In re McKinney
67 A.3d 824 (2013)
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Rule of Law:
A substantial change in circumstances sufficient to warrant a no-fault removal of a trustee under 20 Pa.C.S.A. § 7766(b)(4) can be established by the cumulative effect of multiple corporate mergers of the original institutional trustee, the geographic relocation of all beneficiaries to another state, and a corresponding decline in the character and personalization of trust administration services.
Facts:
- In 1964, Donald L. McKinney's will established a Testamentary Trust upon his death in 1971, naming The Pennsylvania Bank and Trust Company ('Bank and Trust') as trustee and his daughter, Jane D. McKinney, as the primary beneficiary.
- Jane D. McKinney has not resided in Pennsylvania since 1964 and has primarily lived in the Hampton Roads area of Virginia, where her four children (the secondary beneficiaries) also reside.
- In 1989, Jane D. McKinney's mother, Katherine McKinney, created a second trust, the Descendants’ Trust, naming Pennbank (a successor to Bank and Trust) as trustee.
- Over a period of 40 years, the original institutional trustee, Bank and Trust, underwent a series of approximately six mergers and acquisitions, with PNC Bank becoming the trustee in 2009.
- For most of this period, Jane D. McKinney continued to work with the same individual bank officers, who knew her family's history.
- After the final merger in which PNC Bank became the trustee, the long-standing bank personnel who had administered the trusts were replaced by new individuals.
- Jane D. McKinney experienced a decline in service from PNC, citing unresponsiveness and difficulty in obtaining basic banking services.
- The McKinney family's financial planning needs grew more complex following an inheritance, and their financial planning was conducted primarily with advisors in Virginia.
Procedural Posture:
- Jane D. McKinney filed petitions in the Pennsylvania Orphans' Court (the trial court) seeking to remove PNC Bank, National Association, as trustee of two separate family trusts.
- PNC Bank filed an answer opposing removal and requested attorneys' fees from the trusts for its defense.
- The trial court denied the petitions to remove PNC Bank and awarded PNC Bank its attorneys' fees.
- Jane D. McKinney, as Appellant, filed an appeal to the Superior Court of Pennsylvania, an intermediate appellate court, with PNC Bank as the Appellee.
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Issue:
Does the combination of a family's relocation from Pennsylvania to Virginia and a series of approximately six corporate mergers of the original trustee, resulting in the loss of familiar bank personnel and a change in the character of service, constitute a "substantial change of circumstances" warranting a no-fault removal of the current trustee under 20 Pa.C.S.A. § 7766(b)(4)?
Opinions:
Majority - Wecht, J.
Yes. The combination of the beneficiaries' relocation and the series of corporate mergers of the trustee constitutes a substantial change of circumstances justifying the trustee's removal under Pennsylvania's no-fault statute. To remove a trustee under 20 Pa.C.S.A. § 7766(b)(4), a petitioner must prove by clear and convincing evidence that: (1) removal serves the beneficiaries' best interests; (2) it is not inconsistent with a material purpose of the trust; (3) a suitable successor is available; and (4) a substantial change in circumstances has occurred. The court determined that the 'best interests' analysis does not require a showing of fault, but instead involves a comparative analysis of the current and proposed trustees based on factors like personalization of service, convenience, and efficiency. Here, the proposed successor, SunTrust, was better suited as it was located in Virginia with the beneficiaries and already managed other family trusts. The court also found that removing PNC was not inconsistent with a material purpose, because the settlors' original chosen trustee, Bank and Trust, had long ceased to exist through mergers, rendering the 'process of attenuation complete.' Finally, while a single merger is insufficient, the cumulative effect of a 'string of mergers over several years, resulting in the loss of trusted bank personnel, coupled with the movement of a family from Pennsylvania to Virginia,' constituted the necessary substantial change in circumstances.
Analysis:
This case is a matter of first impression in Pennsylvania interpreting the 'no-fault' trustee removal provision, 20 Pa.C.S.A. § 7766(b)(4). The decision modernizes trust law by recognizing the realities of corporate consolidation in the banking industry and the geographic mobility of families. By establishing a comparative, beneficiary-centric test for 'best interests' rather than requiring proof of trustee misconduct, the court lowers the bar for removal. This ruling provides a clear path for beneficiaries to replace an institutional trustee when the original personal or geographic connection has been severed by decades of mergers and relocations, even if the trust instrument lacks a portability clause.
