2023 Pennsylvania Consolidated & Unconsolidated Statutes › Title 20 - DECEDENTS, ESTATES AND FIDUCIARIES › Chapter 72 - Prudent Investor Rule › Section 7203 - Prudent investor rule

§ 7203. Prudent investor rule.
(a) General rule.--
A fiduciary shall invest and manage property held in a trust as a prudent investor would, by considering the purposes, terms and other circumstances of the trust and by pursuing an overall investment strategy reasonably suited to the trust.
(b) Permissible investments.--
A fiduciary may invest in every kind of property and type of investment, including, but not limited to, mutual funds and similar investments, consistent with this chapter.
(c) Considerations in making investment and management decisions.--
In making investment and management decisions, a fiduciary shall consider, among other things, to the extent relevant to the decision or action:
(1) the size of the trust;
(2) the nature and estimated duration of the fiduciary relationship;
(3) the liquidity and distribution requirements of the trust;
(4) the expected tax consequences of investment decisions or strategies and of distributions of income and principal;
(5) the role that each investment or course of action plays in the overall investment strategy;
(6) an asset's special relationship or special value, if any, to the purposes of the trust or to one or more of the beneficiaries, including, in the case of a charitable trust, the special relationship of the asset and its economic impact as a principal business enterprise on the community in which the beneficiary of the trust is located and the special value of the integration of the beneficiary's activities with the community where that asset is located;
(7) to the extent reasonably known to the fiduciary, the needs of the beneficiaries for present and future distributions authorized or required by the governing instrument; and
(8) to the extent reasonably known to the fiduciary, the income and resources of the beneficiaries and related trusts.
(d) Requirements for charitable trusts having voting control of certain publicly traded business corporations.--
(1) Notwithstanding any other legal requirement or process which may include court review of the activities of a charitable trust, a fiduciary for a charitable trust with a majority of its beneficiaries at a principal location within this Commonwealth having voting control of a publicly traded business corporation received as an asset from the settlor shall not consummate any transaction, or vote to permit consummation of or otherwise act to consummate any transaction, which would result in the trust no longer having voting control of that corporation, by sale, merger, consolidation or otherwise, without:
(i) serving notice upon the Attorney General at least 60 days prior to the consummation of the transaction; and
(ii) directing that at least 30 days' prior notice of the consummation of the transaction be provided by the publicly traded business corporation controlled by the trust to employees of that corporation who are located in this Commonwealth.
(2) In addition to any other power or duty provided by law, the Attorney General also has the power to seek judicial review pursuant to this subsection from the court having jurisdiction over the trust if the Attorney General concludes that the consummation of a transaction described in paragraph (1) is unnecessary for the future economic viability of the corporation and would constitute a failure to comply with the provisions of subsection (c) or an impairment of the charitable purpose of the trust.
(3) In a judicial proceeding commenced by the Attorney General under this subsection, the Attorney General must prove by a preponderance of the evidence that consummation of a transaction which would result in the charitable trust no longer having voting control of the corporation is unnecessary for the future economic viability of the corporation and must be prevented in order to avoid noncompliance with the provisions of subsection (c) or an impairment of the charitable purpose of the trust.
(3.1) If a fiduciary provides the notice under paragraph (1)(i), the following apply:
(i) Except as set forth in subparagraph (ii), upon expiration of the notice period under paragraph (1)(i), the fiduciary may:
(A) vote to permit consummation of a transaction described in paragraph (1); or
(B) otherwise act to consummate the transaction described in paragraph (1).
(ii) The fiduciary has no authority under subparagraph (i) if the Attorney General has, within 30 days of receiving the notice under paragraph (1)(i), commenced a judicial proceeding under paragraph (2).
(iii) If the fiduciary is enjoined in a judicial proceeding under subparagraph (ii), the fiduciary shall not have authority under subparagraph (i)(A) or (B) unless the injunction is dissolved by:
(A) stipulation of the fiduciary and the Attorney General; or
(B) an order of a court of competent jurisdiction which is not subject to further judicial review as of right.
(4) In the event court approval to consummate a transaction described in paragraph (1) is obtained pursuant to this subsection, the court shall ensure that the provisions of 15 Pa.C.S. Ch. 25 Subchs. I (relating to severance compensation for employees terminated following certain control-share acquisitions) and J (relating to business combination transactions - labor contracts) apply to the business corporation described in paragraph (1) upon the consummation of the transaction.
(5) A fiduciary of a charitable trust with a majority of its beneficiaries at a principal location within this Commonwealth having voting control of a publicly traded business corporation received as an asset from the settlor shall not be subject to liability for the commercially reasonable sale of certain shares of the corporation not necessary to maintain voting control and for which no control premium is realized if the fiduciary reasonably determined that such sale was authorized in a manner consistent with the requirements of this section and other applicable provisions of this title.
(6) The requirements of this subsection shall not apply to a noncharitable trust, including a noncharitable trust with a charitable remainder and a charitable trust which reverts to noncharitable purposes.
(7) As used in this subsection, the term "voting control" means a majority of the voting power of the outstanding shares of stock entitled to vote on the election of directors.
(Nov. 6, 2002, P.L.1101, No.133, eff. imd.; Nov. 30, 2004, P.L.1525, No.194, eff. imd.)
2004 Amendment.
Act 194 amended subsec. (d).
2002 Amendment.
Act 133 amended subsec. (c)(6) and added subsec. (d).
Cross References.
Section 7203 is referred to in section 7207 of this title; sections 3303, 4303, 5303 of Title 68 (Real and Personal Property).