Recent Pennsylvania Supreme Court Ruling on Removal of a Trustee

29
Aug 2017

By:  Stuart R. Lundy, Esquire

One of the key issues in preparing a trust is to insert language to allow for the removal and replacement of a trustee without judicial approval.  Why?  The Pennsylvania Supreme Court recently unanimously ruled that the Pennsylvania Uniform Trust Act (the “Act”) does not allow the removal of a trustee, even if all of the beneficiaries of the trust unanimously agree to the change, unless:  (a) the language of the trust provides for such removal; or (b) such removal is approved by a court.  In other words, the beneficiaries of a trust cannot remove or replace a trustee at their discretion absent court approval.

 

When the creator of a trust appoints a trustee, he or she must recognize that a financial institution that has existed for decades and they believed would exist for decades thereafter could be the next Lehman Brothers.  Therefore, the creator of a trust must, in the trust itself, provide the beneficiaries with the ability to change the trustee if the beneficiaries unanimously agree.

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