§ 8113 — Charitable trusts

Pennsylvania § 8113

• Jurisdiction: Pennsylvania
• Title 20: DECEDENTS, ESTATES AND FIDUCIARIES
• Ch. 81: PRINCIPAL AND INCOME
• Subch.: PRELIMINARY PROVISIONS; POWER TO ADJUST

Text

(a) Election.--Notwithstanding the foregoing provisions of this chapter, the trustee of a trust held exclusively for charitable purposes may elect to be governed by this section unless the governing instrument expressly provides that the election provided by this section shall not be available.

(b) Eligibility for election.--To make an election under this section, the trustee shall adopt and follow an investment policy seeking a total return for the investments held by the trust, whether the return is to be derived from appreciation of capital or earnings and distributions with respect to capital or both. The policy constituting the election shall be in writing, shall be maintained as part of the permanent records of the trust and shall recite that it constitutes an election to be governed by this section.

(c) Effect of election.--

(1) If an election is made to be governed by this section, the term "income" shall mean a percentage of the value of the trust.

(2) Except as otherwise provided in paragraph (3), the trustee shall, in a writing maintained as part of the permanent records of the trust, select the percentage and determine that it is consistent with the long-term preservation of the real value of the principal of the trust but in no event shall the percentage be less than 2% nor more than 7% per year.

(3) The trustee shall consider the long-term preservation of the real value of the trust assets in selecting a percentage and, as to each charitable organization to which the trustee is required to or may distribute funds, shall consider the organization's need for capital to fulfill its mission and communicate with the organization to make that determination, in selecting a percentage, and may select a percentage as great as 10% per year. This paragraph shall only apply during calendar years 2020, 2021 and 2022, or for the trust's fiscal years that end during those calendar years.

(4) The term "principal" shall mean all other assets held by the trustee with respect to the trust. The selection may be made either annually or subject to change only when the trustee deems such change necessary and prudent.

(d) Revocation of election.--The trustee may revoke an election to be governed by this section if the revocation is made as part of an alternative investment policy seeking the long-term preservation of the real value of the principal of the trust. The revocation and alternative investment policy shall be in writing and maintained as part of the permanent records of the trust.

(e) Value determination.--For purposes of applying this section, the value of the trust shall be the fair market value of the cash and other assets held by the trustee with respect to the trust, whether such assets would be considered "income" or "principal" under the other provisions of this chapter, determined at least annually and averaged over a period of three or more preceding years. However, if the trust has been in existence less than three years, the average shall be determined over the period during which the trust has been in existence.

(f) Charitable organizations.--For a charitable organization defined under Chapter 79 (relating to charitable instruments), the provisions of Chapter 79 shall supersede subsection (c) if necessary to comply with the minimum investment return requirements.

Legislative History

(July 7, 2006, P.L.625, No.98, eff. 60 days; July 8, 2016, P.L.497, No.79, eff. Jan. 1, 2017; July 23, 2020, P.L.681, No.71, eff. imd.) 2020 Amendment.Act 71 amended subsec. (c). 2016 Amendment.Act 79 amended subsec. (f). Cross References.Section 8113 is referred to in section 8105 of this title.