2024 Pennsylvania Consolidated & Unconsolidated Statutes
Act 64 - DECEDENTS, ESTATES AND FIDUCIARIES (20 PA.C.S.) - OMNIBUS AMENDMENTS
Session of 2024
No. 2024-64
SB 1231
AN ACT
Amending Title 20 (Decedents, Estates and Fiduciaries) of the Pennsylvania Consolidated Statutes, in trusts, further providing for definitions - UTC 103, for trust instrument controls and mandatory rules - UTC 105, for governing law - UTC 107, for situs of trust, for nonjudicial settlement agreements - UTC 111, for charitable purposes; enforcement - UTC 405, for trust for care of animal - UTC 408, for noncharitable trust without ascertainable beneficiary - UTC 409, for reformation to correct mistakes - UTC 415, for modification to achieve settlor's tax objectives - UTC 416, for spendthrift provision - UTC 502, for creditor's claim against settlor - UTC 505(a), for overdue distribution - UTC 506, for revocation or amendment of revocable trust - UTC 602, for trustee's duties and powers of withdrawal - UTC 603, for accepting or declining trusteeship - UTC 701, for trustee's bond - UTC 702, for cotrustees - UTC 703, for vacancy in trusteeship and appointment of successor - UTC 704, for resignation of trustee and filing resignation, for compensation of trustee - UTC 708, for duty to administer trust - UTC 801, for duty of loyalty - UTC 802, for powers to direct - UTC 808, for duty to inform and report, for discretionary powers and for powers of trustees - UTC 815, providing for directed trusts, further providing for remedies for breach of trust - UTC 1001, providing for nonjudicial account settlement and further providing for reliance on trust instrument - UTC 1006, for exculpation of trustee - UTC 1008, for certification of trust - UTC 1013 and for title of purchaser.
The General Assembly of the Commonwealth of Pennsylvania hereby enacts as follows:
Section 1. The definitions of "interests of the beneficiaries" and "spendthrift provision" in section 7703 of Title 20 of the Pennsylvania Consolidated Statutes are amended and the section is amended by adding definitions to read:
§ 7703. Definitions - UTC 103.
The following words and phrases when used in this chapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
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"Breach of trust." A violation by a trustee or trust director of a duty that the trustee or trust director owes to a beneficiary of the trust.
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"Interests of the beneficiaries." The beneficial interests provided in the [trust instrument] terms of a trust.
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"Power of appointment." A power given to a person by the terms of a trust, exercisable in a nonfiduciary capacity, to grant and define a beneficial interest in trust property or to grant a power of appointment over the trust property.
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"Spendthrift provision." A [provision in a trust instrument] term of a trust that restrains both voluntary and involuntary transfer of a beneficiary's interest.
"Terms of a trust." Either of the following:
(1) Except as otherwise provided in paragraph (2), the manifestation of the settlor's intent expressed in the trust instrument.
(2) The trust's provisions, as established, determined or amended by a trustee or other person in accordance with applicable law, by a court order or by a nonjudicial settlement agreement under section 7710.1 (relating to nonjudicial settlement agreements - UTC 111) or rules of construction.
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Section 2. Sections 7705 heading, (a), (b) introductory paragraph, (2) and (7), 7707, 7708(a), (b) heading and introductory paragraph and (f), 7710.1(b) and (d)(1), 7735(b) and (c), 7738(b) and (c), 7739(2) and (3), 7740.5, 7740.6, 7742(b), 7745 introductory paragraph, 7746(b) and 7752(a), (c) and (e) of Title 20 are amended to read:
§ 7705. Trust [instrument] controls; mandatory rules - UTC 105.
(a) Trust [instrument] controls.--Except as provided in subsection (b), the [provisions] terms of a trust [instrument] prevail over any contrary provisions of this chapter.
(b) Mandatory rules.--Notwithstanding a contrary provision in the terms of the trust [instrument], the following rules apply:
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(2) [The] Subject to sections 7780.20 (relating to duty and liability of directed trustee - UDTA 9), 7780.22 (relating to no duty to monitor, inform or advise - UDTA 11) and 7780.23 (relating to application of cotrustee - UDTA 12), the duty of a trustee to act in good faith and in accordance with the terms and purposes of the trust as set forth in section 7771 (relating to duty to administer trust - UTC 801).
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(7) The power of the court under section 7768(b) (relating to compensation of trustee - UTC 708) to adjust a trustee's compensation specified in the terms of the trust [instrument].
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§ 7707. Governing law - UTC 107.
The meaning and effect of the [provisions] terms of a trust [instrument] shall be determined by:
(1) the law of the jurisdiction designated in the terms of the trust [instrument], but the mandatory rules of section 7705(b) (relating to trust [instrument] controls; mandatory rules - UTC 105) shall govern if different from the law of the designated jurisdiction [designated in the trust instrument]; or
(2) in the absence of an effective designation in the terms of the trust [instrument], the law of the jurisdiction in which the settlor is domiciled when the trust becomes irrevocable.
§ 7708. Situs of trust.
