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07/20/2024 08:49 PM
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Senate of Pennsylvania
Session of 2023 - 2024 Regular Session


Posted: February 14, 2024 01:11 PM
From: Senator Lisa Baker
To: All Senate members
Subject: Enhancing Trust Administration to Lower Costs and Support Beneficiaries
Pennsylvania’s lack of an up-to-date directed trust law makes our Commonwealth an unattractive location for establishing and administering directed trusts and increases the costs of utilizing trust directors.

Soon, I plan to reintroduce a bill to improve the rules for the administration of directed trusts, simplify the non-judicial settlement of trust accounts, and reduce the costs of administering trusts, making more trust income and assets available for distribution to family members, charities, and other beneficiaries. 

Directed trusts involve designating someone other than the trustee, known as a trust director, to make, approve or review specific decisions of the trustee, such as making investments, voting proxies, managing a closely held business, selecting a custodian, and approving compensation of a trustee.

My proposal reduces the costs of trust administration by adding a streamlined, non-judicial method for trust accounting to relieve a trustee of further liability when a trust terminates, a trustee is replaced or resigns, or a trustee or beneficiary requests a review of trust administration for a specified period. It allows trustees to settle trust accounts by providing 30 months of account statements with notice that, absent an objection, the accounting is deemed approved and future claims will be barred. If any party objects, the amendments require either approval by the Orphans Court or a non-judicial settlement agreement.

The legislation protects both trustees and trust directors who rely on the actions or inactions of each other for the administration of a directed trust.  It also provides greater certainty regarding the consequences of naming trust directors in trust instruments.

These amendments to the Trust Code, recommended by both the Joint State Government Commission and the Uniform Law Commission, have been adopted by 17 other states and received unanimous Senate approval last session as part of Senate Bill 1035.

Please join me in making Pennsylvania a more competitive location in which to establish and administer trusts.

Introduced as SB1231