The Directed Trust Act—Further Eroding the 'Irrevocable' Trust

Private client partner Larissa Whitman and associate Christopher McGann co-authored an article for the Legal Intelligencer titled “The Directed Trust Act—Further Eroding the 'Irrevocable' Trust.”

Whitman and McGann explained how Pennsylvania law helps provide guidance on how “irrevocable” trusts can be changed. They note that, in an effort to be more competitive, Pennsylvania enacted the Directed Trust Act that provides practitioners additional tools to “fix” antiquated or inflexible trusts.

“Importantly, the act applies to Pennsylvania trusts created on or before the effective date,” the authors noted. “Instead of having the trustee be solely entitled to hire a financial advisor, determine to which beneficiaries and in what amounts distributions should be made or how trust funds should be invested, a separate person can handle those responsibilities, leaving the trustee in more of an administrative role. This can be extremely desirable for individuals who, for instance, want a corporate trustee to serve in order to ensure that tax filings are not missed, notices and accountings are provided as needed, but wants a close family friend who knows the family dynamics and the beneficiaries on a personal level to be able to advise the trustee as to what distributions to, or not to, make.”