(a) Specified in trust [instrument].--Without precluding other means for establishing a sufficient connection with the designated jurisdiction, [provisions] the terms of a trust [instrument] designating the situs of the trust are valid and controlling if:
(1) a trustee's principal place of business is located in or a trustee is a resident of the designated jurisdiction;
(2) all or part of the trust administration occurs in the designated jurisdiction; [or]
(3) one or more of the beneficiaries resides in the designated jurisdiction[.]; or
(4) a trust director's principal place of business is located in or a trust director is a resident of the designated jurisdiction.
(b) Unspecified in trust [instrument].--If the terms of a trust [instrument does] do not specify a situs:
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(f) Successor trustee.--In connection with a transfer of the trust's situs, the trustee may transfer some or all of the trust property to a successor trustee designated in the terms of a trust [instrument] or appointed pursuant to section 7764 (relating to vacancy in trusteeship; appointment of successor - UTC 704).
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§ 7710.1. Nonjudicial settlement agreements - UTC 111.
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(b) General rule.--Except as otherwise provided in subsection (c), all beneficiaries [and trustees of], all trustees and other persons, if any, who have an interest in a matter relating to a trust may enter into a binding nonjudicial settlement agreement with respect to [any matter involving the trust] the matter. The rules of Subchapter C (relating to representation) shall apply to a settlement agreement under this section. Persons having interests in the matter shall be the same as indispensable parties to a court action seeking the same result.
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(d) Matters that may be resolved.--Matters that may be resolved by a nonjudicial settlement agreement include the following:
(1) The interpretation or construction of the [provisions] terms of a trust [instrument].
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§ 7735. Charitable purposes; enforcement - UTC 405.
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(b) Selection by court.--If the [provisions] terms of a charitable trust [instrument] do not indicate or authorize the trustee to select a particular charitable purpose or beneficiary, the court may select one or more charitable purposes or beneficiaries. The selection must be consistent with the settlor's intention to the extent it can be ascertained.
(c) Proceeding to enforce trust.--A proceeding to enforce a charitable trust may be brought by the settlor during the settlor's lifetime or at any time by the Attorney General, a charitable organization expressly named in the terms of the trust [instrument] to receive distributions from the trust or any other person who has standing to do so.
§ 7738. Trust for care of animal - UTC 408.
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(b) Enforcement.--A trust authorized by this section may be enforced by a person appointed in the terms of the trust [instrument] or, if no person is so appointed, by a person appointed by the court. A person having an interest in the welfare of the animal may request the court to appoint a person to enforce the trust or to remove a person appointed.
(c) Limitation.--Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust [instrument], property not required for the intended use must be distributed to the settlor if then living, otherwise to the settlor's successors in interest.
§ 7739. Noncharitable trust without ascertainable beneficiary - UTC 409.
Except as otherwise provided in section 7738 (relating to trust for care of animal - UTC 408) or by another statute:
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(2) A trust authorized by this section may be enforced by a person appointed in the terms of the trust [instrument] or, if no person is so appointed, by a person appointed by the court.
(3) Property of a trust authorized by this section may be applied only to its intended use, except to the extent the court determines that the value of the trust property exceeds the amount required for the intended use. Except as otherwise provided in the terms of the trust [instrument], property not required for the intended use must be distributed to the settlor if then living, otherwise to the settlor's successors in interest.
§ 7740.5. Reformation to correct mistakes - UTC 415.
The court may reform the terms of a trust [instrument], even if unambiguous, to conform to the settlor's probable intention if it is proved by clear and convincing evidence that both the settlor's intent [as expressed in] and the terms of the trust [instrument was] were affected by a mistake of fact or law, whether in expression or inducement. The court may provide that the modification have retroactive effect.
§ 7740.6. Modification to achieve settlor's tax objectives - UTC 416.
The court may modify the terms of a trust [instrument] in a manner that is not contrary to the settlor's probable intention in order to achieve the settlor's tax objectives. The court may provide that the modification have retroactive effect.
§ 7742. Spendthrift provision - UTC 502.
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(b) Creation.--A term of a trust [instrument] providing that the interest of a beneficiary is held subject to a "spendthrift trust," or words of similar import, is sufficient to restrain both voluntary and involuntary transfer of the beneficiary's interest.
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§ 7745. Creditor's claim against settlor - UTC 505(a).
Whether or not the terms of a trust [instrument contains] contain a spendthrift provision and notwithstanding section 7744 (relating to discretionary trusts; effect of standard - UTC 504):
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§ 7746. Overdue distribution - UTC 506.
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(b) Definition.--As used in this section, the term "mandatory distribution" means a distribution of income or principal that the trustee is required by the terms of the trust [instrument] to make to a beneficiary, including a distribution upon the termination of the trust. The term excludes a distribution that is subject to the exercise of the trustee's discretion regardless of whether the terms of the trust [instrument includes] include a support or other standard to guide the trustee in making distribution decisions or provides that the trustee "may" or "shall" make discretionary distributions, including distributions pursuant to a support or other standard.
§ 7752. Revocation or amendment of revocable trust - UTC 602.
(a) Power to revoke or amend.--The settlor may revoke or amend a trust unless the terms of the trust [instrument] expressly [provides] provide that the trust is irrevocable.
