference to one or more of these provisions, may not be treated as a power of withdrawal.

"Property."  Anything that may be the subject of ownership, whether real or personal, legal or equitable, or any interest therein.

"Qualified beneficiary."  Assuming nonexercise of all testamentary powers of appointment, a beneficiary who on the date the beneficiary's qualification is determined:

(1)  is a distributee or permissible distributee of trust income or principal;

(2)  would be a distributee or permissible distributee of trust income or principal if the interests of the distributees described in paragraph (1) terminated on that date; or

(3)  would be a distributee or permissible distributee of trust income or principal if the trust terminated on that date.

"Revocable trust."  A trust is revocable to the extent the settlor, immediately before the time as of which the determination is made, had the power, acting without the consent of the trustee or any person holding an interest adverse to revocation, to prevent the transfer of the trust property at the settlor's death by revocation or amendment of or withdrawal of property from the trust.

"Settlor."  A person, including a testator, who creates or contributes property to a trust. If more than one person creates or contributes property to a trust, each person is a settlor of the portion of the trust property attributable to that person's contribution except to the extent another person has the power to revoke or withdraw that portion.

"Spendthrift provision."  A provision in a trust instrument that restrains both voluntary and involuntary transfer of a beneficiary's interest.

"Trust instrument."  A will or other written instrument executed by the settlor that contains trust provisions, including any amendments thereto.

"Trustee."  Includes an original, additional and successor trustee and a cotrustee.

20c7704s

§ 7704.  Knowledge - UTC 104.

(a)  When person has knowledge.--For the purposes of this chapter and subject to subsection (b), a person has knowledge of a fact involving a trust if the person has:

(1)  actual knowledge of it;

(2)  received a notice or notification of it; or

(3)  reason to know it from all the facts and circumstances known to the person at the time in question.

(b)  Employees.--For the purposes of this chapter, an organization that conducts activities through employees has notice or knowledge of a fact involving a trust only from the time the information was received by an employee having responsibility to act for the trust or would have been brought to the employee's attention if the organization had exercised reasonable diligence. An organization exercises reasonable diligence if it maintains reasonable routines for communicating significant information to the employee having responsibility to act for the trust and there is reasonable compliance with the routines. Reasonable diligence does not require an employee of the organization to communicate information unless the communication is part of the individual's regular duties or the individual knows a matter involving the trust would be materially affected by the information.

20c7705s

§ 7705.  Trust instrument controls; mandatory rules - UTC 105.

(a)  Trust instrument controls.--Except as provided in subsection (b), the provisions of a trust instrument prevail over any contrary provisions of this chapter.

(b)  Mandatory rules.--Notwithstanding a contrary provision in the trust instrument, the following rules apply:

(1)  The requirements for creating a trust set forth in section 7732 (relating to requirements for creation - UTC 402).

(2)  The duty of a trustee to act in good faith and in accordance with the purposes of the trust as set forth in section 7771 (relating to duty to administer trust - UTC 801).

(3)  The requirement in section 7734 (relating to trust purposes - UTC 404) that a trust's purpose be lawful and not contrary to public policy.

(4)  The power of the court to modify or terminate a trust under sections 7740 (relating to termination of trusts; proceedings for termination or modification of trusts - UTC 410) through 7740.6 (relating to modification to achieve settlor's tax objectives - UTC 416).

(5)  The effect of a spendthrift provision and the rights of certain creditors and assignees to reach a trust as provided in Subchapter E (relating to creditor's claims; spendthrift and discretionary trusts).

(6)  The power of the court under section 7762 (relating to trustee's bond - UTC 702).

(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 trust instrument.

(8)  The duty of a trustee under section 7780.3 (relating to duty to inform and report).

(9)  (Reserved).

(10)  The effect of an exculpatory term under section 7788 (relating to exculpation of trustee - UTC 1008).

(11)  The rights under sections 7790 (relating to limitation on personal liability of trustee - UTC 1010) through 7790.3 (relating to certification of trust - UTC 1013) of a person other than a trustee or beneficiary.

(12)  Periods of limitation for commencing a judicial proceeding.

(13)  The power of the court to take action and exercise jurisdiction as may be necessary in the interests of justice.

(14)  The subject matter jurisdiction of the court described in Chapter 7 (relating to orphans' court divisions) and venue for commencing a proceeding as provided in section 7714 (relating to venue - UTC 204).

20c7705v

 

Cross References.  Section 7705 is referred to in section 7707 of this title.

20c7706s

§ 7706.  Common law of trusts; principles of equity - UTC 106.

The common law of trusts and principles of equity supplement this chapter, except to the extent modified by this chapter or another statute of this Commonwealth.

20c7707s

§ 7707.  Governing law - UTC 107.

The meaning and effect of the provisions of a trust instrument shall be determined by:

(1)  the law of the jurisdiction designated in 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 jurisdiction designated in the trust instrument; or

(2)  in the absence of an effective designation in the trust instrument, the law of the jurisdiction in which the settlor is domiciled when the trust becomes irrevocable.

20c7708s

§ 7708.  Situs of trust.

(a)  Specified in trust instrument.--Without precluding other means for establishing a sufficient connection with the designated jurisdiction, provisions 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.

(b)  Unspecified in trust instrument.--If the trust instrument does not specify a situs:

(1)  The situs of a testamentary trust shall be:

(i)  in the county where letters were granted to the personal representative;

(ii)  if letters under subparagraph (i) have not been granted, in a county where the letters might have been granted; or

(iii)  if letters under subparagraph (i) have not been granted and are not subject to being granted, in a county in which any trustee resides or has a place of business.

(2)  The situs of an inter vivos trust whose settlor is domiciled in this Commonwealth when the trust becomes irrevocable or, in the case of a revocable trust, when the first application is made to a court concerning the trust shall be:

(i)  during the settlor's lifetime, either in the county of the settlor's principal residence or in the county in which any of the trustees resides or has a place of business; and

(ii)  after the settlor's death:

(A)  in the county in which letters have been granted to the settlor's personal representative;

(B)  in a county in which letters might have been granted;

(C)  in a county which is the principal place of the trust's administration; or

(D)  in a county in which any trustee resides or has a place of business.

(3)  The situs of an inter vivos trust whose settlor either is living and not domiciled in this Commonwealth at the time when the first application is made to a court concerning the trust or was not domiciled in this Commonwealth at the settlor's death after which the first application to a court concerning the trust is made thereafter shall be in a county where:

(i)  a trustee's principal place of business is located or a trustee is a resident;

(ii)  all or part of the trust administration occurs; or

(iii)  one or more of the beneficiaries reside.

(c)  Transfer.--By complying with subsections (d) and (e), the trustee may transfer the trust's situs to another jurisdiction if either immediately before or immediately after the proposed transfer:

(1)  a trustee's principal place of business is located in or a trustee is a resident of the proposed jurisdiction;

(2)  all or part of the trust administration occurs in the proposed jurisdiction; or

(3)  one or more of the beneficiaries reside in the proposed jurisdiction.

(d)  Notice of transfer.--The trustee shall notify the qualified beneficiaries of a proposed transfer of a trust's situs at least 60 days before the date as of which the trustee intends to change the situs. The notice of proposed transfer must include the following:

(1)  The name of the jurisdiction to which the situs is to be transferred.

(2)  The address and telephone number at the new location at which the trustee can be contacted.

(3)  The reasons for the proposed transfer.

(4)  The date on which the proposed transfer is anticipated to occur.

(5)  A statement that if the situs is changed as the trustee proposes, venue will thereafter be in the county of the new situs consistent with section 7714 (relating to venue - UTC 204).

(6)  The name and address of the court before which judicial actions involving the trust will be heard after the situs is changed as the trustee proposes.

(7)  A statement that the change in situs will occur only if all qualified beneficiaries of the trust consent in writing to the change.

(e)  Consent to transfer.--A trustee may transfer a trust's situs under this section without court approval if all the qualified beneficiaries of the trust consent in writing to the change.

(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 trust instrument or appointed pursuant to section 7764 (relating to vacancy in trusteeship; appointment of successor - UTC 704).

(g)  Court-directed change in situs.--A court having jurisdiction of a testamentary or inter vivos trust, on application of a trustee or any party in interest, after notice as the court shall direct and aided if necessary by the report of a master and after accounting as the court shall require, may direct, notwithstanding any other provision of this chapter, that the situs of the trust shall be changed to any other place within or without this Commonwealth if the court shall find the change necessary or desirable for the proper administration of the trust.

(h)  Claims not discharged.--A change in situs under this section does not discharge any claim against the trustee.

20c7709s

§ 7709.  Methods and waiver of notice - UTC 109.

(a)  Notice generally.--Notice to a person under this chapter or the sending of a document to a person under this chapter must be accomplished in a manner reasonably suitable under the circumstances and likely to result in receipt of the notice or document. Permissible methods of notice or for sending a document include first-class mail, personal delivery, delivery to the person's last known place of residence or place of business and a properly directed electronic message.

(b)  Unknown identity or location.--Notice otherwise required under this chapter or a document otherwise required to be sent under this chapter need not be provided to a person whose identity or location is unknown to and not reasonably ascertainable by the trustee, but the trustee shall create and maintain indefinitely a written record of the steps the trustee took to identify or locate the person.

(c)  Waiver.--Notice under this chapter or the sending of a document under this chapter may be waived in writing by the person to be notified or sent the document.

(d)  Notice of judicial proceeding.--Notice of a judicial proceeding must be given as provided in the applicable rules of court.

20c7710s

§ 7710.  Notice; others treated as beneficiaries - UTC 110.

(a)  Notice.--Whenever notice to qualified or current beneficiaries of a trust is required under this chapter, the trustee must also give notice to any other beneficiary who has sent the trustee a written request for notice.

(b)  Enforcement by charitable organization expressly named in instrument.--A charitable organization expressly named in the trust instrument to receive distributions from the trust has the rights of a beneficiary under this chapter.

(c)  Enforcement by others.--A person appointed to enforce a trust created for the care of an animal or another noncharitable purpose as provided in section 7738 (relating to trust for care of animal - UTC 408) or 7739 (relating to noncharitable trust without ascertainable beneficiary - UTC 409) has the rights of a beneficiary under this chapter.

(d)  Office of Attorney General.--The Office of Attorney General has the rights of a charitable organization expressly named in the trust instrument to receive distributions from a trust having its situs in this Commonwealth and the right to notice of any proceeding or nonjudicial settlement agreement in which there is a charitable interest or purpose.

20c7710.1s

§ 7710.1.  Nonjudicial settlement agreements - UTC 111.

(a)  (Reserved).

(b)  General rule.--Except as otherwise provided in subsection (c), all beneficiaries and trustees of a trust may enter into a binding nonjudicial settlement agreement with respect to any matter involving the trust. The rules of Subchapter C (relating to representation) shall apply to a settlement agreement under this section.

(c)  Exception.--A nonjudicial settlement agreement is valid only to the extent it is not inconsistent with a material purpose of the trust and includes terms and conditions that could be properly approved by the court under this chapter or other applicable law.

(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 of a trust instrument.

(2)  The approval of a trustee's report or accounting or waiver of the preparation of a trustee's report or accounting.

(3)  Direction to a trustee to perform or refrain from performing a particular act.

(4)  The resignation or appointment of a trustee and the determination of a trustee's compensation.

(5)  Transfer of a trust's situs.

(6)  Liability or release from liability of a trustee for an action relating to the trust.

(7)  The grant to a trustee of any necessary or desirable power.

(8)  The exercise or nonexercise of any power by a trustee.

(9)  Questions relating to the property or an interest in property held as part of a trust.

(10)  An action or proposed action by or against a trust or trustee.

(11)  The modification or termination of a trust.

(12)  An investment decision, policy, plan or program of a trustee.

(13)  Any other matter concerning the administration of a trust.

(e)  Request of court.--Any beneficiary or trustee of a trust may request the court to approve a nonjudicial settlement agreement to determine whether the representation as provided in Subchapter C was adequate or whether the agreement contains terms and conditions the court could have properly approved.

20c7710.1v

(July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

 

2016 Amendment.  Act 79 amended subsec. (c).

Cross References.  Section 7710.1 is referred to in sections 7721, 7765 of this title.

20c7710.2s

§ 7710.2.  Rules of construction - UTC 112.

The rules of construction that apply in this Commonwealth to the provisions of testamentary trusts also apply as appropriate to the provisions of inter vivos trusts.

20c7711h

 

 

SUBCHAPTER B

JUDICIAL PROCEEDINGS

 

Sec.

7711.  Role of court in administration of trust - UTC 201.

7712.  Jurisdiction over trustee and beneficiary - UTC 202.

7713.  (Reserved).

7714.  Venue - UTC 204.

 

Cross References.  Subchapter B is referred to in section 7701 of this title.

20c7711s

§ 7711.  Role of court in administration of trust - UTC 201.

(a)  Judicial intervention.--The court may intervene in the administration of a trust to the extent its jurisdiction is invoked by an interested person or as provided by law.

(b)  Judicial supervision.--A trust is not subject to continuing judicial supervision unless ordered by the court.

(c)  Scope of proceeding.--A judicial proceeding involving a trust may relate to any matter involving the trust's administration, including a request for declaratory judgment.

20c7712s

§ 7712.  Jurisdiction over trustee and beneficiary - UTC 202.

(a)  Personal jurisdiction over trustee.--By accepting the trusteeship of a trust having its situs in this Commonwealth or by moving the situs to this Commonwealth, the trustee submits personally to the jurisdiction of the courts of this Commonwealth regarding any matter involving the trust.

