Breaking a Deadlock Among Trustees [Pennsylvania]

A settlor of a trust can provide in the trust document a division of responsibilities among co-trustees, and can even require an odd number of trustees so that the chances are high that there will always be a majority of co-trustees supporting the administrative action. In case it is not stipulated that there must be an odd number of trustees or a situation arises where there is not a majority vote, the Pennsylvania Uniform Trust Act provides a solution: petition the court for a judicial resolution to the trustee deadlock.

When a dispute arises among trustees as to the exercise or nonexercise of any of their powers and there is no agreement by majority of them, unless otherwise provided by 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. 20 Pa. C.S. §7763(a.1).

A recent case, In re John E. Jackson and Sue M. Jackson Charitable Trust, Appeal of Polly J. Townsend and William R. Jackson, Jr, the Superior Court held that the corporate trustee was within its rights to seek judicial intervention when there was a deadlock between the corporate trustee and two individuals that held equal voting power.

It should be noted that Section 7763(a.1) does not mandate or even contemplate the necessity for an evidentiary hearing, and nor does the Restatement, Third, of Trusts.

See Samuel W. Braver & Deborah A. Little, Breaking a Deadlock Among Trustees, BIPC.com, September 20, 2018.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.