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(c) How to revoke or amend.--The settlor may revoke or amend a revocable trust only:
(1) by substantial compliance with a method provided in the terms of the trust [instrument]; or
(2) if the terms of the trust [instrument does] do not provide a method or the method provided in the terms of the trust [instrument] is not expressly made exclusive, by a later writing, other than a will or codicil, that is signed by the settlor and expressly refers to the trust or specifically conveys property that would otherwise have passed according to the terms of the trust [instrument].
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(e) Agent.--A settlor's powers with respect to revocation or amendment of the nondispositive provisions of or withdrawal of property from a trust may be exercised by an agent under a power of attorney only to the extent expressly authorized by the terms of the trust [instrument] or the power. The agent under a power of attorney that expressly authorizes the agent to do so may amend the dispositive provisions of a revocable trust as the court may direct.
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Section 3. Section 7753(a) of Title 20 is amended and the section is amended by adding a subsection to read:
§ 7753. Trustee's duties; powers of withdrawal - UTC 603.
(a) Power of settlor.--Regardless of the legal capacity of the settlor, the rights of the beneficiaries are subject to the control of, and the duties of the trustee are owed exclusively to, the settlor [while] to the extent a trust is revocable.
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(c) Direction contrary to trust terms.--While a trust is revocable, the trustee may follow a written direction of the settlor that is contrary to the terms of the trust. To the extent a trust is revocable by a settlor in conjunction with other persons, the trustee may follow a written direction from the settlor and those persons that is contrary to the terms of the trust.
Section 4. Sections 7761(a), 7762(a) and (c), 7763(a.1), (c) and (g), 7764(b), (c)(1) and (d)(1), 7765(a.1)(2), 7768(a) and (b), 7771, 7772(b)(1) and 7778 of Title 20 are amended to read:
§ 7761. Accepting or declining trusteeship - UTC 701.
(a) Accepting trusteeship.--Except as otherwise provided in subsection (c), a person designated as trustee accepts the trusteeship:
(1) by substantially complying with a method of acceptance provided in the terms of the trust [instrument]; or
(2) if the terms of the trust [instrument does] do not provide a method or the method provided in the terms of the trust [instrument] is not expressly made exclusive, by accepting delivery of the trust property, exercising powers or performing duties as trustee or by otherwise indicating acceptance of the trusteeship.
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§ 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] terms of the trust [instrument] and the court has not dispensed with the requirement.
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(c) Institutional trustees.--An institution qualified to do trust business in this Commonwealth need not give bond even if required by the terms of the trust [instrument].
§ 7763. Cotrustees - UTC 703.
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(a.1) When no majority.--When a dispute arises among trustees as to the exercise or nonexercise of any of their powers and there is no agreement by a majority of them, unless otherwise provided by the terms of the trust [instrument], the court in its discretion, upon petition filed by any of the trustees or any party in interest, aided if necessary by the report of a master, may direct the exercise or nonexercise of the power as it deems necessary for the best interest of the trust.
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(c) Performance.--[A] Subject to section 7780.23 (relating to application to cotrustee - UDTA 12), a cotrustee shall participate in the performance of a trustee's function unless the cotrustee is unavailable to perform the function because of absence, illness, disqualification under the law or other reason or the cotrustee has properly delegated the performance of the function to another trustee.
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(g) Reasonable care.--[Each] Subject to section 7780.23, each trustee shall exercise reasonable care to:
(1) prevent a cotrustee from committing a breach of trust involving fraud or self-dealing; and
(2) compel a cotrustee to redress a breach of trust involving fraud or self-dealing.
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§ 7764. Vacancy in trusteeship; appointment of successor - UTC 704.
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(b) Filling of vacancy.--A vacancy in a trusteeship need not be filled if one or more cotrustees remain in office and the terms of the trust [instrument does] do not require that it be filled. A vacancy shall be filled if the trust has no remaining trustee.
(c) Filling vacancy for noncharitable trust.--A vacancy in a trusteeship of a noncharitable trust that is required to be filled shall be filled in the following order of priority:
(1) by a person designated in or pursuant to the [provisions] terms of the trust [instrument] to act as successor trustee;
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(d) Filling vacancy for charitable trust.--A vacancy in a trusteeship of a charitable trust that is required to be filled shall be filled in the following order of priority:
(1) by a person designated in or [under] pursuant to the [provisions] terms of the trust [instrument] to act as successor trustee;
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§ 7765. Resignation of trustee; filing resignation.
(a.1) General rule.--A trustee may resign:
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(2) without court approval if authorized to resign by the terms of the trust [instrument]; or
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§ 7768. Compensation of trustee - UTC 708.
(a) If unspecified.--If neither the terms of a trust [instrument] nor a separate written agreement signed by the settlor or anyone who is authorized by the terms of the trust [instrument] to do so specifies the trustee's compensation, the trustee is entitled to compensation that is reasonable under the circumstances. Neither a compensation provision in the terms of a trust [instrument] nor a fee agreement governs compensation payable from trust principal unless it explicitly so provides.
