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Legal Memorandum: Reimbursement for Unauthorized Expenses

Issue: Under the laws of Pennsylvania, is a trustee entitled to attorneys’ fees following removal where the trustee was prevented from challenging removal due to the terms of the trust?

Area of Law: Estate Planning & Probate
Keywords: Reimbursement; Attorney fees; Action for removal
Jurisdiction: Pennsylvania
Cited Cases: 108 A.2d 681; 29 A. 758; 342 Pa. 209; 103 Pa. Super. 310; 379 Pa. 209; 182 Pa. 126; 594 A.2d 333; 263 A.2d 365; 642 A.2d 467; 537 Pa. 194; 594 A.2d 322; 393 A.2d 443; 406 Pa. Super. 271; 406 Pa. Super. 249; 20 A.2d 206; 322 Pa. 358; 482 Pa. 188; 163 Pa. 35; 9 A. 46; 158 A. 201
Cited Statutes: 231 Pa. Code § 2.1; 20 Pa. C.S.A. § 7769(1); section 709 of the Uniform Trust Code; Restatement (Second) of Trusts § 245; 20 Pa. C.S.A. § 7766
Date: 08/01/2015

A fundamental tenet of trust law is that “‘[t]he duty of a trustee is to preserve the estate.'”  In re Coulter’s Estate, 379 Pa. 209, 215, 108 A.2d 681, 684 (1954) (quoting In re Thouron’s Estate, 182 Pa. 126, 130, 37 A. 861, 662 (1897)).  Likewise, the rules governing the administration of Orphans’ Court “shall be liberally construed to secure the just, speedy and inexpensive determination of every action or proceeding to which they are applicable.”  231 Pa. Code § 2.1 (emphasis added).  Where attorney fees are incurred to protect the trustee’s interests at the expense of the estate, such challenge does not preserve the estate.

Under 20 Pa. C.S.A. § 7769(1), a trustee may collect “expenses that were properly incurred in the administration of the trust; and (2) to the extent necessary to prevent unjust enrichment of the trust, expenses that were not properly incurred in the administration of the trust.”  This section refers to section 709 of the Uniform Trust Code, making it proper for a court to consider the UTC’s Comments in interpreting the Pennsylvania code, which states:

A trustee is ordinarily not entitled to reimbursement for incurring unauthorized expenses. Such expenses are normally the personal responsibility of the trustee.  As provided in subsection (a)(2), a trustee is entitled to reimbursement for unauthorized expenses only if the unauthorized expenditures benefitted the trust.  The purpose of this provision, which is derived from Restatement (Second) of Trusts § 245 (1959), is not to ratify the […]

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