Trial Engrossment of Amendment A05789 to House Bill 2484 P.N. 3712, Regular Session 2019-2020

A05789

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

2484

Session of

2020

INTRODUCED BY WHITE, MAY 5, 2020

REFERRED TO COMMITTEE ON FINANCE, MAY 5, 2020

AN ACT

Amending Titles 15 (Corporations and Unincorporated

Associations) and 20 (Decedents, Estates and Fiduciaries) of

the Pennsylvania Consolidated Statutes, establishing

financial restrictions related to the COVID-19 emergency; in

financial matters of domestic nonprofit corporations, further

providing for investment of trust funds; and, in principal

and income, further providing for charitable trusts.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. Section 5548(c)(3) of Title 15 of the

Pennsylvania Consolidated Statutes is amended to read:

Section 1. Section 5548(c) and (d) of Title 15 of the

Pennsylvania Consolidated Statutes are amended and the section

is amended by adding subsections to read:

§ 5548. Investment of trust funds.

* * *

(3) If an election is made to be governed by this

subsection, all of the following apply:

(i) The term "income" shall mean a percentage of the

value of the assets so held by or for the corporation.

(ii) The board of directors or other body shall in

a writing maintained as part of the permanent records of

the corporation annually select a percentage and

determine that it is consistent with the long-term

preservation of the real value of the assets, but in no

event shall the percentage:

(A) except as set forth in clause (B), be less

than 2% nor more than 7% per year[.]; or

(B) be less than 2% nor more than 10% for:

(I) each calendar year during which the

proclamation of disaster emergency issued by the

Governor on March 6, 2020, published at 50 Pa.B.

1644 (March 21, 2020), and any renewal of the

state of disaster emergency, is in effect; and

(II) the succeeding calendar year.

(1) Unless otherwise specifically directed in the trust

instrument, the board of directors or other body may elect to

be governed by this subsection with respect to assets thus

received, including any participation in any common trust

fund.

(2) To make an election under this subsection, the board

of directors or other body shall adopt and follow an

investment policy seeking a total return for the assets held

by the corporation or in the name of a nominee of the

corporation or by an institutional trustee pursuant to

section 5549 (relating to transfer of trust or other assets

to institutional trustee), whether the return is to be

derived from capital appreciation, earnings or distributions

with respect to the capital or both. The policy constituting

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the election shall be in writing, shall be maintained as part

of the permanent records of the corporation and shall recite

that it constitutes an election to be governed by this

subsection.

(3) (i) If an election is made to be governed by this

subsection, the term "income" shall mean a percentage of

the value of the assets so held by or for the

corporation. [The]

(ii) Except as otherwise provided in subparagraph

(iii), the board of directors or other body shall in a

writing maintained as part of the permanent records of

the corporation annually select a percentage and

determine that it is consistent with the long-term

preservation of the real value of the assets, but in no

event shall the percentage be less than 2% nor more than

7% per year.

(iii) The board of directors or other governing body

shall, in selecting a percentage, consider both the long-

term preservation of the real value of the assets and the

corporation's need for capital to fulfill its mission and

may select a percentage of not more than 10% per year.

This subparagraph shall only apply during calendar years

2020, 2021 and 2022, or for the corporation's fiscal

years that end during those calendar years.

(4) The board of directors or other body may revoke an

election to be governed by this subsection if the revocation

is made as part of an alternative investment policy seeking

the long-term preservation of the real value of the assets

thus received. The revocation and alternative investment

policy shall be in writing and maintained as part of the

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permanent records of the corporation.

(5) For purposes of applying this subsection, the value

of the assets of the corporation shall be the fair market

value of the assets so held by or for the corporation,

determined at least annually and averaged over a period of

three or more preceding years. However, if the assets have

been held for less than three years, the average shall be

determined over the period during which the assets have been

held.

(d) Scope of section.--[This section] Subsections (a), (b)

and (c) shall apply to assets hereafter received pursuant to

section 5547 (relating to authority to take and hold trust

property), to assets heretofore so received and held at the time

when this article takes effect and to reinvestments of all such

assets.

