A trust cannot be amended by its beneficiaries to allow for the removal and replacement of a trustee without judicial approval, the Pennsylvania Supreme Court has ruled.

In a unanimous July 19 decision in Trust Under Agreement of Edward Winslow Taylor, the justices found that a section of the Uniform Trust Act dealing with the modification of a trust does not allow changes that open the door to a trustee's removal, which is governed by a separate section of the act.

"The legislative intent with respect to the interplay between Sections 7740.1 and 7766 is clear the scope of permissible amendments under Section 7740.1 does not extend to modifications to add a portability clause permitting beneficiaries to remove and replace a trustee at their discretion; instead, removal and replacement of a trustee is to be governed exclusively by Section 7766," Justice Christine L. Donohue wrote for the court.

Wells Fargo Bank, as the current trustee of a trust established by Edward Winslow Taylor in 1928, sought to overturn a Superior Court ruling that granted the beneficiaries' request to modify the trust's terms to add a portability clause that would allow them to replace the corporate trustee at their discretion, without cause or judicial approval.

The bank asserted that Section 7740.1, which governs the modification of a trust, does not trump Section 7766, which governs the removal of a trustee, and that the Superior Court failed to apply basic principles of statutory construction in its review of the relationship between the two sections.

The beneficiaries argued that portability clauses are common in modern trusts and that, given the significant changes to the banking industry in the past century, they should be allowed to modify the trust in order to be placed on the same footing as the beneficiaries of modern trusts. They emphasized that they did not seek to remove Wells Fargo as trustee and any such speculation was irrelevant to the case.

The Superior Court erred in its determination that the language of Section 7740.1 does not require application of the principles of statutory construction, Donohue said. When read in conjunction, the two sections create ambiguities in part because neither contains explicit language addressing the beneficiaries' requested modification that necessitate a review applying the principles of statutory construction.

Permitting the modification of a trust to add a portability clause pursuant to Section 7740.1 would "nullify, exclude or cancel" the effectiveness of Section 7766, Donohue said. Under Section 7766, beneficiaries seeking to remove and replace a trustee face substantial evidentiary hurdles before an Orphans' Court judge, but Section 7740.1 requires no such detailed analysis.