Full question:
I would like to get some information regarding Pennsylvania’s gift act pertaining to an irrevocable trust and how it relates to the responsibilities of co-trustees or co-fiduciaries. Please state the applicable statute that applies.
- Category: Trusts
- Date:
- State: Pennsylvania
Answer:
The Pennsylvania Uniform Trust Act, effective November 6, 2006, outlines the state's trust laws. While it restates many existing laws, it introduces new provisions that affect trustees and beneficiaries. Notably, the Act requires trustees of certain irrevocable trusts to notify 'current beneficiaries' in writing about the trust's existence and how to contact the trustee. A 'current beneficiary' is defined as someone aged 18 or older who is entitled to receive income or principal currently, or someone aged 25 or older who may receive distributions at the trustee's discretion.
This written notice must inform beneficiaries of their right to obtain a copy of the trust and receive an annual written report detailing the trust's assets, liabilities, and transactions since the last report. Beneficiaries can waive their right to this notice in writing but can also rescind that waiver later. For existing irrevocable trusts, trustees have two years to provide these notices unless a beneficiary dies or is adjudicated incapacitated after November 6, 2006, in which case notice is required within thirty days.
The Act also grants current beneficiaries the right to receive annual reports from trustees. While this encourages communication and keeps beneficiaries informed about the trust's financial status, it can limit beneficiaries' ability to sue trustees for mishandling the trust. Specifically, beneficiaries cannot challenge a transaction if they received an annual report for the year the transaction occurred and the four years following, did not object in writing within six months after the fifth report, and the reports included a clear statement about the effect of non-objection.
Despite the potential drawbacks, the Act aims to motivate trustees to provide accurate reports so beneficiaries can address questionable transactions promptly. Beneficiaries should also consider that preparing these reports can be time-consuming and costly.
Additionally, during the Settlor's lifetime, the Settlor and all beneficiaries may agree to modify or terminate an irrevocable trust, even if it conflicts with the trust's material purpose. Courts can also modify or terminate a trust under certain conditions, such as if all beneficiaries consent, if unanticipated circumstances arise, if the trust's provisions are impractical, to correct mistakes, due to the trust's small size, or to meet the Settlor's tax objectives.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.