In re Ashton

The Pennsylvania Supreme Court declined “to adopt a test for standing whereby a retroactive or future enlargement in trustee compensation can only be challenged by a beneficiary who is able to demonstrate, preliminary, that her benefit will be affected by the increase.” Augustus Ashton created a trust in his will when he died in 1951. He funded the will with $2.6 million. By 2017, the corpus had grown to $72.3 million. His grandniece was a beneficiary entitled to $2,400 annually, irrespective of the size of the trust. The trustee filed an interim accounting and sought permission to make changes to the trust, including the trustee’s compensation. Given the size of the trust’s corpus compared to the beneficiary’s payment, the trustee’s proposed requests would not harm her annual payout. Nonetheless, the beneficiary objected to the trustee’s stewardship. The trustee argued that the beneficiary did not have standing because the proposed changes would not affect her interest. The Orphans’ Court sustained the objection, ruling the beneficiary had standing to object. The Superior Court reversed in part. The Supreme Court reversed and held that the beneficiary stood on a different footing relative to the trust than members of the general public because she was a named beneficiary with rights to the proceeds. And the trustee acts under a duty of loyalty which obligates it to administer the trust solely in the interests of the beneficiaries. As a result, the beneficiary’s substantial, direct, and immediate interest was harmed if the trustee’s actions were improper. Therefore, the beneficiary had standing to challenge the trustee’s proposed alterations.

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