(b)  Personal jurisdiction over beneficiary.--With respect to their interests in the trust, the beneficiaries of a trust having its situs in this Commonwealth are subject to the jurisdiction of the courts of this Commonwealth regarding any matter involving the trust. By not releasing or disclaiming the beneficiary's beneficial interest in the trust, a beneficiary of a trust having its situs in this Commonwealth submits personally to the jurisdiction of the courts of this Commonwealth regarding any matter involving the trust.

(c)  Additional jurisdictional methods.--This section does not preclude other methods of obtaining jurisdiction over a trustee, beneficiary or other person receiving property from the trust.

20c7713s

§ 7713.  (Reserved).

20c7714s

§ 7714.  Venue - UTC 204.

(a)  General rule.--Except as otherwise provided in subsection (b), venue for a judicial proceeding involving a trust is in the county of this Commonwealth in which the trust's situs is located and, if the trust is created by will and the estate is not yet closed, in the county in which the decedent's estate is being administered.

(b)  Exceptions.--

(1)  If a trust has no trustee, venue for a judicial proceeding for the appointment of a trustee is in:

(i)  any county in which a beneficiary resides;

(ii)  any county in which trust property is located; or

(iii)  if the trust is created by will, the county in which the decedent's estate was or is being administered.

(2)  The venue of proceedings that are pending on the effective date of this section shall not be disturbed.

20c7714v

 

Cross References.  Section 7714 is referred to in sections 7705, 7708 of this title.

20c7721h

 

 

SUBCHAPTER C

REPRESENTATION

 

Sec.

7721.  Scope; definition of trust matter.

7722.  Representation of parties in interest in general.

7723.  Representatives and persons represented.

7724.  Appointment of representative.

7725.  Notice of representation.

7726.  Representation ineffective if person objects.

 

Cross References.  Subchapter C is referred to in sections 7701, 7710.1, 7740.1 of this title.

20c7721s

§ 7721.  Scope; definition of trust matter.

(a)  Scope.--This subchapter shall apply to this entire chapter unless the context clearly specifies the contrary.

(b)  Definition.--As used in this subchapter, the term "trust matter" includes a judicial proceeding and a nonjudicial settlement, agreement or act pertaining to any matter listed in section 7710.1(d) (relating to nonjudicial settlement agreements - UTC 111).

20c7722s

§ 7722.  Representation of parties in interest in general.

(a)  Judicial proceeding.--In a judicial proceeding involving a trust matter, an order or decree of the court that binds the representative is binding upon a person, class of persons or both represented in accordance with section 7723 (relating to representatives and persons represented) if:

(1)  the trustee notifies the representative in writing whom he represents and the representative does not decline the representation as provided in section 7725 (relating to notice of representation);

(2)  a petitioner, whether or not a trustee, avers the representation in a petition before the court, the representative is the petitioner or a respondent over whom the court has jurisdiction and, if a respondent, the representative does not decline the representation in a responsive pleading filed and served as required by law; or

(3)  the representative has signed a certification of representation described in subsection (d) and has not rescinded the certification on the court's records by the time the court acts upon the petition.

(b)  Nonjudicial resolution.--In a nonjudicial resolution of a trust matter, notice to, the consent or approval of or the waiver or release by the representative is binding upon a person, class of persons or both represented in accordance with section 7723 if:

(1)  the trustee notifies the representative in writing whom he represents and the representative does not decline the representation as provided in section 7725; or

(2)  the representative has signed a certification of representation described in subsection (d) and has not rescinded the certification in a writing received by the trustee by the time of the nonjudicial settlement.

(c)  Permissible consideration.--In making decisions, a representative may consider the general benefit accruing to the living members of the family of the person represented.

(d)  Certification of representation.--

(1)  A certification signed by the representative describing his representation of another person, class of persons or both in accordance with section 7723 may be filed with:

(i)  the court, in the case of a judicial proceeding; or

(ii)  the trustee, in the case of a nonjudicial resolution of a trust matter.

(2)  Subject to paragraph (3), a certification of representation may be rescinded in a writing signed by the representative and filed with:

(i)  the court at any time before the court acts in reliance upon the certification, in the case of a judicial proceeding; or

(ii)  the trustee before a trust matter is resolved without application to the court.

(3)  A representative's rescission of a certification of representation shall have no effect upon actions taken by a trustee in good faith reliance upon the certification.

20c7722v

(July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

20c7723s

§ 7723.  Representatives and persons represented.

The following rules except as set forth in paragraph (7) apply to the extent there is no conflict of interest with respect to the matter at issue between the representative and the person or persons represented that might affect the impartiality of the representative and, if two or more persons are being represented, to the extent there is no conflict of interest with respect to the matter at issue between or among the persons represented that might affect the impartiality of the representative:

(1)  A plenary guardian represents the person whose estate the guardian supervises, and a limited guardian represents the person whose estate the guardian supervises within the scope of authority prescribed by the court order that defines the guardian's authority.

(2)  An agent under a general power of attorney represents the agent's principal, and an agent under a limited power of attorney represents the principal within the scope of the agent's authority under the power of attorney.

(3)  Where property or an interest in property is vested in a class of persons, the living sui juris class members represent the class members who are minors, unborn, unknown or unascertained.

(4)  Where property or an interest in property will pass to a class of persons upon the occurrence of a future event, the living sui juris class members represent the class members who are minors, unborn, unknown or unascertained. The class members entitled to represent other class members or potential class members are the persons who would take the property or interest in property if the future event had occurred immediately before the commencement of the judicial proceeding relating to the property or interest in property or immediately before the effective date of the nonjudicial resolution of the matter.

(5)  Where property or an interest in property will pass to a person, class of persons or both upon the occurrence of a future event, but the property or interest in property will pass to another person, class of persons or both upon the occurrence of an additional future event, the person, class of persons or both who would take upon the occurrence of the first event represents the person, class of persons or both who would take upon the occurrence of the additional event, provided their interests are identical or substantially similar for purposes of the particular trust matter. If a class of persons would take upon the occurrence of the first event, paragraph (4) applies to representation between or among the class.

(6)  A person represents all minors or unborn individuals and persons whose identity or location is unknown and not reasonably ascertainable, to the extent such persons are not otherwise represented, if the interests of the person and the person represented are substantially identical with respect to the particular question or dispute involved.

(7)  Whether or not there is a conflict of interest described in this section, the sole holder or all coholders of a presently exercisable or testamentary power of appointment represent all potential appointees and all takers in default of exercise of the power of appointment if the holder may appoint to:

(i)  the holder's estate, the holder's creditors or the creditors of the holder's estate; or

(ii)  anyone other than the holder's estate, the holder's creditors and the creditors of the holder's estate.

(8)  The sole holder or all coholders of a presently exercisable or testamentary power of appointment not described in paragraph (7) represent all potential appointees and all takers in default of exercise of the power who are also potential appointees.

(9)  Except as provided in paragraph (1), a person represents the person's minor and unborn descendants.

20c7723v

 

Cross References.  Section 7723 is referred to in sections 7722, 7724 of this title.

20c7724s

§ 7724.  Appointment of representative.

Notwithstanding any other provision of this subchapter, if in any judicial proceeding involving a trust matter the court determines that the representation provided by section 7723 (relating to representatives and persons represented) is or might be inadequate, the court may appoint a guardian ad litem or trustee ad litem to represent the inadequately represented person, class of persons or both.

20c7725s

§ 7725.  Notice of representation.

A person representing another must be given written notice by the trustee that the person is representing the other person. A person to whom the notice is given is presumed to accept the representation unless the person declines the representation in a writing delivered to the trustee no later than 30 days after receipt of the notice.

20c7725v

(Oct. 27, 2010, P.L.837, No.85, eff. 60 days)

 

Cross References.  Section 7725 is referred to in section 7722 of this title.

20c7726s

§ 7726.  Representation ineffective if person objects.

Notwithstanding the provisions of this subchapter, a person may not represent another who is sui juris and files a written objection to representation with the trustee.

20c7731h

 

 

SUBCHAPTER D

CREATION, VALIDITY, MODIFICATION

AND TERMINATION OF TRUST

 

Sec.

7731.  Creation of trust - UTC 401.

7732.  Requirements for creation - UTC 402.

7733.  Written trusts created in other jurisdictions - UTC 403.

7734.  Trust purposes - UTC 404.

7735.  Charitable purposes; enforcement - UTC 405.

7736.  Creation of trust induced by fraud, duress or undue influence - UTC 406.

7737.  Oral trusts unenforceable.

7738.  Trust for care of animal - UTC 408.

7739.  Noncharitable trust without ascertainable beneficiary - UTC 409.

7740.  Termination of trusts; proceedings for termination or modification of trusts - UTC 410.

7740.1. Modification or termination of noncharitable irrevocable trust by consent - UTC 411.

7740.2. Modification or termination of noncharitable irrevocable trust by court - UTC 412.

7740.3. Charitable trusts - UTC 413.

7740.4. Modification or termination of noncharitable trust - UTC 414.

7740.5. Reformation to correct mistakes - UTC 415.

7740.6. Modification to achieve settlor's tax objectives - UTC 416.

7740.7. Division of trusts.

7740.8. Combination of trusts.

 

Cross References.  Subchapter D is referred to in section 7701 of this title.

20c7731s

§ 7731.  Creation of trust - UTC 401.

A trust may be created by:

(1)  transfer of property under a written instrument to another person as trustee during the settlor's lifetime or by will or other written disposition taking effect upon the settlor's death;

(2)  written declaration, signed by or on behalf and at the direction of the owner of property as required by section 7732 (relating to requirements for creation - UTC 402), that the owner holds identifiable property as trustee; or

(3)  written exercise of a power of appointment in favor of a trustee.

20c7732s

§ 7732.  Requirements for creation - UTC 402.

(a)  Requirements.--A trust is created only if:

(1)  the settlor has capacity to create a trust;

(2)  the settlor signs a writing that indicates an intention to create the trust and contains provisions of the trust;

(3)  the trust has a definite beneficiary or is:

(i)  a charitable trust;

(ii)  a trust for the care of an animal, as provided in section 7738 (relating to trust for care of animal - UTC 408); or

(iii)  a trust for a noncharitable purpose, as provided in section 7739 (relating to noncharitable trust without ascertainable beneficiary - UTC 409);

(4)  the trustee has duties to perform; and

(5)  the same person is not the sole trustee and sole beneficiary of the trust.

(b)  (Reserved).

(b.1)  Signature by mark or another.--A trust instrument other than a will may be signed by mark or by a person other than the settlor on behalf of and at the direction of the settlor in the same manner as a power of attorney under Chapter 56 (relating to powers of attorney).

(c)  Power to select beneficiary from indefinite class.--A power in a trustee to select a beneficiary from an indefinite class is valid. If the power with respect to a noncharitable trust is not exercised within a reasonable time, the power fails and the property subject to the power passes to the persons who would have taken the property had the power not been conferred.

(d)  Definition.--As used in this section, the term "definite beneficiary" means a beneficiary that can be ascertained now or in the future, subject to any applicable rule against perpetuities.

20c7732v

 

Cross References.  Section 7732 is referred to in sections 7705, 7731 of this title.

20c7733s

§ 7733.  Written trusts created in other jurisdictions - UTC 403.

A written trust not created by will is validly created if its creation complies with the law of the jurisdiction in which the trust instrument was executed or the law of the jurisdiction in which, at the time of creation:

(1)  the settlor was domiciled, had a residence or was a national;

(2)  a trustee was domiciled or had a place of business; or

(3)  any trust property was located.

20c7734s

§ 7734.  Trust purposes - UTC 404.

A trust may be created only to the extent its purposes are lawful and not contrary to public policy.

20c7734v

 

Cross References.  Section 7734 is referred to in section 7705 of this title.

20c7735s

§ 7735.  Charitable purposes; enforcement - UTC 405.

(a)  Purposes.--A charitable trust may be created for the relief of poverty, the advancement of education or religion, the promotion of health, governmental or municipal purposes or other purposes the achievement of which is beneficial to the community.

(b)  Selection by court.--If the provisions 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 trust instrument to receive distributions from the trust or any other person who has standing to do so.

20c7735v

 

Cross References.  Section 7735 is referred to in section 7703 of this title.

20c7736s

§ 7736.  Creation of trust induced by fraud, duress or undue influence - UTC 406.

A trust or an amendment to a trust is voidable to the extent its creation was induced by fraud, duress or undue influence.

20c7737s

§ 7737.  Oral trusts unenforceable.

Oral trusts are unenforceable in this Commonwealth.

20c7738s

§ 7738.  Trust for care of animal - UTC 408.

(a)  Creation and termination.--A trust may be created to provide for the care of an animal alive during the settlor's lifetime. The trust terminates upon the death of the animal or, if the trust was created to provide for the care of more than one animal alive during the settlor's lifetime, upon the death of the last surviving animal.

(b)  Enforcement.--A trust authorized by this section may be enforced by a person appointed in 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 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.

20c7738v

 

Cross References.  Section 7738 is referred to in sections 7710, 7732, 7739 of this title.

20c7739s

§ 7739.  Noncharitable trust without ascertainable beneficiary - UTC 409.

Except as otherwise provided in section 7738 (relating to trust for care of animal - UTC 408) or by another statute:

(1)  A trust may be created for a noncharitable purpose without a definite or definitely ascertainable beneficiary or for a noncharitable but otherwise valid purpose to be selected by the trustee. The trust may not be enforced for more than 21 years.

(2)  A trust authorized by this section may be enforced by a person appointed in 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 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.

20c7739v

 

Cross References.  Section 7739 is referred to in sections 7710, 7732 of this title.

20c7740s

§ 7740.  Termination of trusts; proceedings for termination or modification of trusts - UTC 410.

