Petition To Modify Trust To Allow The Removal And Replacement Of A Corporate Trustee Without Seeking Orphans’ Court Approval Is Approved
In the trust litigation case of Trust Under Agreement of Taylor, PICS Case No. 15-1488 (Pa. Super., Sept. 15, 2015) the Honorable Anne E. Lazarus, writing on behalf of the Pennsylvania Superior Court, ruled that the Orphan’s Court erred in denying beneficiaries’ petition to modify trust to allow for removal and replacement of a corporate trustee without seeking court approval because orphan’s court incorrectly imposed on beneficiaries requirements not contemplated by the plain language of §7740.1 and incorrectly imported the requirements of §7766.
Beneficiaries under a trust executed in 1928 filed a petition to modify the trust agreement seeking to modify a paragraph of the agreement to include a provision for the removal and replacement of the corporate trustee which they argued was a standard provision in modern trust agreements. They sought to modify the paragraph so that in future, a corporate trustee could be removed by the beneficiaries without seeking court approval. The corporate trustee contested the petition and filed for judgment on the pleadings. The orphan’s court granted the corporate trustee’s motion and denied the beneficiaries’ petition.
All beneficiaries of the trust appealed. The central issue was whether the orphan’s court committed an error of law in its application of §7740.1 to beneficiaries’ request and improperly “imported” into its analysis is the restrictions on the removal of trustees in §7766. Pursuant to the requirements of §7740.1, beneficiaries asserted that the proposed modifications were not inconsistent with the material purpose of the trust. Corporate trustee contended that §7766 was the exclusive provision for the removal of trustees. Beneficiaries responded that §7740.1 was clear and unambiguous, not limited, sub silentio by the provisions of §7766 and that they were not seeking to remove the trustee, but to modify the trust.
The orphan’s court found that the interrelationship between the two statutes created a clear ambiguity, that §7766 was implicated by the language in §7740.1(d) (1) and that the broad provisions of §7740.1 had to yield to the specific removal provisions of §7766.
The orphan’s court erred. The beneficiaries did not seek to remove a trustee. They simply sought to amend the trust to provide flexibility to allow the beneficiaries to remove the trustee if at a future time, they chose to do so. By imputing motives to beneficiaries based on assumptions not supported by the record, the orphans’ court engaged in speculation and conjecture and created a false premise.
The court also improperly applied the rules of statutory construction to interpret a statute that was unambiguous in its face. There was no textual support for the orphan’s court’s reading of the words “under this section” in §7740.1(d) (1) to provide an opening for the wholesale importation of the requirements of §7766. Subsection (d) (1) allowed modification by some beneficiaries in the same manner as would have been allowed under subsection (b).
In a dissent, Judge Platt argued that the special provision codified in §7766(b) (4) prevailed over the general provision found at §7740.1.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 38 PLW 933 (October 6, 2015).
Filed Under: Trust Modification; Trust Litigation; Removal and Replacement of Corporate Trustee
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