(b) If specified; adjustment.--If the terms of a trust [instrument] or written fee agreement signed by the settlor or anyone who is authorized by the terms of the trust [instrument] to do so specifies a trustee's compensation, the trustee is entitled to the specified compensation. The court may allow reasonable compensation that is more or less than that specified if:
(1) the duties of the trustee have become substantially different from those contemplated when the trust was created or when the fee agreement was executed;
(2) the compensation specified in the terms of the trust [instrument] or fee agreement would be unreasonable; or
(3) the trustee performed extraordinary services, and the [trust instrument or fee agreement does not specify the] trustee's compensation for those services is not specified in the terms of the trust or fee agreement.
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§ 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] terms and purposes and the interests of the beneficiaries and in accordance with applicable law.
§ 7772. Duty of loyalty - UTC 802.
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(b) Effect of conflict of interest.--Subject to the rights of persons dealing with or assisting the trustee as provided in section 7790.2 (relating to protection of person dealing with trustee - UTC 1012), a sale, purchase, exchange, encumbrance or other disposition of property between a trust and either the trustee in the trustee's individual capacity or one of the persons identified in subsection (c) is voidable by a court upon application by a beneficiary affected by the transaction unless:
(1) the transaction was authorized by the terms of the trust [instrument];
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§ 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.]
(e) Directed trust.--If the terms of a trust provide that a person who is not a trustee may direct a trustee to take or not take certain actions, or that a person who is not a trustee may change the terms of the trust, Subchapter H.1 (relating to directed trusts) applies.
Section 5. Section 7780.3(a) and (k) introductory paragraph of Title 20 are amended and subsection (i) is amended by adding a paragraph to read:
§ 7780.3. Duty to inform and report.
(a) Duty to respond to requests.--A trustee shall promptly respond to a reasonable request by the settlor of a trust or by a beneficiary of an irrevocable trust for information related to the trust's administration. A trustee shall promptly respond to the Department of [Public Welfare's] Human Services' reasonable request for information related to the trust's administration when a settlor or beneficiary is a resident in a State-owned facility or an applicant for or recipient of cash or medical assistance from the Commonwealth and the department certifies in writing that it has obtained a currently valid consent for the disclosure of such information from the settlor or beneficiary of the trust. A trustee may rely upon the department's certification without investigating its accuracy.
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(i) Contents of notice.--Except as provided in subsection (g), any notice under this section shall be written and convey the following information:
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(6) The name, address and telephone number of each trust director.
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(k) Notice to settlor's appointee.--The terms of a trust may provide that the settlor [of a trust] may [in the trust instrument] appoint one or more persons or a succession of persons to receive, on behalf of one or more named current beneficiaries of the trust, the notices required by this section. The trustee giving the notice required by this section to that appointee satisfies the trustee's duty to give to the named current beneficiary the notice required by this section if:
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Section 6. Sections 7780.4 and 7780.5(a) of Title 20 are amended to read:
§ 7780.4. Discretionary powers.
The trustee shall exercise a discretionary power in good faith and in accordance with the [provisions] terms and purposes of the trust and the interests of the beneficiaries, notwithstanding the breadth of discretion granted to a trustee [in] by the terms of the trust [instrument], including the use of such terms as "absolute," "sole" or "uncontrolled."
§ 7780.5. Powers of trustees - UTC 815.
(a) Exercise of power.--Except as otherwise provided in the terms of the trust [instrument] or in other provisions of this 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.
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Section 7. Chapter 77 of Title 20 is amended by adding a subchapter to read:
SUBCHAPTER H.1
DIRECTED TRUSTS
Sec.
7780.11. Short title of subchapter.
7780.12. Definitions - UDTA 2.
7780.13. Application - UDTA 3.
7780.14. Exclusions - UDTA 5.
7780.15. Powers of trust director and shared powers - UDTA 6.
7780.16. Trust director for investments.
7780.17. Trust protector.
7780.18. Limitations on powers of trust director - UDTA 7.
7780.19. Duty and liability of trust director - UDTA 8.
7780.20. Duty and liability of directed trustee - UDTA 9.
7780.21. Duty to provide information to trust director or directed trustee - UDTA 10.
7780.22. No duty to monitor, inform or advise - UDTA 11.
7780.23. Application to cotrustee - UDTA 12.
7780.24. Limitation of action against trust director - UDTA 13.
7780.25. Defenses in action against trust director - UDTA 14.
7780.26. Jurisdiction over trust director - UDTA 15.
7780.27. Office of trust director - UDTA 16.
§ 7780.11. Short title of subchapter.
This subchapter shall be known and may be cited as the Directed Trust Act.
§ 7780.12. Definitions - UDTA 2.
The following words and phrases when used in this subchapter shall have the meanings given to them in this section unless the context clearly indicates otherwise:
"Directed trust." A trust for which the terms of the trust grant a power of direction.
"Directed trustee." A trustee that is subject to a trust director's power of direction.
"Power of direction." As follows:
(1) A power over a trust granted to a person by the terms of the trust to the extent the power is exercisable while the person is not serving as a trustee.
(2) The term includes a power over the investment, management or distribution of trust property or other matters of trust administration and, in the case of a trust protector, may include powers to modify the terms of the trust.
(3) A power of direction includes incidental powers that are appropriate and necessary to the exercise or nonexercise of the power of direction. The rules specified in this subchapter govern the exercise of such incidental powers.