(a)  Termination.--A trust terminates to the extent it is revoked or expires pursuant to its terms, no purpose of the trust remains to be achieved or the purposes of the trust have become unlawful or contrary to public policy. In addition, a trust may be terminated by the methods prescribed by sections 7740.1 (relating to modification or termination of noncharitable irrevocable trust by consent - UTC 411) through 7740.4 (relating to modification or termination of noncharitable trust - UTC 414).

(b)  Proceedings for termination or modification.--The settlor, the trustee or a beneficiary may commence a proceeding to approve or disapprove a proposed modification or termination under sections 7740.1 through 7740.6 (relating to modification to achieve settlor's tax objectives - UTC 416), the division of a trust under section 7740.7 (relating to division of trusts) or the combination of trusts under section 7740.8 (relating to combination of trusts). The settlor of a charitable trust may commence a proceeding to modify the trust under section 7740.3 (relating to charitable trusts - UTC 413).

20c7740v

 

Cross References.  Section 7740 is referred to in section 7705 of this title.

20c7740.1s

§ 7740.1.  Modification or termination of noncharitable irrevocable trust by consent - UTC 411.

(a)  Consent by settlor and beneficiaries.--A noncharitable irrevocable trust may be modified or terminated upon consent of the settlor and all beneficiaries even if the modification or termination is inconsistent with a material purpose of the trust. A settlor's power to consent to a trust's modification or termination may be exercised by a guardian, an agent under the settlor's general power of attorney or an agent under the settlor's limited power of attorney that specifically authorizes that action. Notwithstanding Subchapter C (relating to representation), the settlor may not represent a beneficiary in the modification or termination of a trust under this subsection.

(b)  Consent by beneficiaries with court approval.--A noncharitable irrevocable trust may be modified upon the consent of all the beneficiaries only if the court concludes that the modification is not inconsistent with a material purpose of the trust. A noncharitable irrevocable trust may be terminated upon consent of all the beneficiaries only if the court concludes that continuance of the trust is not necessary to achieve any material purpose of the trust.

(b.1)  Spendthrift provision.--A spendthrift provision in a trust instrument is presumed to constitute a material purpose of the trust.

(c)  Distribution upon termination.--Upon termination of a trust under subsection (a) or (b), the trustee shall distribute the trust property as agreed by the beneficiaries.

(d)  Consent by some beneficiaries with court approval.--If not all the beneficiaries consent to a proposed modification or termination of the trust under subsection (a) or (b), the modification or termination may be approved by the court only if the court is satisfied that:

(1)  if all the beneficiaries had consented, the trust could have been modified or terminated under this section; and

(2)  the interests of a beneficiary who does not consent will be adequately protected.

20c7740.1v

 

Cross References.  Section 7740.1 is referred to in sections 7705, 7740 of this title.

20c7740.2s

§ 7740.2.  Modification or termination of noncharitable irrevocable trust by court - UTC 412.

(a)  Unanticipated circumstances.--The court may modify the administrative or dispositive provisions of a noncharitable irrevocable trust, make an allowance from the principal of the trust or terminate the trust if, because of circumstances that apparently were not anticipated by the settlor, modification, allowance or termination will further the purposes of the trust. To the extent practicable, the modification or allowance shall approximate the settlor's probable intention.

(b)  Inability to administer effectively.--The court may modify the administrative provisions of a noncharitable irrevocable trust if adherence to the existing provisions would be impracticable or wasteful or impair the trust's administration.

(c)  Distribution of property.--Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.

20c7740.2v

 

Cross References.  Section 7740.2 is referred to in sections 7705, 7740 of this title.

20c7740.3s

§ 7740.3.  Charitable trusts - UTC 413.

(a)  General rule.--Except as otherwise provided in subsection (b), if a particular charitable purpose becomes unlawful, impracticable or wasteful:

(1)  the trust does not fail, in whole or in part;

(2)  the trust property does not revert to the settlor or the settlor's successors in interest; and

(3)  the court shall apply cy pres to fulfill as nearly as possible the settlor's charitable intention, whether it be general or specific.

(b)  Exception.--A provision in the terms of a charitable trust that would result in distribution of the trust property to a noncharitable beneficiary prevails over the power of the court under subsection (a) to apply cy pres.

(c)  Administrative deviation.--A court may modify an administrative provision of a charitable trust to the extent necessary to preserve the trust.

(d)  Administrative termination of small charitable trusts.--A trust solely for charitable purposes having assets of less than $100,000 may be terminated at its inception or at any time thereafter by the trustee with the consent of the Attorney General and all charitable organizations that are designated as beneficiaries by name in the trust instrument. Upon termination, the assets, subject to the approval of the Attorney General, shall be delivered to the organizations, if any, designated in the trust instrument or, if none, to organizations selected by the trustee, in either case to be held and applied for the general or specific charitable purposes and on the terms that will, in the trustee's discretion, fulfill as nearly as possible the settlor's intention.

(e)  Judicial termination of charitable trusts.--If the separate existence of a trust, whenever created, solely for charitable purposes results or will result in administrative expense or other burdens unreasonably out of proportion to the charitable benefits, the court may, upon application of the trustee or any interested person and after notice to the Attorney General, terminate the trust, either at its inception or at any time thereafter, and award the assets outright, free of the trust, to the charitable organizations, if any, designated in the trust instrument or, if none, to charitable organizations selected by the court, in either case for the purposes and on the terms that the court may direct to fulfill as nearly as possible the settlor's intentions other than any intent to continue the trust, if the court is satisfied that the charitable organizations will properly use or administer the assets.

20c7740.3v

 

Cross References.  Section 7740.3 is referred to in sections 7705, 7740 of this title.

20c7740.4s

§ 7740.4.  Modification or termination of noncharitable trust - UTC 414.

(a)  Trustee's authority.--A trustee of a noncharitable trust may terminate the trust if the trustee concludes that the value of the trust property is insufficient to justify the cost of administration, the trustee has given written notice to the qualified beneficiaries at least 60 days before the proposed termination and no qualified beneficiary provides the trustee with a written objection to the proposed termination on or before the date specified in the notice.

(b)  Court authority.--The court may modify or terminate a noncharitable trust, or remove the trustee and appoint a different trustee, if it determines that the value of the trust property is insufficient to justify the cost of administration.

(c)  Distribution of trust property.--Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust.

20c7740.4v

 

Cross References.  Section 7740.4 is referred to in sections 7705, 7740 of this title.

20c7740.5s

§ 7740.5.  Reformation to correct mistakes - UTC 415.

The court may reform a trust instrument, even if unambiguous, to conform to the settlor's probable intention if it is proved by clear and convincing evidence that the settlor's intent as expressed in the trust instrument was affected by a mistake of fact or law, whether in expression or inducement. The court may provide that the modification have retroactive effect.

20c7740.5v

 

Cross References.  Section 7740.5 is referred to in sections 7705, 7740 of this title.

20c7740.6s

§ 7740.6.  Modification to achieve settlor's tax objectives - UTC 416.

The court may modify 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.

20c7740.6v

 

Cross References.  Section 7740.6 is referred to in sections 7705, 7740 of this title.

20c7740.7s

§ 7740.7.  Division of trusts.

(a)  Without court approval.--A trustee may, without court approval, divide a trust into separate trusts, allocating to each separate trust either a fractional share of each asset and each liability held by the original trust or assets having an appropriate aggregate fair market value and fairly representing the appreciation or depreciation in the assets of the original trust as a whole. The beneficiaries of the separate trusts may be different so long as their rights are not impaired. If the division reflects disclaimers or different tax elections, the division shall relate back to the date to which the disclaimer or tax election relates.

(b)  With court approval.--The court, for cause shown, may authorize the division of a trust into separate trusts upon such terms and conditions and with notice as the court shall direct.

(c)  Separate fund.--A trustee may, without court approval, set aside property in a separate fund prior to actual distribution, after which income earned on the separate fund and appreciation or depreciation of the fund set-aside shall belong to the separate fund.

20c7740.7v

(July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

 

2016 Amendment.  Act 79 amended subsec. (b).

Cross References.  Section 7740.7 is referred to in section 7740 of this title.

20c7740.8s

§ 7740.8.  Combination of trusts.

(a)  With court approval.--The court, for cause shown, may authorize the combination of separate trusts with substantially similar provisions upon terms and conditions and with notice as the court shall direct notwithstanding that the trusts may have been created by separate instruments and by different persons. If necessary to protect possibly different future interests, the assets shall be valued at the time of the combination, and a record made of the proportionate interest of each separate trust in the combined fund.

(b)  Without court approval.--A trustee may, without court approval, combine trusts that were created under the same or different instruments if the trusts have identical provisions, tax attributes and trustees.

20c7740.8v

 

Cross References.  Section 7740.8 is referred to in section 7740 of this title.

20c7741h

 

 

SUBCHAPTER E

CREDITOR'S CLAIMS; SPENDTHRIFT AND

DISCRETIONARY TRUSTS

 

Sec.

7741.  Rights of beneficiary's creditor or assignee - UTC 501.

7742.  Spendthrift provision - UTC 502.

7743.  Exceptions to spendthrift provision - UTC 503.

7744.  Discretionary trusts; effect of standard - UTC 504.

7745.  Creditor's claim against settlor - UTC 505(a).

7746.  Overdue distribution - UTC 506.

7747.  Personal obligations of trustee - UTC 507.

7748.  Property subject to power of withdrawal - UTC 505(b).

 

Cross References.  Subchapter E is referred to in sections 7701, 7705 of this title.

20c7741s

§ 7741.  Rights of beneficiary's creditor or assignee - UTC 501.

A judgment creditor or assignee of the beneficiary may reach the beneficiary's interest by attachment of present or future distributions to or for the benefit of the beneficiary or other means to the extent the beneficiary's interest is not subject to a spendthrift provision.

20c7742s

§ 7742.  Spendthrift provision - UTC 502.

(a)  Validity.--A spendthrift provision is valid only if it restrains both voluntary and involuntary transfer of a beneficiary's interest.

(b)  Creation.--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.

(c)  Effect.--A beneficiary may not transfer an interest in a trust in violation of a valid spendthrift provision. Except as otherwise provided in this subchapter, a creditor or assignee of the beneficiary of a spendthrift trust may not reach the interest or a distribution by the trustee before its receipt by the beneficiary.

20c7743s

§ 7743.  Exceptions to spendthrift provision - UTC 503.

(a)  (Reserved).

(b)  Who may override.--A spendthrift provision is unenforceable against:

(1)  a beneficiary's child who has a judgment or court order against the beneficiary for support or maintenance, to the extent of the beneficiary's interests in the income and principal of the trust;

(2)  any other person who has a judgment or court order against the beneficiary for support or maintenance, to the extent of the beneficiary's interest in the trust's income;

(3)  a judgment creditor who has provided services for the protection of the beneficiary's interest in the trust; and

(4)  a claim of the United States or the Commonwealth to the extent Federal law or a statute of this Commonwealth provides.

(c)  Remedy if unenforceable.--A claimant against whom a spendthrift provision cannot be enforced may obtain from a court an order attaching present or future distributions to or for the benefit of the beneficiary. The court may limit the award to such relief as is appropriate under the circumstances.

(d)  Definition.--As used in this section, the term "child" includes any person for whom an order or judgment for child support has been entered in this Commonwealth or another state.

20c7744s

§ 7744.  Discretionary trusts; effect of standard - UTC 504.

(a)  (Reserved).

(b)  Distribution not compelled.--Except as otherwise provided in subsection (c), whether or not a trust contains a spendthrift provision, a creditor of a beneficiary may not compel a distribution that is subject to the trustee's discretion, even if:

(1)  the discretion is expressed in the form of a standard of distribution;

(2)  the trustee has abused the discretion; or

(3)  the beneficiary is the trustee or a cotrustee of the trust.

(c)  Exception.--To the extent a trustee has not complied with a standard of distribution or has abused a discretion:

(1)  a distribution from the trust's income, principal or both may be ordered by the court to satisfy a judgment or court order against the beneficiary for support or maintenance of the beneficiary's child to the extent of the beneficiary's interests in the trust's income, principal or both, and the court shall direct the trustee to pay the child from the trust an amount as is equitable under the circumstances, but not more than the amount the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion; and

(2)  a distribution from trust income may be ordered by the court to satisfy a judgment or court order against the beneficiary for support or maintenance of any person other than the beneficiary's child to the extent of the beneficiary's interest in the income of the trust, and the court shall direct the trustee to pay the person an amount from the income of the trust as is equitable under the circumstances, but not more than the amount of income the trustee would have been required to distribute to or for the benefit of the beneficiary had the trustee complied with the standard or not abused the discretion.

(d)  Proceeding against trustee.--This section does not limit the right of a beneficiary to maintain a judicial proceeding against a trustee for an abuse of discretion or failure to comply with a standard for distribution.

(e)  (Reserved).

(f)  Definition.--As used in this section, the term "child" includes any person for whom an order or judgment for child support has been entered in this Commonwealth or another state.

20c7744v

 

Cross References.  Section 7744 is referred to in section 7745 of this title.

20c7745s

§ 7745.  Creditor's claim against settlor - UTC 505(a).

Whether or not a trust instrument contains a spendthrift provision and notwithstanding section 7744 (relating to discretionary trusts; effect of standard - UTC 504):

(1)  During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor's creditors.

(2)  A judgment creditor or assignee of the settlor of an irrevocable trust may reach the maximum amount that can be distributed to or for the settlor's benefit. If a trust has more than one settlor, the creditor or assignee of a particular settlor may reach the portion of the trust attributable to that settlor's contribution. However, the assets of an irrevocable trust are not subject to the claims of a creditor of the settlor solely because of the existence of the trustee's discretionary power to pay directly to the taxing authorities or to reimburse the settlor for any income tax payable by the settlor attributable to trust income or principal.