(d.1) Nonjudicial settlement agreement.--

(1) Notwithstanding section 5547(b), except as expressly

provided in the gift instrument and as otherwise provided in

subsection (d.2), if the donor placed restrictions on the use

or management of property transferred to a nonprofit

corporation, the donor or anyone the donor appointed for the

purpose in the gift instrument, or the guardian of the

donor's property, the agent under the donor's financial power

of attorney or the donor's personal representative, together

with the nonprofit corporation holding the property, may

enter into a binding nonjudicial settlement agreement with

respect to any matter involving the property, including a

restriction.

(2) This subsection shall only apply during calendar

years 2020, 2021 and 2022, or for the corporation's fiscal

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years that end during those calendar years.

(d.2) Exception.--

(1) Notwithstanding section 5547(b), a nonjudicial

settlement agreement is valid only to the extent it includes

terms and conditions that the court could approve under this

chapter or other applicable law, and that the property

remains committed to a charitable purpose or purposes.

(2) This subsection shall only apply during calendar

years 2020, 2021 and 2022, or for the corporation's fiscal

years that end during those calendar years.

(d.3) Request of court.--

(1) Notwithstanding section 5547(b), a nonprofit

corporation may request the court to review a nonjudicial

settlement agreement in order to determine whether the

agreement contains terms and conditions the court could have

approved.

(2) This subsection shall only apply during calendar

years 2020, 2021 and 2022, or for the corporation's fiscal

years that end during those calendar years.

(d.4) Proceeding to enforce gift instrument.--

(1) Notwithstanding section 5547(b), a proceeding to

enforce a gift instrument related to assets held by a

nonprofit corporation for a charitable purpose may be brought

by the donor during the donor's lifetime or at any time by

the Office of the Attorney General, by a charitable

organization expressly named in the gift instrument to

receive any portion of the assets governed by the gift

instrument or by any other person having standing to do so,

which may include anyone appointed in the gift instrument.

(2) This subsection shall only apply during calendar

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years 2020, 2021 and 2022, or for the corporation's fiscal

years that end during those calendar years.

* * *

Section 2. Section 8113(c) of Title 20 is amended to read:

§ 8113. Charitable trusts.

* * *

governed by this section, all of the following apply:

(1) The term "income" shall mean a percentage of the

value of the trust.

(2) The trustee shall, in a writing maintained as part

of the permanent records of the trust, select the percentage

and determine that it is consistent with the long-term

preservation of the real value of the principal of the trust,

but in no event shall the percentage:

(i) except as set forth in subparagraph (ii), be

less than 2% nor more than 7% per year[.]; or

(ii) be less than 2% nor more than 10% for:

(A) each calendar year during which the

proclamation of disaster emergency issued by the

Governor on March 6, 2020, published at 50 Pa.B. 1644

(March 21, 2020), and any renewal of the state of

disaster emergency, is in effect; and

(B) the succeeding calendar year.

(3) The term "principal" shall mean all other assets

held by the trustee with respect to the trust.

(4) The selection may be made either annually or subject

to change only when the trustee deems such change necessary

and prudent.

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(1) If an election is made to be governed by this

section, [governed by this section,] the term "income" shall

mean a percentage of the value of the trust. [The]

(2) Except as otherwise provided in paragraph (3), the

trustee shall, in a writing maintained as part of the

permanent records of the trust, select the percentage and

determine that it is consistent with the long-term

preservation of the real value of the principal of the

trust[,] but in no event shall the percentage be less than 2%

nor more than 7% per year.

(3) The trustee shall consider the long-term

preservation of the real value of the trust assets in

selecting a percentage and, as to each charitable

organization to which the trustee is required to or may

distribute funds, shall consider the organization's need for

capital to fulfill its mission and communicate with the

organization to make that determination, in selecting a

percentage, and may select a percentage as great as 10% per

year. This paragraph shall only apply during calendars years

2020, 2021 and 2022, or for the trust's fiscal years that end

during those calendar years.

(4) The term "principal" shall mean all other assets

held by the trustee with respect to the trust. The selection

may be made either annually or subject to change only when

the trustee deems such change necessary and prudent.

* * *

Section 3. This act shall take effect immediately.

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