"Trust director." As follows:
(1) A person that is granted a power of direction by the terms of a trust to the extent the power is exercisable while the person is not serving as a trustee.
(2) A beneficiary or settlor of a trust may serve as a trust director of the trust.
"Trust protector." A trust director authorized by the terms of a trust to modify one or more terms of the trust.
"Willful misconduct." As follows:
(1) Intentional conduct that is malicious, designed to defraud or unconscionable.
(2) Mere negligence, gross negligence and recklessness do not constitute "willful misconduct."
§ 7780.13. Application - UDTA 3.
(a) General rule.--This subchapter applies to a trust, whenever and wherever created, that is governed by Pennsylvania law.
(b) Exclusion.--This subchapter has no application to decisions or actions that occurred before the effective date of this subchapter.
§ 7780.14. Exclusions - UDTA 5.
This subchapter does not apply to:
(1) A power of appointment.
(2) A power held by the settlor or a beneficiary of a trust to appoint or remove a trustee or a trust director unless the terms of the trust provide that the power is exercisable by the settlor or beneficiary acting as a trust director.
(3) A settlor's power over a trust to the extent the settlor may revoke the trust.
(4) A power of a beneficiary over a trust to the extent the exercise or nonexercise of the power affects the beneficial interest of:
(i) the beneficiary; or
(ii) another beneficiary who is represented by the beneficiary under Subchapter C (relating to representation) with respect to the exercise or nonexercise of the power.
(5) A power over a trust that must be held in a nonfiduciary capacity to achieve the settlor's tax objectives under 26 U.S.C. (relating to Internal Revenue Code), as amended, and regulations issued thereunder, as amended.
§ 7780.15. Powers of trust director and shared powers - UDTA 6.
(a) Grant of powers.--The terms of a trust may grant a power of direction to one or more trust directors. A power of direction may extend to any one or more of a trustee's powers, subject to section 7780.18 (relating to limitations on powers of trust director - UDTA 7).
(b) Shared powers.--Trust directors that share powers may act by majority decision unless the terms of the trust provide otherwise.
§ 7780.16. Trust director for investments.
The explicit appointment by the terms of a trust of a "trust director for investments," accompanied by a citation to this section, grants to the trust director the following powers unless the terms of the trust provide otherwise:
(1) To direct the trustee, or veto the trustee's recommendations, as to the investment of the trust's assets.
(2) To direct the trustee, or veto the trustee's recommendations, as to the voting of proxies and the exercise of other voting powers associated with the trust's assets.
(3) To select, change and determine reasonable compensation of one or more investment advisors or managers, and authorize or engage them to perform any of the investment duties of a trustee or trust director.
(4) To determine the frequency and methodology for valuing trust assets.
(5) To exercise, or veto the trustee's exercise of, any other investment power the trustee has or might have.
(6) To perform other acts relating to the investment of the trust's assets as the terms of the trust specify.
§ 7780.17. Trust protector.
(a) General rule.--The terms of a trust may expressly grant to a trust director powers, alone or together with powers to direct a trustee's actions, to modify the terms of a trust. In that event, the trust director is a trust protector.
(b) Illustrative powers.--Among the powers the terms of a trust may grant explicitly to a trust protector are the following:
(1) To increase, decrease or otherwise modify what is distributable to one or more beneficiaries of the trust.
(2) To terminate the trust and direct how the trustee shall distribute the trust property to or in further trust for any one or more of the beneficiaries.
(3) To expand, modify, limit or terminate a power of appointment, and to grant a power of appointment to a beneficiary of the trust on terms as the trust protector specifies.
(4) The powers described in section 8104 (relating to trustee's power to adjust) to adjust between income and principal and to convert the trust to a unitrust in accordance with section 8105 (relating to power to convert to unitrust).
(5) To convert a trust in whole or in part to a special needs trust, or provide that a special needs trust shall arise or be established at a specific time or upon the occurrence of an event with respect to some or all of the trust's assets.
(6) To appoint or remove trustees, investment advisors and investment managers, and prescribe a plan of succession for future holders of any of these offices.
(7) To appoint or remove trust directors, specify their powers and modify the powers of a trust director.
(8) To appoint one or more successor trust protectors, and prescribe a plan of succession for future holders of that office.
(9) To renounce, release, limit or modify any power given to a trustee by the terms of the trust or by law.
(10) To resolve disagreements among trustees.
(11) To change the trust's situs or governing law, or both.
(12) To apply to a court of competent jurisdiction to interpret any terms of the trust or pass upon an action that the trust protector, another trust director or a trustee proposes to take or not take.
(13) Any other or different power that the settlor expressly grants to the trust protector.
(c) Limitation.--Unless the terms of the trust expressly provide otherwise, no trust protector may exercise a power in a manner that would benefit the trust protector personally or vest in the trust protector a taxable power of appointment described in 26 U.S.C. § 2041 (relating to powers of appointment) or 2514 (relating to powers of appointment), as amended, or the corresponding provision of any later Federal tax statute.
(d) Notice to qualified beneficiaries.--A trust protector shall notify the trustees and the qualified beneficiaries of the trust in writing of the trust protector's exercise of a power with respect to the trust unless the terms of the trust explicitly direct that no such notice be given.