(3)  After the death of the settlor and subject to the settlor's right to direct the source from which liabilities will be paid, the property of a revocable trust is subject to claims of the settlor's creditors, costs of administration of the settlor's estate, the expenses of the settlor's funeral and disposal of remains and the family exemption to the extent the settlor's probate estate is inadequate to satisfy those claims, costs, expenses and exemption and no other statute specifically exempts the property from those claims.

20c7745v

(Oct. 27, 2010, P.L.837, No.85, eff. imd.)

 

2010 Amendment.  Section 10(a)(1) of Act 85 provided that the amendment of section 7745 shall be retroactive to November 6, 2006.

20c7746s

§ 7746.  Overdue distribution - UTC 506.

(a)  Distribution not made within reasonable time.--Whether or not the interest of the beneficiary in the trust is subject to a spendthrift provision, a creditor or assignee of a beneficiary may reach a mandatory distribution of income or principal, including a distribution upon termination of the trust, if the trustee has not made the distribution to the beneficiary within a reasonable time after the mandated distribution date.

(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 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 trust instrument includes 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.

20c7747s

§ 7747.  Personal obligations of trustee - UTC 507.

Trust property is not subject to personal obligations of the trustee even if the trustee becomes insolvent or bankrupt.

20c7748s

§ 7748.  Property subject to power of withdrawal - UTC 505(b).

Trust property that is subject to a power of withdrawal, during the period the power may be exercised and after its lapse, release or waiver, may be reached by a creditor or an assignee of the holder of the power whether or not the interest of the holder in the trust is subject to a spendthrift provision.

20c7751h

 

 

SUBCHAPTER F

REVOCABLE TRUSTS

 

Sec.

7751.  Capacity of settlor of revocable trust - UTC 601.

7752.  Revocation or amendment of revocable trust - UTC 602.

7753.  Trustee's duties; powers of withdrawal - UTC 603.

7754.  Actions contesting validity of revocable trust.

7755.  Claims and distribution after settlor's death.

 

Cross References.  Subchapter F is referred to in section 7701 of this title.

20c7751s

§ 7751.  Capacity of settlor of revocable trust - UTC 601.

The capacity required to create, amend, revoke or add property to a revocable trust or to direct the actions of the trustee of a revocable trust is the same as that required to make a will.

20c7752s

§ 7752.  Revocation or amendment of revocable trust - UTC 602.

(a)  Power to revoke or amend.--The settlor may revoke or amend a trust unless the trust instrument expressly provides that the trust is irrevocable.

(b)  More than one settlor.--If a revocable trust is created or funded by more than one settlor:

(1)  to the extent the trust consists of community property, either spouse alone who notifies the other spouse may revoke the trust, but the trust may be amended only by joint action of both spouses;

(2)  to the extent the trust consists of property other than community property, each settlor may revoke or amend the trust with respect to the portion of the trust property attributable to that settlor's contribution upon notice to each other settlor; and

(3)  upon the revocation or amendment of the trust by fewer than all the settlors, the trustee shall promptly notify the other settlors of the revocation or amendment.

(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 trust instrument; or

(2)  if the trust instrument does not provide a method or the method provided in 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 trust instrument.

(d)  Delivery of property.--Upon revocation of a revocable trust, the trustee shall deliver the trust property as the settlor directs.

(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 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.

(f)  Guardian.--A guardian of the settlor's estate may exercise the settlor's powers with respect to revocation or amendment of or withdrawal of property from a revocable trust as the court may direct.

(g)  Liability.--A trustee who does not know that a trust has been revoked or amended is not liable to the settlor, the settlor's successors in interest or the beneficiaries for distributions made and other actions taken on the assumption that the trust had not been amended or revoked.

20c7753s

§ 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 to, the settlor while a trust is revocable.

(b)  Holder of power of withdrawal.--The holder of a power of withdrawal has the rights of a settlor of a revocable trust under this section to the extent of the property subject to the power during the period the power may be exercised.

20c7754s

§ 7754.  Actions contesting validity of revocable trust.

(a)  How action may be commenced.--A person having standing to do so may contest the validity of a revocable trust by filing a petition with the court.

(b)  Time limit.--The petition described in subsection (a) must be filed no later than one year after the date on which the trustee gave the notice required by section 7780.3(c) (relating to duty to inform and report). The court, upon petition of a party in interest and with such notice as the court may direct, may limit the time by which a petition under this section must be filed to six months after the date on which the trustee gave the notice required by section 7780.3(c).

(c)  Grounds for contest.--The grounds for contesting the validity of a revocable trust shall be the same as those for contesting the validity of a will.

(d)  Competency of witnesses.--The competency of a witness in an action contesting the validity of a revocable trust shall be governed by the same rules that apply in actions contesting the validity of a will.

20c7754v

(Oct. 27, 2010, P.L.837, No.85, eff. 60 days)

 

2010 Amendment.  Act 85 added subsec. (d).

20c7755s

§ 7755.  Claims and distribution after settlor's death.

(a)  Creditors' rights.--Creditors of the settlor of a revocable trust shall have the same rights against the trust assets determined immediately before the settlor's death as they have against the settlor's estate, but the assets of the settlor's estate shall be applied first toward satisfaction of the creditors' claims. This subsection shall not expose to creditors' claims trust assets for which other provisions of substantive law provide exemption from the claims of the settlor's creditors.

(b)  Enforcement of claim against revocable trust.--A creditor may make a claim against a revocable trust by notifying the settlor's personal representative as provided in section 3384 (relating to notice of claim) or, if no personal representative has been appointed, by notifying the trustee according to the methods set forth in section 3384. A personal representative who receives notice shall within 20 days notify the trustee in writing and upon doing so shall have no liability under this section to the creditor.

(c)  Trustee's duty to advertise.--

(1)  A trustee of a revocable trust:

(i)  May advertise at any time after the settlor's death.

(ii)  Shall advertise if the first advertisement of the grant of letters by the settlor's personal representative does not occur within 90 days after the settlor's death.

(2)  Advertisements by the trustee under this subsection shall be in the manner set forth in section 3162 (relating to advertisement of grant of letters), shall be done in the jurisdiction of the deceased settlor's domicile and shall include:

(i)  The fact of the trust's existence.

(ii)  The trustee's name and address.

(3)  The personal representative of the settlor of a revocable trust shall send to the trustee copies of the proof of publication of the advertisement of the grant of letters.

(d)  Liability of personal representative.--A personal representative who has received the notice required by section 7780.3(c) (relating to duty to inform and report) and does not notify the trustee of a revocable trust of a creditor's claim known to the personal representative within one year after the first complete advertisement of the grant of letters to the personal representative shall be liable to the creditor to the extent the creditor's interest is prejudiced thereby. A personal representative shall have no liability under this section to a creditor whose claim is not known to the personal representative within one year after the first complete advertisement of the grant of letters to the personal representative. The provisions of this section shall not affect the liability of the settlor's personal representative under other provisions of law.

(e)  Liability to any creditor.--At the trustee's own risk and without the filing, audit or confirmation of the trustee's account, a trustee of a revocable trust who has either given the settlor's personal representative the notice required by section 7780.3(c) or given the notice required by subsection (c) may distribute real or personal property of the revocable trust. That distribution shall be without liability to any creditor of the settlor unless the claim of that creditor is known to the trustee within 13 months after the first complete advertisement of the grant of letters to the personal representative or, if no personal representative has been appointed, within one year after the first complete advertisement under subsection (c).

(f)  Rights of creditors against distributed property.--

(1)  No creditor shall have any claim against personal property distributed by the trustee of a revocable trust at the trustee's own risk under subsection (e) unless the claim of the creditor is known to the trustee within 13 months after the first complete advertisement of the grant of letters to the personal representative or, if no personal representative has been appointed, within one year after the first complete advertisement of the trust under subsection (c).

(2)  No creditor shall have any claim against real property distributed by the trustee of a revocable trust at the trustee's own risk under subsection (e) unless the creditor, within one year after the settlor's death, files a written notice of claim with the clerk. The claim against real property shall expire at the end of five years after the settlor's death unless within that time the trustee files an account or the creditor files a petition to compel an accounting.

(g)  Judicial principles.--In any proceeding by a creditor against a trustee or beneficiary of a revocable trust, the court shall apply principles analogous to:

(1)  section 3387 (relating to claims not due; certain to become due);

(2)  section 3388 (relating to claims not certain to become due);

(3)  section 3392 (relating to classification and order of payment); and

(4)  section 3393 (relating to notice to Commonwealth and political subdivisions).

20c7755v

(Oct. 27, 2010, P.L.837, No.85, eff. 60 days)

 

2010 Amendment.  Act 85 amended subsec. (c).

20c7761h

 

 

SUBCHAPTER G

OFFICE OF TRUSTEE

 

Sec.

7761.  Accepting or declining trusteeship - UTC 701.

7762.  Trustee's bond - UTC 702.

7763.  Cotrustees - UTC 703.

7764.  Vacancy in trusteeship; appointment of successor - UTC 704.

7765.  Resignation of trustee; filing resignation.

7766.  Removal of trustee - UTC 706.

7767.  Delivery of property by former trustee - UTC 707.

7768.  Compensation of trustee - UTC 708.

7769.  Reimbursement of expenses - UTC 709.

7770.  Liability of successor trustee.

 

Cross References.  Subchapter G is referred to in section 7701 of this title.

20c7761s

§ 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 trust instrument; or

(2)  if the trust instrument does not provide a method or the method provided in 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.

(b)  Rejecting trusteeship.--A person designated as trustee who has not yet accepted the trusteeship may reject the trusteeship. A designated trustee who does not accept the trusteeship within a reasonable time after knowing of the designation is deemed to have rejected the trusteeship.

(c)  Actions not constituting acceptance of trusteeship.--A person designated as trustee, without accepting the trusteeship, may:

(1)  act to preserve the trust property if, within a reasonable time after acting, the person sends a written rejection of the trusteeship to the settlor or, if the settlor is dead or lacks capacity, to a qualified beneficiary; and

(2)  inspect or investigate trust property to determine potential liability under environmental or other law or for any other purpose.

20c7762s

§ 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 or is required by the provisions of the trust instrument and the court has not dispensed with the requirement.

(b)  Judicial authority.--The court may specify the amount of a bond, its liabilities and whether sureties are necessary. The court may modify or terminate a bond at any time.

(c)  Institutional trustees.--An institution qualified to do trust business in this Commonwealth need not give bond even if required by the trust instrument.

20c7762v

 

Cross References.  Section 7762 is referred to in section 7705 of this title.

20c7763s

§ 7763.  Cotrustees - UTC 703.

(a)  Majority decision.--Cotrustees who do not reach a unanimous decision may act by majority decision.

(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 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.

(b)  Vacancy.--If a vacancy occurs in a cotrusteeship, the remaining cotrustees may act for the trust.

(c)  Performance.--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.

(d)  Unavailability.--If a cotrustee is unavailable to perform duties and prompt action is necessary to achieve the purposes of the trust or to avoid injury or loss to the trust property, the remaining cotrustee or a majority of the remaining cotrustees may act for the trust.

(e)  (Reserved).

(f)  Liability.--Except as otherwise provided in subsection (g), a trustee who does not join in an action of another trustee is not liable for the action.

(g)  Reasonable care.--Each trustee shall exercise reasonable care to:

(1)  prevent a cotrustee from committing a breach of trust involving fraud or self-dealing; and

(2)  compel a cotrustee to redress a breach of trust involving fraud or self-dealing.

(h)  Dissenting trustee.--A dissenting trustee shall join the majority to carry out a majority decision requiring affirmative action and may be ordered to do so by the court. A dissenting trustee who joins in an action at the direction of the majority of the trustees and who notified any cotrustee of the dissent at or before the time of the action is not liable for the action unless the action is a breach of trust involving fraud or self-dealing.

20c7764s

§ 7764.  Vacancy in trusteeship; appointment of successor - UTC 704.

(a)  When vacancy occurs.--A vacancy in a trusteeship occurs if:

(1)  a person designated as trustee rejects the trusteeship;

(2)  a person designated as trustee cannot be identified or does not exist;

(3)  a trustee resigns;

(4)  a trustee is disqualified or removed;

(5)  a trustee dies; or

(6)  a trustee is determined by the court to be incapacitated pursuant to section 5511 (relating to petition and hearing; independent evaluation).

(b)  Filling of vacancy.--A vacancy in a trusteeship need not be filled if one or more cotrustees remain in office and the trust instrument does 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 of the trust instrument to act as successor trustee;

(2)  by a person appointed by unanimous written agreement of the qualified beneficiaries; or

(3)  by a person appointed by the court.

(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 the provisions of the trust instrument to act as successor trustee;

(2)  by a person selected by unanimous written agreement of the qualified beneficiaries if the Office of Attorney General concurs in the selection; or

(3)  by a person appointed by the court.

(e)  Appointment by court.--Whether or not a vacancy in a trusteeship exists or is required to be filled, the court may appoint an additional trustee or special fiduciary if the court considers the appointment desirable for the administration of the trust.

(f)  Filing appointment.--An appointment of a trustee and an acceptance of an appointment of a trustee may be filed with the clerk of court having jurisdiction over the trust.

20c7764v

 

Cross References.  Section 7764 is referred to in section 7708 of this title.

20c7765s

§ 7765.  Resignation of trustee; filing resignation.

(a)  Court approval.--(Deleted by amendment).

(a.1)  General rule.--A trustee may resign:

(1)  with court approval;

(2)  without court approval if authorized to resign by the trust instrument; or

(3)  pursuant to a nonjudicial settlement agreement described in section 7710.1 (relating to nonjudicial settlement agreements - UTC 111).

(b)  Without court approval if authorized by trust instrument.--(Deleted by amendment).

(c)  Without court approval and without authorization in trust instrument.--(Deleted by amendment).

(d)  Liability.--The resignation of a trustee shall not by itself relieve the resigning trustee of liability in connection with the administration of the trust.

(e)  Filing resignation.--A resignation of a trustee may be filed with the clerk of the court having jurisdiction over the trust.

20c7765v

(July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

 

2016 Amendment.  Act 79 added subsec. (a.1) and deleted subsecs. (a), (b) and (c).

20c7766s

§ 7766.  Removal of trustee - UTC 706.

(a)  Request to remove trustee; court authority.--The settlor, a cotrustee or a beneficiary may request the court to remove a trustee or a trustee may be removed by the court on its own initiative.

(b)  When court may remove trustee.--The court may remove a trustee if it finds that removal of the trustee best serves the interests of the beneficiaries of the trust and is not inconsistent with a material purpose of the trust, a suitable cotrustee or successor trustee is available and:

(1)  the trustee has committed a serious breach of trust;

(2)  lack of cooperation among cotrustees substantially impairs the administration of the trust;

(3)  the trustee has not effectively administered the trust because of the trustee's unfitness, unwillingness or persistent failures; or

(4)  there has been a substantial change of circumstances. A corporate reorganization of an institutional trustee, including a plan of merger or consolidation, is not itself a substantial change of circumstances.

(c)  Court remedies.--Pending a final decision on a request to remove a trustee, or in lieu of or in addition to removing a trustee, the court may order appropriate relief under section 7781(b) (relating to remedies for breach of trust - UTC 1001) as may be necessary to protect the trust property or the interests of the beneficiaries.

(d)  Procedure.--The procedure for removal and discharge of a trustee and the effect of removal and discharge shall be the same as that set forth in sections 3183 (relating to procedure for and effect of removal) and 3184 (relating to discharge of personal representative and surety).

(e)  Cross reference.--See section 1608 of the act of November 30, 1965 (P.L.847, No.356), known as the Banking Code of 1965.

20c7766v

(Oct. 27, 2010, P.L.837, No.85, eff. 60 days)

 

2010 Amendment.  Act 85 amended subsec. (b) and added subsec. (e).

Cross References.  Section 7766 is referred to in section 7781 of this title.

20c7767s

§ 7767.  Delivery of property by former trustee - UTC 707.

(a)  Duties and powers of trustee.--Unless a cotrustee remains in office or the court otherwise orders, a trustee who has resigned or been removed has the duties of a trustee and the powers necessary to protect the trust property until the trust property is delivered to a successor trustee or other person entitled to it.

(b)  Delivery of trust property.--A trustee who has resigned or been removed shall proceed expeditiously to deliver the trust property within the trustee's possession to the cotrustee, successor trustee or other person entitled to it.

20c7768s

§ 7768.  Compensation of trustee - UTC 708.

(a)  If unspecified.--If neither the trust instrument nor a separate written agreement signed by the settlor or anyone who is authorized by 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 a trust instrument nor a fee agreement governs compensation payable from trust principal unless it explicitly so provides.

(b)  If specified; adjustment.--If a trust instrument or written fee agreement signed by the settlor or anyone who is authorized by 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 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.

(c)  Entitlement not barred.--None of the following shall bar a trustee's entitlement to compensation from the income or principal of the trust:

(1)  The trust is perpetual or for any other reason has not yet terminated.

(2)  The trustee's term of office has not yet ended.

(3)  The trustee of a testamentary trust also acted as a personal representative of the settlor and was or might have been compensated for services as a personal representative from the principal of the settlor's estate.

(d)  Court authority.--In determining reasonable compensation, the court may consider, among other facts, the market value of the trust and may determine compensation as a fixed or graduated percentage of the trust's market value. The court may allow compensation from principal, income or both and determine the frequency with which compensation may be collected. Compensation at levels that arise in a competitive market shall be presumed to be reasonable in the absence of compelling evidence to the contrary.

(e)  Cemetery lots.--The authority in this section to pay compensation from trust principal shall not apply to trusts created by cemetery lot owners as endowments for the endowed care and maintenance of burial or cemetery lots if the principal sum involved is less than $20,000. Compensation shall be paid exclusively from the income of such trusts.

20c7768v

 

Cross References.  Section 7768 is referred to in section 7705 of this title.

20c7769s

§ 7769.  Reimbursement of expenses - UTC 709.

(a)  Reimbursement from trust property.--A trustee is entitled to be reimbursed out of the trust property, with interest as appropriate, for:

(1)  expenses that were properly incurred in the administration of the trust; and

(2)  to the extent necessary to prevent unjust enrichment of the trust, expenses that were not properly incurred in the administration of the trust.

(b)  Advance.--An advance by the trustee of money for the protection of the trust gives rise to a lien against trust property to secure reimbursement with reasonable interest.

20c7770s

§ 7770.  Liability of successor trustee.

A successor trustee shall not be personally liable for the acts or omissions of the trustee's predecessor and shall have no duty to investigate the acts or omissions of the predecessor.

20c7770v

 

Cross References.  Section 7770 is referred to in section 7780.1 of this title.

20c7771h

 

 

SUBCHAPTER H

DUTIES AND POWERS OF TRUSTEE

 

Sec.

7771.  Duty to administer trust - UTC 801.

7772.  Duty of loyalty - UTC 802.

7773.  Impartiality - UTC 803.

7774.  Prudent administration - UTC 804.

7775.  Costs of administration - UTC 805.

7776.  Trustee's skills - UTC 806.

7777.  Delegation by trustee.

7778.  Powers to direct - UTC 808.

7779.  Control and protection of trust property - UTC 809.

7780.  Recordkeeping and identification of trust property - UTC 810.

7780.1. Enforcement and defense of claims - UTC 811.

7780.2. (Reserved).

7780.3. Duty to inform and report.

7780.4. Discretionary powers.

7780.5. Powers of trustees - UTC 815.

7780.6. Illustrative powers of trustee.

7780.7. Distribution upon termination.

 

Cross References.  Subchapter H is referred to in section 7701 of this title.

20c7771s

§ 7771.  Duty to administer trust - UTC 801.

Upon acceptance of a trusteeship, the trustee shall administer the trust in good faith, in accordance with its provisions and purposes and the interests of the beneficiaries and in accordance with applicable law.

20c7771v

 

Cross References.  Section 7771 is referred to in section 7705 of this title.

20c7772s

§ 7772.  Duty of loyalty - UTC 802.

(a)  Duty of trustee.--A trustee shall administer the trust solely in the interests of the beneficiaries.

(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 trust instrument;

(2)  the transaction was approved by the court;

(3)  the beneficiary did not commence a judicial proceeding within the time allowed by section 7785 (relating to limitation of action against trustee);

(4)  the beneficiary consented to the trustee's conduct, ratified the transaction or released the trustee in compliance with section 7789 (relating to beneficiary's consent, release or ratification - UTC 1009); or

(5)  the transaction involves a contract entered into or claim acquired by the trustee before the person became or contemplated becoming a trustee.

(c)  What constitutes conflict of interest.--A sale, purchase, exchange, encumbrance or other disposition of property is presumed to be affected by a conflict between personal and fiduciary interests if it is entered into by the trustee with:

(1)  the trustee's spouse;

(2)  the trustee's parent or a spouse of the parent;

(3)  a descendant of the trustee's parent or a spouse of the descendant;

(4)  an agent of the trustee unless the trustee is a corporation and the agent is an affiliate of the corporation or the transaction is authorized by section 7209 (relating to mutual funds);

(5)  a corporation or other person or enterprise in which the trustee or a person that owns a significant interest in the trustee has an interest that might affect the trustee's judgment, but this paragraph does not apply to an affiliate of a corporate trustee or to a transaction authorized by section 7209; or

(6)  the trustee personally.

(d)  Transactions between trustee and beneficiary.--A transaction between a trustee and a beneficiary that does not concern trust property but that occurs during the existence of the trust or while the trustee retains significant influence over the beneficiary and from which the trustee obtains an advantage is voidable by a court upon application by the beneficiary unless the trustee establishes that the transaction was fair to the beneficiary.

(e)  Conflict regarding trust opportunity.--A transaction not concerning trust property in which the trustee engages in the trustee's individual capacity involves a conflict between personal and fiduciary interests if the transaction concerns an opportunity properly belonging to the trust.

(f)  (Reserved).

(g)  Business enterprises.--In voting shares of stock or in exercising powers of control over similar interests in other forms of business enterprise, the trustee shall act in the best interests of the beneficiaries. If the trust is the sole owner of a corporation or other form of enterprise, the trustee shall elect or appoint directors or other managers who will manage the corporation or business enterprise in the best interests of the beneficiaries.

(h)  Permissible transactions.--This section does not preclude the following transactions if fair to the beneficiaries:

(1)  an agreement between a trustee and a beneficiary relating to the appointment or compensation of the trustee;

(2)  payment of reasonable compensation to the trustee and payment of reasonable compensation to affiliates of a corporate trustee if the compensation is disclosed to the current beneficiaries;

(3)  a transaction between a trust and another trust, decedent's estate or guardianship, of which the trustee is a fiduciary or in which a beneficiary has an interest;

(4)  a deposit of trust money in a regulated financial-service institution operated by the trustee;

(5)  an advance by the trustee of money for the protection of the trust; or

(6)  a transaction authorized by section 7209.

(i)  (Reserved).

20c7773s

§ 7773.  Impartiality - UTC 803.

If a trust has two or more beneficiaries, the trustee shall act impartially in investing, managing and distributing the trust property, giving due regard to the beneficiaries' respective interests in light of the purposes of the trust. The duty to act impartially does not mean that the trustee must treat the beneficiaries equally. Rather, the trustee must treat the beneficiaries equitably in light of the purposes of the trust.

20c7774s

§ 7774.  Prudent administration - UTC 804.

A trustee shall administer the trust as a prudent person would, by considering the purposes, provisions, distributional requirements and other circumstances of the trust and by exercising reasonable care, skill and caution.

20c7775s

§ 7775.  Costs of administration - UTC 805.

In administering a trust, the trustee may incur only costs that are reasonable in relation to the trust property, the purposes of the trust and the skills of the trustee.

20c7776s

§ 7776.  Trustee's skills - UTC 806.

A trustee who has special skills or expertise relevant to a trust or who is named trustee in reliance upon the trustee's representation that the trustee has special skills or expertise relevant to a trust shall use those special skills or expertise in the administration of the trust.

20c7777s

§ 7777.  Delegation by trustee.

(a)  Standards for delegation.--A trustee may delegate duties and powers that a prudent trustee of comparable skills might delegate under the circumstances. The trustee shall exercise reasonable care, skill and caution in:

(1)  selecting an agent;

(2)  establishing the scope and specific terms of the delegation, consistent with the purposes and provisions of the trust; and

(3)  reviewing periodically the agent's actions in order to monitor the agent's performance and compliance with the scope and specific terms of the delegation.

(b)  Agent's duty.--The agent shall comply with the scope and terms of the delegation and shall exercise the delegated duties and powers with reasonable care, skill and caution and shall be liable to the trust for failure to do so. An agent who represents having special skills or expertise shall use those special skills or that expertise.

(c)  Liability.--A trustee who complies with subsection (a) is not liable to the beneficiaries or to the trust for an action of the agent to whom the function was delegated.

(d)  Jurisdiction.--An agent who accepts the delegation of duties or powers from a trustee who is subject to the jurisdiction of a court of this Commonwealth shall be deemed to have submitted to the jurisdiction of that court even if the terms of the delegation provide for a different jurisdiction or venue.

(e)  When one trustee may delegate to another.--A trustee may delegate duties and powers to another trustee if the delegating trustee reasonably believes that the other trustee has greater skills than the delegating trustee with respect to those duties and powers and the other trustee accepts the delegation. The delegating trustee shall not be responsible for the decisions, actions or inactions of the trustee to whom those duties and powers have been delegated if the delegating trustee has exercised reasonable care, skill and caution in establishing the scope and specific terms of the delegation and in reviewing periodically the performance of the trustee to whom the duties and powers have been delegated and that trustee's compliance with the scope and specific terms of the delegation.

20c7778s

§ 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 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.

20c7779s

§ 7779.  Control and protection of trust property - UTC 809.

A trustee shall take reasonable steps to take control of and protect the trust property.

20c7780s

§ 7780.  Recordkeeping and identification of trust property - UTC 810.

(a)  Records.--A trustee shall keep adequate records of the administration of the trust.

(b)  Commingling trust property prohibited.--A trustee shall keep trust property separate from the trustee's own property.

(c)  Designating trust property.--Except as otherwise provided in subsection (d) and section 3321 (relating to nominee registration; corporate fiduciary as agent; deposit of securities in a clearing corporation; book-entry securities), a trustee shall cause the trust property to be designated so that the interest of the trust, to the extent feasible, appears in records maintained by a party other than a trustee or beneficiary.

(d)  Investing property of separate trusts.--If the trustee maintains records clearly indicating the respective interests, a trustee may invest as a whole the property of two or more separate trusts.

20c7780.1s

§ 7780.1.  Enforcement and defense of claims - UTC 811.

Except as provided in section 7770 (relating to liability of successor trustee), a trustee shall take reasonable steps to enforce claims of the trust and to defend claims against the trust. When one of several trustees is individually liable to the trust, the other trustee or trustees shall take any legal action against that trustee necessary to protect the trust.

20c7780.2s

§ 7780.2.  (Reserved).

20c7780.3s

§ 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 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.

(b)  Notice after settlor of revocable trust has been adjudicated incapacitated.--No later than 30 days after the date on which the trustee of a revocable trust learns that the settlor has been adjudicated incapacitated, the trustee shall send the notice described in subsection (i) to the settlor's guardian.