(e) Conflicts.--If the terms of a trust grant the same power to both a trust protector and a trust director that is not a trust protector and do not provide a different rule, the trust protector shall control the exercise of the power.
§ 7780.18. Limitations on powers of trust director - UDTA 7.
In the exercise or nonexercise of powers affecting the following, a trust director is subject to the same rules as a trustee that holds the same power regarding:
(1) A payback provision in the terms of a trust necessary to comply with the reimbursement requirements of Medicaid law in 42 U.S.C. § 1396p(d)(4)(A) (relating to liens, adjustments and recoveries, and transfers of assets), as amended, and regulations issued thereunder, as amended.
(2) A charitable interest in a trust, including notice regarding the interest to the Office of Attorney General.
§ 7780.19. Duty and liability of trust director - UDTA 8.
(a) Scope.--Except as provided in subsections (b) and (c), with respect to a power of direction, a trust director has the same fiduciary duty and liability in the exercise or nonexercise of the power if the power:
(1) may be exercised by only one trust director, as a sole trustee in a like position and under similar circumstances; or
(2) is shared with a trustee or another trust director, as a cotrustee in a like position and under similar circumstances.
(b) Licensed or certified trust directors.--If a trust director is licensed, certified or otherwise authorized or permitted by law other than this subchapter to provide health care in the ordinary course of the trust director's business or practice of a profession, to the extent that the trust director acts in that capacity, the trust director is not subject to duty or liability under this subchapter unless the terms of the trust provide otherwise.
(c) Effect of terms of the trust.--The terms of a trust may vary a trust director's duty or liability to the same extent that the terms of the trust may vary the duty or liability of a trustee in a like position and under similar circumstances.
§ 7780.20. Duty and liability of directed trustee - UDTA 9.
(a) Duty to comply with power of direction.--Subject to subsection (b), a directed trustee shall take reasonable action to comply with a trust director's exercise or nonexercise of a power of direction, and the directed trustee shall not be liable for that action.
(b) Exception for willful misconduct.--A directed trustee shall not comply with a trust director's exercise or nonexercise of a power of direction to the extent that, by doing so, the directed trustee would engage in willful misconduct.
(c) When release from liability ineffective.--An exercise of a power of direction under which a trust director purports to release a trustee or another trust director from liability for breach of trust is ineffective:
(1) to the extent that it would relieve the trustee or the other trust director of liability for a breach of trust committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries;
(2) if the release was induced by improper conduct of the trustee or the other trust director in procuring the release; or
(3) if, at the time of the release, the trust director that exercised the power did not know of the material facts relating to the breach.
(d) Petition for declaratory judgment.--A directed trustee that has reasonable doubt about its duty under this section may petition the court for a declaratory judgment.
(e) Additional duties and liabilities.--The terms of the trust may impose a duty or liability on a directed trustee in addition to the duties and liabilities prescribed by this section.
§ 7780.21. Duty to provide information to trust director or directed trustee - UDTA 10.
(a) Duty of directed trustee.--Subject to section 7780.22 (relating to no duty to monitor, inform or advise - UDTA 11), a directed trustee shall provide information to a trust director to the extent that the information is reasonably related to powers or duties of the:
(1) directed trustee; and
(2) trust director, or the powers or duties of another trust director over which the trust director may exercise authority.
(b) Duty of trust director.--Subject to section 7780.22, a trust director shall provide information to a directed trustee or another trust director to the extent that the information is reasonably related to the powers or duties of the:
(1) trust director; and
(2) directed trustee, or the other trust director or a trust director over which the other trust director may exercise authority.
(c) Limitation on liability of directed trustee.--A directed trustee that acts in reliance upon information provided by a trust director is not liable for a breach of trust to the extent that the breach resulted from the reliance unless the information was outside the scope of the trust director's authority or the directed trustee engages in willful misconduct by doing so.
(d) Limitation on liability of trust director.--A trust director that acts in reliance upon information provided by a directed trustee or another trust director is not liable for a breach of trust to the extent that the breach resulted from the reliance unless the trust director engages in willful misconduct by doing so.
§ 7780.22. No duty to monitor, inform or advise - UDTA 11.
(a) Directed trustee.--Unless the terms of the trust provide otherwise:
(1) A directed trustee does not have a duty to:
(i) monitor a trust director; or
(ii) inform or advise a settlor, beneficiary, cotrustee or trust director as to any matter on which the directed trustee might not have acted as the trust director acted or as to any matter on which the directed trustee might have acted but the trust director did not act.
(2) By taking an action described in paragraph (1), a directed trustee does not thereby assume a duty that is excluded by paragraph (1).
(b) Trust director.--Unless the terms of the trust provide otherwise:
(1) A trust director does not have a duty to:
(i) monitor a trustee or another trust director over which the trust director has no authority; or
(ii) inform or advise a settlor, beneficiary, cotrustee or other trust director as to any matter on which the trust director might not have acted as a trustee or other trust director acted or as to any matter on which the trust director might have acted but the trustee or another trust director did not act.
(2) By taking an action described in paragraph (1), a trust director does not thereby assume a duty that is excluded by paragraph (1).
§ 7780.23. Application to cotrustee - UDTA 12.
The terms of a trust may assign different duties and standards of care to different trustees and, in doing so, relieve a trustee from liability with respect to a duty assigned to another trustee to the same extent that, in a directed trust, a directed trustee is relieved from duty and liability with respect to a trust director's power of direction under sections 7780.20 (relating to duty and liability of directed trustee - UDTA 9), 7780.21 (relating to duty to provide information to trust director or directed trustee - UDTA 10) and 7780.22 (relating to no duty to monitor, inform or advise - UDTA 11).
§ 7780.24. Limitation of action against trust director - UDTA 13.
(a) Commencement of action.--An action against a trust director for breach of trust must be commenced within the same limitation period as under section 7785 (relating to limitation of action against trustee) for an action for breach of trust against a trustee in a like position and under similar circumstances.
(b) Effect of report or accounting.--A report or accounting has the same effect on the limitation period for an action against a trust director for breach of trust that the report or accounting would have under section 7785 in an action for breach of trust against a trustee in a like position and under similar circumstances.
§ 7780.25. Defenses in action against trust director - UDTA 14.
In an action against a trust director for breach of trust, the trust director may assert the same defenses that a trustee in a like position and under similar circumstances could assert in an action for breach of trust against the trustee.
§ 7780.26. Jurisdiction over trust director - UDTA 15.
(a) Effect of acceptance of appointment.--By accepting an appointment as a trust director, the trust director submits to personal jurisdiction of the courts of this Commonwealth regarding any matter related to a power or duty of the trust director.
(b) Other methods of obtaining jurisdiction.--This section does not preclude other methods of obtaining jurisdiction over a trust director.
§ 7780.27. Office of trust director - UDTA 16.
Unless the terms of the trust provide otherwise, the rules applicable to a trustee apply to a trust director regarding the following matters:
(1) Acceptance or declining under section 7761 (relating to accepting or declining trusteeship - UTC 701), except that if a trustee requests in writing that a person designated as a trust director accept that role in writing and the person does not do so in writing within 60 days after receipt of the trustee's request, the person shall be deemed to have rejected the appointment to serve as a trust director.
(2) Giving of bond to secure performance under section 7762 (relating to trustee's bond - UTC 702).
(3) Reasonable compensation under section 7768 (relating to compensation of trustee - UTC 708).
(4) Resignation under section 7765 (relating to resignation of trustee; filing resignation), or upon at least 30 days' advance notice in writing to the qualified beneficiaries of the trust, the settlor if sui juris and all trustees.
(5) Removal under section 7766 (relating to removal of trustee - UTC 706).
(6) Vacancy and appointment of a successor under section 7764 (relating to vacancy in trusteeship; appointment of successor - UTC 704), except that if a trust director does not accept an appointment or there is a vacancy in the position, the powers and duties of the trustee or another trust director shall be determined as if the office of the nonaccepting trust director had not been created.
Section 8. Section 7781(a) of Title 20 is amended to read:
§ 7781. Remedies for breach of trust - UTC 1001.
[(a) What constitutes breach of trust.--A violation by a trustee of a duty the trustee owes to a beneficiary is a breach of trust.]
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Section 9. Title 20 is amended by adding a section to read:
§ 7785.1. Nonjudicial account settlement.
(a) Election.--A trustee may elect to proceed under this section to obtain a nonjudicial settlement of account when:
(1) the trust terminates in whole or in part;
(2) the trustee ceases or intends to cease to serve for any reason; or
(3) the trustee seeks discharge for an interim accounting period when the trust is continuing.
(b) Mandatory notice.--Within a reasonable time after a trustee elects to proceed under this section, the trustee shall give notice of a request for nonjudicial account settlement in the manner and to the extent required by section 7709(a), (b) and (c) (relating to methods and waiver of notice - UTC 109) to:
(1) the qualified beneficiaries of the trust;
(2) any other beneficiary who has sent the trustee a written request for notice;
(3) any person who has the notification rights of a beneficiary under section 7710 (relating to notice; others treated as beneficiaries - UTC 110); and
(4) any cotrustee, trust director or similar fiduciary or successor trustee.
(c) Permissive notice.--The trustee may also provide notice to any other person who the trustee reasonably believes may have an interest in the trust.
(d) Representation.--Whether notice is mandatory or permissive, the trustee may give notice to a representative in accordance with Subchapter C (relating to representation). The time period for the presumption of the representative's acceptance of the representation shall be deemed to run concurrently with the notice period provided under this section.
(e) Contents of notice.--The notice under subsection (b) or (c) shall provide:
(1) The reason for providing notice under this section.
(2) To the extent applicable, the proposed distribution of the net assets of the trust, including the distributees and proportions to be distributed.
(3) To the extent applicable, an estimate of disbursements anticipated to be made prior to distribution, including legal fees and trustee fees, if any.
(4) Trust account statements showing all transactions, the fair market value of all assets and realized and unrealized gains and losses on assets held in the account for 30 months prior to the date a trust terminates, the cessation of the trustee's service or statement of intent to cease to serve, or the end of the interim accounting period, or for the entire term of the trust if the term of the trust is shorter than the 30-month period.