(c)  Notice after settlor of revocable trust has died.--No later than 30 days after the date on which the trustee of a revocable trust learns that the settlor has died, the trustee shall send the notice described in subsection (i) to:

(1)  the settlor's personal representative;

(2)  the settlor's spouse or, if the settlor's spouse is incapacitated, the spouse's guardian;

(3)  each of the settlor's children who is sui juris and the guardian, if any, of each child who is not sui juris; and

(4)  the trust's current beneficiaries.

(d)  Notice after settlor of irrevocable trust has been adjudicated incapacitated.--No later than 30 days after the date on which the trustee of an irrevocable trust learns that the settlor has been adjudicated incapacitated, the trustee shall send the notice described in subsection (i) to the trust's current beneficiaries. A revocable trust shall not be deemed irrevocable for the purposes of this subsection merely because the settlor has been adjudicated incapacitated.

(e)  Notice after settlor of irrevocable trust has died.--No later than 30 days after the date on which the trustee of an irrevocable trust learns that the settlor has died, the trustee shall send the notice described in subsection (i) to the trust's current beneficiaries unless the settlor had been adjudicated incapacitated and the trustee sent notices to the current beneficiaries as required by subsection (d).

(f)  Notice to current beneficiaries.--No later than 30 days after the date on which the trustee of an irrevocable trust learns that a person who did not previously receive the notice described in subsection (i) is a current beneficiary of the trust, the trustee shall send the notice described in subsection (i) to the current beneficiary if, at that time, the trustee knows that the settlor is then deceased or has been adjudicated incapacitated. With respect to a testamentary trust, the time specified in this subsection commences to run when the trust is first funded, whether or not the trust is completely funded on that date.

(g)  Change in trusteeship.--

(1)  Each time there is a change in trusteeship of any trust, the trustee shall notify the settlor in writing of the change.

(2)  Each time there is a change in trusteeship of any trust whose settlor is deceased or of an irrevocable trust whose settlor has been adjudicated incapacitated, the trustee shall notify the current beneficiaries in writing of the change.

(3)  Notice under this subsection shall include the trustee's name, address and telephone number.

(h)  Trustee's notice to any beneficiary at any time.--Apart from the requirements of this section, the trustee may send the notice described in subsection (i) to any beneficiary of the trust at any time.

(i)  Contents of notice.--Except as provided in subsection (g), any notice under this section shall be written and convey the following information:

(1)  The fact of the trust's existence.

(2)  The identity of the settlor.

(3)  The trustee's name, address and telephone number.

(4)  The recipient's right to receive upon request a copy of the trust instrument.

(5)  Each current beneficiary's right to receive, at least annually, upon request, periodic written financial reports concerning the trust.

(j)  Waiver.--Any beneficiary may waive in writing the right to receive the notice described in subsection (i) and thereafter may rescind in writing that waiver.

(k)  Notice to settlor's appointee.--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:

(1)  the trustee notifies the appointee that the notice is being given to the appointee as representing the named current beneficiary; and

(2)  the appointee does not decline to receive the notice in a writing delivered to the trustee no later than 30 days after receipt of the trustee's notice.

(k.1)  Nomination by current beneficiary.--In a writing given to the trustee, a current beneficiary of a trust may nominate another person to receive, on behalf of the current beneficiary, the notices required by this section. By giving the notices required by this section to the nominee of the current beneficiary, the trustee satisfies the trustee's duty to give to the current beneficiary the notices required by this section if:

(1)  the trustee notifies the nominee that the notice is being given to the nominee as representative of the current beneficiary and that future notices required by this section will be given to the nominee in the same capacity; and

(2)  the nominee does not decline to receive the notices on behalf of the current beneficiary in a writing given to the trustee no later than 60 days after receipt of the notice described in paragraph (1).

(k.2)  Reliance on nomination.--The trustee may rely upon the current beneficiary's nomination of another person to receive the notices required by this section on behalf of the current beneficiary and the nominee's presumed acceptance of that representation under subsection (k.1)(2) until the trustee receives a written rescission of the nomination from the current beneficiary or a written declination to receive further notices from the nominee. No such rescission or declination shall render ineffective any notice given by the trustee to the nominee before the trustee received the rescission or declination.

(l)  Applicability.--

(1)  If the death or adjudication of incapacity described in subsection (b), (c), (d) or (e) occurs on or after November 6, 2006, the time limit for notice set forth in that subsection shall apply.

(2)  If the death or adjudication of incapacity described in subsection (b), (d) or (e) has occurred before November 6, 2006, the time limit for notice set forth in that subsection shall be November 6, 2008.

(3)  The notice under subsection (f) shall not be required to be completed until two years after November 6, 2006.

20c7780.3v

(Oct. 27, 2010, P.L.837, No.85; July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

 

2016 Amendment.  Act 79 added subsecs. (k.1) and (k.2).

2010 Amendment.  Act 85 amended subsecs. (a), (f), (g), (i), (k) and (l), effective immediately as to subsec. (l)(2) and in 60 days as to subsecs. (a), (f), (g), (i), (k) and (l)(1) and (3). Section 10(a)(2) of Act 85 provided that the amendment of subsec. (l)(2) shall be retroactive to November 6, 2006.

References in Text.  The Department of Public Welfare, referred to in this section, was redesignated as the Department of Human Services by Act 132 of 2014.

Cross References.  Section 7780.3 is referred to in sections 3162, 3384.1, 5603, 7705, 7754, 7755, 7785 of this title.

20c7780.4s

§ 7780.4.  Discretionary powers.

The trustee shall exercise a discretionary power in good faith and in accordance with the provisions and purposes of the trust and the interests of the beneficiaries, notwithstanding the breadth of discretion granted to a trustee in the trust instrument, including the use of such terms as "absolute," "sole" or "uncontrolled."

20c7780.5s

§ 7780.5.  Powers of trustees - UTC 815.

(a)  Exercise of power.--Except as otherwise provided in the trust instrument or in other provisions of this 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.

(b)  (Reserved).

20c7780.5v

 

Cross References.  Section 7780.5 is referred to in sections 7780.6, 7790.2 of this title.

20c7780.6s

§ 7780.6.  Illustrative powers of trustee.

(a)  Listing.--The powers which a trustee may exercise pursuant to section 7780.5 (relating to powers of trustees - UTC 815) include the following powers:

(1)  To accept, hold, invest in and retain investments as provided in Chapter 72 (relating to prudent investor rule).

(2)  To pay or contest a claim; settle a claim by or against the trust by compromise, arbitration or otherwise; and release, in whole or in part, any claim belonging to the trust.

(3)  To resolve a dispute regarding the interpretation of the trust or the administration of the trust by mediation, arbitration or other alternative dispute resolution procedures.

(4)  To prosecute or defend actions, claims or proceedings for the protection of trust assets and of the trustee in the performance of the trustee's duties.

(5)  To abandon or decline to administer any property which is of little or no value, transfer title to abandoned property and decline to accept title to and administer property which has or may have environmental or other liability attached to it.

(6)  To insure the assets of the trust against damage or loss and, at the expense of the trust, protect the trustee, the trustee's agents and the beneficiaries from liability to third persons arising from the administration of the trust.

(7)  To advance money for the protection of the trust and for all expenses, losses and liability sustained in the administration of the trust or because of the holding or ownership of any trust assets. The trustee has a lien on the trust assets as against the beneficiary for an advance under this paragraph, including interest on the advance.

(8)  To pay taxes, assessments, compensation of the trustee and employees and agents of the trustee and other expenses incurred in the administration of the trust.

(9)  To receive additions to the assets of the trust.

(10)  To sell or exchange any real or personal property at public or private sale, without obligation to repudiate an otherwise binding agreement in favor of better offers. If the trustee has been required to give bond, no proceeds of the sale of real estate, including proceeds arising by the reason of involuntary conversion, shall be paid to the trustee until:

(i)  the court has made an order excusing the trustee from entering additional security; or

(ii)  the court has made an order requiring additional security and the trustee has entered the additional security.

(11)  To enter for any purpose into a lease as lessor or lessee with or without option to purchase or renew for a term within or extending beyond the term of the trust.

(12)  To grant options for sales or leases of a trust asset and acquire options for the acquisition of assets, including options exercisable after the trust terminates.

(13)  To join in any reorganization, consolidation, merger, dissolution, liquidation, voting trust plan or other concerted action of securityholders and to delegate discretionary duties with respect thereto.

(14)  To vote a security, in person or by general or limited proxy, with or without power of substitution.

(15)  To borrow funds and mortgage or pledge trust assets as security for repayment of the funds borrowed, including repayments after the trust terminates.

(16)  To make loans to and buy property from the personal representatives of the settlor and the settlor's spouse. Loans under this paragraph shall be adequately secured, and the purchases under this paragraph shall be for fair market value.

(17)  To partition, subdivide, repair, improve or develop real estate; enter into agreements concerning the partition, subdivision, repair, improvement, development, zoning or management of real estate; impose or extinguish restrictions on real estate; dedicate land and easements to public use; adjust boundaries; and do anything else regarding real estate which is commercially reasonable or customary under the circumstances.

(18)  With respect to possible liability for violation of environmental law:

(i)  to inspect or investigate property the trustee holds or has been asked to hold or property owned or operated by an organization in which the trustee holds or has been asked to hold an interest, for the purpose of determining the application of environmental law with respect to the property;

(ii)  to take action to prevent, abate or otherwise remedy any actual or potential violation of environmental law affecting property held directly or indirectly by the trustee, whether taken before or after the assertion of a claim or the initiation of governmental enforcement;

(iii)  to decline to accept property into trust or disclaim a power with respect to property that is or may be burdened with liability for violation of environmental law;

(iv)  to compromise claims against the trust which may be asserted for an alleged violation of environmental law; and

(v)  to pay the expense of inspection, review, abatement or remedial action to comply with environmental law.

(19)  To operate, repair, maintain, equip and improve any farm or farm operation; to purchase and sell livestock, crops, feed and other property that is normally perishable; and to purchase, use and dispose of farm equipment and employ one or more farm managers and others in connection with farm equipment and pay them reasonable compensation.

(20)  To make ordinary or extraordinary repairs or alterations in buildings or other structures; demolish improvements; and raze existing or erect new party walls or buildings.

(21)  To enter into a lease or arrangements for exploration and removal of minerals or other natural resources or enter into a pooling or unitization agreement.

(22)  To exercise all rights and incidents of ownership of life insurance policies held by the trust, including borrowing on policies, entering into and terminating split-dollar plans, exercising conversion privileges and rights to acquire additional insurance and selecting settlement options.

(23)  To employ a custodian; hold property unregistered or in the name of a nominee, including the nominee of any institution employed as custodian, without disclosing the fiduciary relationship and without retaining possession and control of securities or other property so held or registered; and pay reasonable compensation to the custodian.

(24)  To apply funds distributable to a beneficiary who is, in the trustee's opinion, disabled by illness or other cause and unable properly to manage the funds directly for the beneficiary's benefit or to pay such funds for expenditure on the beneficiary's behalf to:

(i)  the beneficiary;

(ii)  a guardian of the beneficiary's estate;

(iii)  an agent acting under a general power of attorney for the beneficiary; or

(iv)  if there is no agent or guardian, a relative or other person having legal or physical custody or care of the beneficiary.

(25)  To pay funds distributable to a minor beneficiary to the minor or to a guardian of the minor's estate or to apply the funds directly for the minor's benefit.

(26)  To do any of the following:

(i)  Pay any funds distributable to a beneficiary who is not 21 years of age or older to:

(A)  the beneficiary;

(B)  an existing custodian for the beneficiary under Chapter 53 (relating to Pennsylvania Uniform Transfers to Minors Act) or under any other state's version of the Uniform Transfers to Minors Act;

(C)  an existing custodian for the beneficiary under the former Pennsylvania Uniform Gifts to Minors Act or under any other state's version of the Uniform Gifts to Minors Act; or

(D)  a custodian for the beneficiary appointed by the trustee under Chapter 53.

(ii)  Apply the funds for the beneficiary.

(27)  To pay calls, assessments and other sums chargeable or accruing against or on account of securities.

(28)  To sell or exercise stock subscription or conversion rights.

(29)  To continue or participate in the operation of any business or other enterprise and to effect incorporation, merger, consolidation, dissolution or other change in the form of the organization of the business or enterprise.

(30)  To select a mode of payment under a qualified employee benefit plan or a retirement plan payable to the trustee and exercise rights under the plan.

(31)  To distribute in cash or in kind or partly in each and allocate particular assets in proportionate or disproportionate shares.

(32)  To appoint a trustee to act in another jurisdiction with respect to trust property located in the other jurisdiction, confer upon the appointed trustee all the powers and duties of the appointing trustee, require that the appointed trustee furnish security and remove the appointed trustee.

(33)  To exercise elections with respect to Federal, State and local taxes.

(34)  To execute and deliver instruments which will accomplish or facilitate the exercise of the trustee's powers.

(b)  Effect.--The trustee shall have no further responsibility or liability for funds upon any of the following:

(1)  Payment under subsection (a)(24).

(2)  Payment under subsection (a)(25).

(3)  Payment or application under subsection (a)(26).

20c7780.6v

(Oct. 27, 2010, P.L.837, No.85, eff. imd.)

 

2010 Amendment.  Act 85 amended subsec. (a). Section 10(a)(3) of Act 85 provided that the amendment of subsec. (a) shall be retroactive to November 6, 2006.

Cross References.  Section 7780.6 is referred to in section 7790.2 of this title.

20c7780.7s

§ 7780.7.  Distribution upon termination.

Upon the occurrence of an event terminating or partially terminating a trust, the trustee shall proceed to distribute the trust property within a reasonable time to the persons entitled to it, subject to the right of the trustee to retain a reasonable reserve for the payment of debts, expenses and taxes.