(5) A statement that the trustee seeks settlement of the account of the trust, including the period of time for which the trustee seeks discharge of the account of the trust, and that clearly and conspicuously states that claims against a trustee under Subchapter I (relating to liability of trustees and rights of persons dealing with trustees) and section 7754 (relating to actions contesting validity of revocable trust), if applicable, will be forever barred if no objections are received within the time period described in subsection (g).
(6) The name and mailing address of the trustee.
(7) The name and telephone number of a person who may be contacted for additional information.
(f) Distributions.--To the extent applicable, distributions from a terminating trust, and any fees and expenses due or anticipated as of the date that the settlement of account is requested, may be held by or on behalf of the trustee until the settlement of account is approved or deemed approved as provided by this section.
(g) Objection.--A person provided notice under subsection (b) or (c) may object to the settlement of account by giving written notice to the trustee within 60 days after the notice was sent. If a person given notice under subsection (b) or (c) makes timely objections to the settlement of account, the trustee or the person making the objections may:
(1) submit the written objection to the court and commence a proceeding for its resolution; or
(2) resolve the objection by nonjudicial settlement agreement under section 7710.1 (relating to nonjudicial settlement agreements - UTC 111) or otherwise.
(h) Approval.--If no timely objections are raised under subsection (g), or objections are resolved as provided by subsection (g), the settlement of account shall be deemed approved and any assets held in trust shall, within a reasonable time thereafter, be distributed subject to payment of expenses as provided in subsection (f) or shall continue to be administered in trust subject to payment of expenses.
(i) Reliance.--The trustee may rely upon the written statement of a person receiving notice that the person does not object.
(j) Limitation of action and preclusive effect.--
(1) When a settlement of account is deemed approved under this section for a terminated trust or with respect to the duties of a trustee who ceased to serve or stated an intent to cease to serve, each person who was sent notice as provided by subsection (b) or (c) is barred from bringing a claim against the trustee or challenging the distribution of assets of the trust to the same extent and with the same preclusive effect as if the court had entered a final, unappealable order approving the trustee's final account.
(2) When a settlement of account for a trustee seeking final settlement of an interim trust account is deemed approved under this section, each person who was sent notice as provided by subsection (b) or (c) is barred from bringing a claim against the trustee for the period of the interim trust account to the same extent and with the same preclusive effect as if the court had entered a final, unappealable order approving the trustee's interim trust account.
(k) Representation.--The provisions of Subchapter C shall apply to an account settlement under this section.
(l) Filing account.--Nothing in this section shall preclude a trustee from proceeding under section 7797 (relating to filing accounts) or 7710.1.
Section 10. Sections 7786, 7788(a) introductory paragraph, 7790.3(d) and (f) and 7794 of Title 20 are amended to read:
§ 7786. Reliance on trust instrument - UTC 1006.
A trustee who acts in reasonable reliance on the [express provisions] terms of the trust as expressed in the trust instrument is not liable to a beneficiary for a breach of trust to the extent the breach resulted from the reliance.
§ 7788. Exculpation of trustee - UTC 1008.
(a) When exculpatory provision unenforceable.--A [provision] term of a trust [instrument] relieving a trustee of liability for breach of trust is unenforceable to the extent that it:
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§ 7790.3. Certification of trust - UTC 1013.
* * *
(d) Dispositive trust provisions.--A certification of trust need not contain the dispositive [provisions] terms of the trust [instrument].
* * *
(f) Reliance on certification.--A person who acts in reliance upon a certification of trust without knowledge that the representations contained in the certification are incorrect is not liable to any person for so acting and may assume without inquiry the existence of the facts contained in the certification. Knowledge of the [provisions] terms of the trust [instrument] may not be inferred solely from the fact that a copy of all or part of the trust instrument is held by the person relying upon the certification.
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§ 7794. Title of purchaser.
If the trustee has given a bond as required in accordance with this title, any sale, pledge, mortgage or exchange by a trustee, whether pursuant to a decree or to the exercise of a power conferred by the terms of a trust [instrument] or of a power under this title, shall pass the full title of the trust in the property, unless otherwise specified. Persons dealing with the trustee shall have no obligation to see to the proper application of the cash or other assets given in exchange for the property of the trust. A sale or exchange by a trustee pursuant to a decree under section 3353 (relating to order of court) shall have the effect of a judicial sale as to the discharge of liens, but the court may decree a sale or exchange freed and discharged from the lien of any mortgage otherwise preserved from discharge by existing law if the holder of the mortgage consents by writing filed in the proceeding. No sale, mortgage, exchange or conveyance shall be prejudiced by the subsequent dismissal of the trustee. No sale, mortgage, exchange or conveyance by a testamentary trustee shall be prejudiced by the terms of a will or codicil thereafter probated if the person dealing with the trustee did so in good faith.
Section 11. The letters "UTC" in section headings refer to the Uniform Trust Code. The letters "UDTA" in section headings refer to the Uniform Directed Trust Act. The number that follows these letters refers to a particular section of the applicable uniform act. If a section in 20 Pa.C.S. has these references, that section shall be construed and applied consistent with 1 Pa.C.S. §§ 1927 and 1939.
Section 12. This act shall take effect in 90 days.
APPROVED--The 15th day of July, A.D. 2024.
JOSH SHAPIRO