20c7781h

 

 

SUBCHAPTER I

LIABILITY OF TRUSTEES AND RIGHTS

OF PERSONS DEALING WITH TRUSTEES

 

Sec.

7781.  Remedies for breach of trust - UTC 1001.

7782.  Damages for breach of trust - UTC 1002.

7783.  Damages in absence of breach - UTC 1003.

7784.  (Reserved).

7785.  Limitation of action against trustee.

7786.  Reliance on trust instrument - UTC 1006.

7787.  Event affecting administration or distribution - UTC 1007.

7788.  Exculpation of trustee - UTC 1008.

7789.  Beneficiary's consent, release or ratification - UTC 1009.

7790.  Limitation on personal liability of trustee - UTC 1010.

7790.1. Interest as general partner - UTC 1011.

7790.2. Protection of person dealing with trustee - UTC 1012.

7790.3. Certification of trust - UTC 1013.

 

Cross References.  Subchapter I is referred to in section 7701 of this title.

20c7781s

§ 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.

(b)  Remedies.--To remedy a breach of trust that has occurred or may occur, the court may order any appropriate relief, including the following:

(1)  Compelling the trustee to perform the trustee's duties.

(2)  Enjoining the trustee from committing a breach of trust.

(3)  Compelling the trustee to redress a breach of trust by paying money, restoring property or other means.

(4)  Ordering a trustee to file an account.

(5)  Taking any action authorized by Chapter 43 (relating to temporary fiduciaries).

(6)  (Reserved).

(7)  Removing the trustee as provided in section 7766 (relating to removal of trustee - UTC 706).

(8)  Reducing or denying compensation to the trustee.

(9)  Subject to section 7790.2 (relating to protection of person dealing with trustee - UTC 1012):

(i)  voiding an act of the trustee;

(ii)  imposing a lien or a constructive trust on trust property; or

(iii)  tracing trust property wrongfully disposed of and recovering the property or its proceeds.

(10)  (Reserved).

20c7781v

 

Cross References.  Section 7781 is referred to in section 7766 of this title.

20c7782s

§ 7782.  Damages for breach of trust - UTC 1002.

(a)  Liability for breach of trust.--A trustee who commits a breach of trust is liable to the beneficiaries affected.

(b)  Contribution.--

(1)  Except as otherwise provided in this subsection, if more than one trustee is liable to the beneficiaries for a breach of trust, a trustee is entitled to contribution from the other trustee or trustees.

(2)  A trustee is not entitled to contribution if the trustee:

(i)  was substantially more at fault than another trustee; or

(ii)  committed the breach of trust in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries.

(3)  A trustee who received a benefit from the breach of trust is not entitled to contribution from another trustee to the extent of the benefit received.

20c7783s

§ 7783.  Damages in absence of breach - UTC 1003.

(a)  Profit.--A trustee is accountable to an affected beneficiary for any profit, excluding reasonable compensation, made by the trustee arising from the administration of the trust, even absent a breach of trust.

(b)  Loss or depreciation.--Absent a breach of trust, a trustee is not liable to a beneficiary for a loss or depreciation in the value of trust property or for not having made a profit.

20c7784s

§ 7784.  (Reserved).

20c7785s

§ 7785.  Limitation of action against trustee.

(a)  Imposed by trustee's written reports.--

(1)  A beneficiary is barred from challenging a transaction or asserting a claim against a trustee for breach of trust if:

(i)  the trustee provided the beneficiary at least annually with periodic written financial reports concerning the trust;

(ii)  the transaction was disclosed in a report to which subparagraph (i) refers or such report provided sufficient information so that the beneficiary knew or should have known of the potential claim or should have inquired into its existence;

(iii)  in the 30 months after a report to which subparagraph (ii) refers was sent by the trustee to the beneficiary, the beneficiary did not notify the trustee in writing that the beneficiary challenges the transaction or asserts a claim and provides in writing the basis for that challenge or assertion; and

(iv)  all reports were accompanied by a conspicuous written statement describing the effect of this paragraph.

(2)  A claim not barred by paragraph (1) may nevertheless be barred by subsection (b).

(3)  In a writing given to the trustee, a beneficiary of a trust may nominate another person to receive, on behalf of the beneficiary, the reports required by this section. By giving the reports required by this section to the nominee of the beneficiary, the trustee satisfies the trustee's duty to give the beneficiary the reports required by this section if:

(i)  the trustee notifies the nominee that the report and future reports required by this section are being given to the nominee as representative of the beneficiary; and

(ii)  the nominee does not decline to receive reports on behalf of the beneficiary in a writing given to the trustee no later than 60 days after receipt of the notice described in this subsection.

(4)  The trustee may rely upon the beneficiary's nomination of another person to receive the reports required by this section on behalf of the beneficiary and the nominee's presumed acceptance of that representation under this subsection until the trustee receives a written rescission of the nomination from the beneficiary or a written declination to receive further reports from the nominee. No such rescission or declination shall render ineffective any report given by the trustee to the nominee before the trustee received the rescission or declination.

(b)  Five-year absolute bar.--If not previously barred by subsection (a) or section 7798 (relating to failure to present claim at audit):

(1)  Except as provided in paragraph (1.1), (2) or (3), a claim by a beneficiary against a trustee, including a claim preserved by the beneficiary notifying the trustee in the manner described in subsection (a), shall be barred five years after the first to occur of the following events:

(i)  the date after the removal, resignation or death of the trustee on which the beneficiary was given the notice required by section 7780.3(g) (relating to duty to inform and report);

(ii)  the termination of the beneficiary's interest in the trust; or

(iii)  the termination of the trust.

(1.1)  A beneficiary who has challenged a transaction or asserted a claim as provided in subsection (a)(1)(iii) may not challenge the transaction or assert the claim against the trustee in a court or an arbitration proceeding commenced more than five years after the date the trustee sent the beneficiary the report described in subsection (a)(1)(i) and (ii).

(2)  Except as set forth in paragraph (3), if the first to occur of the events set forth in paragraph (1) occurred before November 6, 2006, a claim described in paragraph (1) shall be barred five years after November 6, 2006.

(3)  A claim described in paragraph (1) or (1.1) is not barred if, prior to the respective date set forth in either paragraph (1) or (2), the trustee has filed an account with the court or the beneficiary has petitioned the court to compel the trustee to file an account.

20c7785v

(Oct. 27, 2010, P.L.837, No.85, eff. 60 days; July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

 

2016 Amendment.  Act 79 added subsec. (a)(3) and (4).

Cross References.  Section 7785 is referred to in sections 5603, 7772 of this title.

20c7786s

§ 7786.  Reliance on trust instrument - UTC 1006.

A trustee who acts in reasonable reliance on the express provisions of the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance.

20c7787s

§ 7787.  Event affecting administration or distribution - UTC 1007.

If the happening of an event, including marriage, divorce, performance of educational requirements, attaining a specific age or death, affects the administration or distribution of a trust, a trustee who has exercised reasonable care to ascertain the happening of the event is not liable for a loss resulting from the trustee's lack of knowledge.

20c7788s

§ 7788.  Exculpation of trustee - UTC 1008.

(a)  When exculpatory provision unenforceable.--A provision of a trust instrument relieving a trustee of liability for breach of trust is unenforceable to the extent that it:

(1)  relieves the trustee of liability for breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries; or

(2)  was inserted as the result of an abuse by the trustee of a fiduciary or confidential relationship to the settlor.

(b)  Exculpatory provision by trustee.--An exculpatory term drafted or caused to be drafted by the trustee is invalid as an abuse of a fiduciary or confidential relationship unless the trustee proves that the exculpatory term is fair under the circumstances and that its existence and contents were adequately communicated to the settlor.

20c7788v

 

Cross References.  Section 7788 is referred to in section 7705 of this title.

20c7789s

§ 7789.  Beneficiary's consent, release or ratification - UTC 1009.

A trustee is not liable to a beneficiary for breach of trust if the beneficiary consented to the conduct constituting the breach, released the trustee from liability for the breach or ratified the transaction constituting the breach, unless the consent, release or ratification of the beneficiary was induced by improper conduct of the trustee.

20c7789v

 

Cross References.  Section 7789 is referred to in section 7772 of this title.

20c7790s

§ 7790.  Limitation on personal liability of trustee - UTC 1010.

(a)  When trustee not personally liable.--Except as otherwise provided in the contract, a trustee is not personally liable on a contract properly entered into in the trustee's fiduciary capacity in the course of administering the trust if the trustee in the contract disclosed the fiduciary capacity.

(b)  When trustee personally liable.--A trustee is personally liable for torts committed in the course of administering a trust or for obligations arising from ownership or control of trust property, including liability for violation of environmental law, only if the trustee is personally at fault.

(c)  Assertion of claim.--A claim based on a contract entered into by a trustee in the trustee's fiduciary capacity on an obligation arising from ownership or control of trust property or on a tort committed in the course of administering a trust may be asserted in a judicial proceeding against the trustee in the trustee's fiduciary capacity, whether or not the trustee is personally liable for the claim.

20c7790v

 

Cross References.  Section 7790 is referred to in section 7705 of this title.

20c7790.1s

§ 7790.1.  Interest as general partner - UTC 1011.

(a)  Contractual liability.--Except as otherwise provided in subsection (c) or unless personal liability is imposed in the contract, a trustee who holds an interest as a general partner in a general or limited partnership is not personally liable on a contract entered into by the partnership after the trust's acquisition of the interest if the fiduciary capacity was disclosed in the contract or in a statement previously filed pursuant to 15 Pa.C.S. Ch. 83 (relating to general partnerships) or 85 (relating to limited partnerships).

(b)  Tortious liability.--Except as otherwise provided in subsection (c), a trustee who holds an interest as a general partner is not personally liable for torts committed by the partnership or for obligations arising from ownership or control of the interest unless the trustee is personally at fault.

(c)  When immunity inapplicable.--The immunity provided by this section does not apply if an interest in the partnership is held by:

(1)  the trustee in a capacity other than that of trustee;

(2)  the trustee's spouse; or

(3)  the trustee's descendant, sibling or parent or the spouse of a descendant, sibling or parent.

(d)  Personal liability of settlor.--If the trustee of a revocable trust holds an interest as a general partner, the settlor is personally liable for contracts and other obligations of the partnership as if the settlor were a general partner.

20c7790.1v

 

References in Text.  Chapters 83 and 85 of Title 15 (Corporations and Unincorporated Associations), referred to in subsec. (a), were repealed November 21, 2016, P.L.1328, No.170, effective in 90 days.  The subject matter can now be found in Chapters 84 and 86, respectively, in Title 15.

Cross References.  Section 7790.1 is referred to in section 7705 of this title.

20c7790.2s

§ 7790.2.  Protection of person dealing with trustee - UTC 1012.

(a)  (Reserved).

(a.1)  Protection from liability.--Unless a person assisting or dealing with a trustee has actual knowledge that the trustee is committing a breach of trust or has knowledge of such facts that the trustee's conduct amounts to bad faith, the person:

(1)  may assume without inquiry the existence of trust powers and their proper exercise by the trustee;

(2)  is not bound to inquire whether the trustee has power to act or is properly exercising the power; and

(3)  is fully protected in dealing with the trustee as if the trustee possessed and properly exercised the powers the trustee purports to exercise.

(b)  No requirement to inquire.--A person other than a beneficiary who in good faith deals with a trustee is not required to inquire into the extent of the trustee's powers or the propriety of their exercise.

(c)  (Reserved).

(c.1)  Ultra vires.--A trustee's act may not be set aside or not specifically enforced because the trustee's act was not authorized by section 7780.5 (relating to powers of trustees - UTC 815) or 7780.6 (relating to illustrative powers of trustee) or because the trustee's act was authorized but the authority was improperly exercised. A court's power to set aside a transaction for fraud, accident, mistake or self-dealing is unaffected by this subsection.

(d)  Former trustee.--A person other than a beneficiary who in good faith assists a former trustee, or who in good faith and for value deals with a former trustee, without knowledge that the trusteeship has terminated is protected from liability as if the former trustee were still a trustee.

(e)  Effect of other laws.--Comparable protective provisions of other laws relating to commercial transactions or transfer of securities by fiduciaries prevail over the protection provided by this section.

20c7790.2v

 

Cross References.  Section 7790.2 is referred to in sections 7705, 7772, 7781 of this title.

20c7790.3s

§ 7790.3.  Certification of trust - UTC 1013.

(a)  Contents of certification.--Instead of furnishing a copy of the trust instrument to a person other than a beneficiary, the trustee may furnish to the person a certification of trust containing the following information:

(1)  The trust's existence and the date the trust instrument was executed.

(2)  The identity of the settlor.

(3)  The identity and address of the currently acting trustee.

(4)  The powers of the trustee.

(5)  The revocability or irrevocability of the trust and the identity of any person holding a power to revoke the trust.

(6)  The authority of cotrustees to sign or otherwise authenticate and whether all or less than all are required in order to exercise powers of the trustee.

(7)  The trust's taxpayer identification number.

(8)  The manner of taking title to trust property.

(b)  Authentication.--A certification of trust may be signed or otherwise authenticated by any trustee.

(c)  Assurance of representations.--A certification of trust must state that the trust has not been revoked, modified or amended in a manner that would cause the representations contained in the certification of trust to be incorrect.

(d)  Dispositive trust provisions.--A certification of trust need not contain the dispositive provisions of the trust instrument.

(e)  Provisions to be made available upon request.--A recipient of a certification of trust may require the trustee to furnish copies of those excerpts from the original trust instrument and later amendments which designate the trustee and confer upon the trustee the power to act in the pending transaction.

(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 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.

(g)  Enforcement.--A person who in good faith enters into a transaction in reliance upon a certification of trust may enforce the transaction against the trust property as if the representations contained in the certification were correct.

(h)  Liability.--A person making a demand for the trust instrument in addition to a certification of trust or excerpts is liable for damages if the court determines that the person did not act in good faith in demanding the trust instrument.

(i)  Applicability.--This section does not limit the right of a person to obtain a copy of the trust instrument in a judicial proceeding concerning the trust.

20c7790.3v

 

Cross References.  Section 7790.3 is referred to in section 7705 of this title.

20c7791h

 

 

SUBCHAPTER J

MISCELLANEOUS PROVISIONS

 

Sec.

7791.  Abandonment of property.

7792.  Powers, duties and liabilities identical with personal representatives.

7793.  Effect of removal, or of probate of later will or codicil.

7794.  Title of purchaser.

7795.  Reports for school district trustees.

7796.  Jurisdiction.

7797.  Filing accounts.

7798.  Failure to present claim at audit.

7799.  Income on distributive shares.

7799.1. Annexation of account of distributed estate or trust.

7799.2. Accounts, audits and distributions.

7799.3. Pooled trusts for individuals with disabilities.

20c7791s

§ 7791.  Abandonment of property.

If any property is so burdensome or is so encumbered or is in such condition that it is of no value to the trust, the trustee may abandon it. If property without value cannot be abandoned without transfer of title to another or without a formal renunciation, the court may authorize the trustee to transfer or renounce it without consideration if it finds that this will be for the best interests of the trust.

20c7792s

§ 7792.  Powers, duties and liabilities identical with personal representatives.

The provisions concerning the powers, duties and liabilities of a trustee shall be the same as those set forth in the following provisions of this title for the administration of a decedent's or a minor's estate:

Section 3184 (relating to discharge of personal representative and surety).

Section 3321(d) and (e) (relating to nominee registration; corporate fiduciary as agent; deposit of securities in a clearing corporation; book-entry securities).

Section 3323 (relating to compromise of controversies).

Section 3324 (relating to death or incapacity of fiduciary).

Section 3332 (relating to inherent powers and duties).

Section 3353 (relating to order of court).

Section 3354 (relating to power given in governing instrument).

Section 3355 (relating to restraint of sale).

Section 3356 (relating to purchase by personal representative).

Section 3358 (relating to collateral attack).

Section 3359 (relating to record of proceedings; county where real estate lies).

Section 3532(c) (relating to at risk of personal representative).

20c7792v

(July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017)

20c7793s

§ 7793.  Effect of removal, or of probate of later will or codicil.

(a)  No impeachment.--No act of administration performed by a testamentary trustee in good faith shall be impeached by the subsequent:

(1)  revocation of the probate of the will from which the trustee derives authority;

(2)  probate of a later will or of a codicil; or

(3)  dismissal of the trustee.

(b)  Good faith dealings.--Regardless of the good or bad faith of the testamentary trustee, no person who deals in good faith with a testamentary trustee shall be prejudiced by the occurrence of any of the contingencies set forth in subsection (a).

20c7794s

§ 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 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 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.

20c7795s

§ 7795.  Reports for school district trustees.

(a)  Scope.--This section applies if a school district is a trustee of land in accordance with all of the following:

(1)  The land is held for the benefit of the public.

(2)  The land is not used directly for school purposes.

(b)  Requirement.--

(1)  By January 30, the school district shall prepare a report for the prior year concerning the trust.

(2)  The report shall detail all of the following:

(i)  Revenues generated.

(ii)  Expenses incurred.

(iii)  Balance of funds held by the school district as trustee.

(iv)  A statement regarding the activities taken by the trustee during the prior year to advance the purposes of the trust.

(3)  The report must be certified as correct by the district superintendent.

(4)  The report shall be made public as follows:

(i)  The report shall be published in 14-point type in a newspaper of general circulation in each county in which the land is located.

(ii)  The report shall be available during business hours for inspection and copying at the office of the district superintendent. A reasonable fee may be charged for copying.

20c7795v

 

Cross References.  Section 7795 is referred to in section 7796 of this title.

20c7796s

§ 7796.  Jurisdiction.

Notwithstanding 42 Pa.C.S. § 931 (relating to original jurisdiction and venue), jurisdiction over an action involving land referred to in section 7795 (relating to reports for school district trustees) shall be vested in the court of common pleas in the judicial district where:

(1)  all of the land is located; or

(2)  more than 50% of the land is located.

20c7797s

§ 7797.  Filing accounts.

(a)  When to file.--A trustee shall file an account of his administration whenever directed to do so by the court and may file an account at any other time.

(b)  Where to file.--All accounts of trustees shall be filed in the office of the clerk.

20c7798s

§ 7798.  Failure to present claim at audit.

(a)  Applicability.--This section applies to a person that, at the audit of a trustee's account, has a claim that:

(1)  arose out of the administration of trust property or arises out of the distribution of trust property upon any interim or final accounting of the trust; and

(2)  is not reported to the court as an admitted claim.

(b)  Bar.--A person that fails, at the call for audit or confirmation, to present a claim under subsection (a) shall be forever barred from making a claim against:

(1)  trust property distributed pursuant to the audit or confirmation;

(2)  a distributee of trust property distributed pursuant to the audit or confirmation; and

(3)  except as otherwise provided in section 3521 (relating to rehearing; relief granted), trust property awarded back upon further trust pursuant to the audit or confirmation.

(c)  Liens and charges unimpaired.--Nothing in this section shall be construed as impairing any lien or charge on real or personal estate of the trust existing at the time of the audit.

20c7798v

 

Cross References.  Section 7798 is referred to in section 7785 of this title.

20c7799s

§ 7799.  Income on distributive shares.

Except as otherwise provided by the trust instrument or by the provisions of section 3543 (relating to income on distributive shares):

(1)  If a sum of money is directed to be set aside at a specified time as a separate trust, it shall be entitled to income at the annual rate of 5% from the date it was to be set aside until it is set aside. If a sum of money is directed to be paid outright, it shall be entitled to income at the annual rate of 5% from three months after it became payable until it is paid.

(2)  A donee of a gift of specific real or personal property directed to be distributed from a trust shall be entitled to the net income from property given to the donee accrued from the date it became distributable.

(3)  All income from real and personal property earned during the administration of a trust and not payable to others pursuant to the governing instrument or the provisions of this section shall be distributed pro rata among the income beneficiaries of a continuing trust and other persons entitled to residuary shares of the trust.

20c7799v

 

Cross References.  Section 7799 is referred to in section 8121 of this title.

20c7799.1s

§ 7799.1.  Annexation of account of distributed estate or trust.

A trustee who has received property from a personal representative or from another trustee in distribution of an estate or another trust may annex a copy of an account of the administration of the estate or other trust to an account filed by the trustee covering the administration of the trust under the trustee's management. If notice of the annexation of the account of the estate or other trust is given to the persons required to be notified of the filing of the trustee's account of the principal trust, confirmation of the principal account shall relieve both the trustee of the principal trust and the personal representative or trustee of the distributed estate or other trust of all liability to beneficiaries of the principal trust for transactions shown in the account so annexed to the same extent as if the annexed account had been separately filed and confirmed. If the fund covered by the annexed account has itself received property from another source under circumstances that would have permitted annexation of an account under this section or under section 3501.2 (relating to annexation of account of terminated trust, guardianship or agency), accounts for both funds may be annexed.

20c7799.2s

§ 7799.2.  Accounts, audits and distributions.

The provisions concerning accounts, audits and distributions in trust estates shall be the same as those set forth in the following provisions of this title for the administration of a decedent's estate:

Section 3511 (relating to audits in counties having separate orphans' court division).

Section 3512 (relating to audits in counties having no separate orphans' court division).

Section 3513 (relating to statement of proposed distribution).

Section 3514 (relating to confirmation of account and approval of proposed distribution).

Section 3521 (relating to rehearing; relief granted).

Section 3533 (relating to award upon final confirmation of account).

Section 3536 (relating to recording and registering decrees awarding real estate).

Section 3538 (relating to distributions involving persons born out of wedlock).

Section 3539 (relating to change in law after pattern of distribution established).

Section 3540 (relating to absentee and additional distributees).

Section 3541 (relating to order of abatement).

Section 3545 (relating to transcripts of balances due by personal representative).

20c7799.3s

§ 7799.3.  Pooled trusts for individuals with disabilities.

(a)  Scope.--This section relates to pooled trusts.

(b)  Organization of pooled trust.--

(1)  A pooled trust shall be administered by a trustee governed by a board. The trust may employ persons as necessary.

(2)  The members of a board and employees of a trustee, if any, shall stand in a fiduciary relationship to the beneficiaries and the trustee regarding investment of the trust and shall not profit, either directly or indirectly, with respect to the investment.

(3)  A trustee shall maintain a separate account for each beneficiary of a pooled trust; but, for purposes of investment and management of funds, the trustee may pool these accounts. The trustee shall have exclusive control and authority to manage and invest the money in the pooled trust in accordance with this section, subject, however, to the exercise of that degree of judgment, skill and care under the prevailing circumstances that persons of prudence, discretion and intelligence who are familiar with investment matters exercise in the management of their affairs, considering the probable income to be derived from the investment and the probable safety of their capital. The trustee may charge a trust management fee to cover the costs of administration and management of the pooled trust.

(4)  A board member shall disclose and abstain from participation in a discussion or voting on an issue if a conflict of interest arises with the board member on a particular issue or vote.

(5)  No board member may receive compensation for services provided as a member of the board. No fees or commissions may be paid to a board member. A board member may be reimbursed for necessary expenses incurred which are in the best interest of the beneficiaries of the pooled trust as a board member upon presentation of receipts.

(6)  The trustee shall disburse money from a beneficiary's account for the sole benefit of the beneficiary. A disbursement from a beneficiary's account must have a reasonable relationship to the needs of the beneficiary.

(c)  Pooled trust fund.--Before the funding of a pooled trust, all liens and claims in favor of the Department of Public Welfare for repayment of cash and medical assistance shall first be satisfied. All money received for pooled trust funds shall be deposited with a court-approved corporate fiduciary or with the State Treasury if no court-approved corporate fiduciary is available to the trustee. The funds shall be pooled for investment and management. A separate account shall be maintained for each beneficiary, and quarterly accounting statements shall be provided to each beneficiary by the trustee. The court-approved corporate fiduciary or the State Treasury shall provide quarterly accounting statements to the trustee. The court-approved corporate fiduciary or the State Treasury may charge a trust management fee to cover the costs of managing the funds in the pooled trust.

(d)  Reporting.--

(1)  In addition to reports required to be filed under 15 Pa.C.S. Pt. III (relating to partnerships and limited liability companies), the trustee shall file an annual report with the Office of Attorney General and the Department of Public Welfare, along with an itemized statement which shows the funds collected for the year, income earned, salaries paid, other expenses incurred and the opening and final trust balances. A copy of this statement shall be available to the beneficiary, settlor or designee of the settlor upon request.

(2)  The trustee shall prepare and provide each settlor or the settlor's designee annually with a detailed individual statement of the services provided to the settlor's beneficiary during the previous 12 months and of the services to be provided during the following 12 months. The trustee shall provide a copy of this statement to the beneficiary upon request.

(e)  Coordination of services.--

(1)  The Department of Public Welfare shall review and approve the pooled trust of an applicant for medical assistance.

(2)  In the determination of eligibility for medical assistance benefits, the interest of a disabled beneficiary in a pooled trust that has been approved by the Department of Public Welfare shall not be considered as a resource for purposes of determining the beneficiary's eligibility for medical assistance.

(3)  No State agency may reduce the benefits or services available to an individual because that person is a beneficiary of a pooled trust. The beneficiary's interest in a pooled trust is not reachable in satisfaction of a claim for support and maintenance of the beneficiary.

(f)  Notice.--The Office of Attorney General and the Department of Public Welfare shall make available information on the treatment of pooled trusts for the individuals with disabilities in the medical assistance program.

(g)  Applicability.--This section shall apply to all of the following:

(1)  Pooled trusts established after March 8, 2003.

(2)  Accounts of individual beneficiaries established after March 8, 2003, in pooled trusts created before March 9, 2003.

(h)  Definitions.--As used in this section, the following words and phrases shall have the meanings given to them in this subsection:

"Beneficiary."  An individual with a disability who has the right to receive services and benefits of a pooled trust.

"Board."  A group of persons vested with the management of the business affairs of a trustee.

"Disability."  A physical or mental impairment as defined in section 1614 of the Social Security Act (49 Stat. 620, 42 U.S.C. § 1382c).

"Pooled trust."  A trust which meets all of the following:

(1)  The trust contains assets of more than one beneficiary.

(2)  Each beneficiary is an individual with a disability.

(3)  The trust is managed by a nonprofit corporation.

(4)  A separate account is maintained for each beneficiary of the trust, but, for purposes of investment and management of funds, the trust pools these accounts. Accounts in the trust may be established by the parent, grandparent or legal guardian of the individual with a disability, by the individual with a disability or by a court.

(5)  The trust provides that any money remaining in a beneficiary's account upon the death of the beneficiary that is not retained by the trust will be paid to the Commonwealth, up to the total amount of medical assistance paid on behalf of the beneficiary.

"Trustee."  A nonprofit organization that manages a pooled trust.

20c7799.3v

(Oct. 27, 2014, P.L.2897, No.186, eff. 60 days)

 

2014 Amendment.  Act 186 amended the section heading and subsecs. (f) and (h).

Special Provisions in Appendix.  See section 15 of Act 98 of 2006 in the appendix to this title for special provisions relating to consolidation of Pooled Trust Act.

References in Text.  The Department of Public Welfare, referred to in this section, was redesignated as the Department of Human Services by Act 132 of 2014.