Wills, Estates, Trusts & Probate
Trustee Breach of Fiduciary Duty in Pennsylvania
A Pennsylvania trustee who puts personal interests ahead of the trust, fails to keep beneficiaries informed, or manages trust assets recklessly has breached a fiduciary duty. Under 20 Pa.C.S. § 7772, a trustee owes a duty of loyalty to the beneficiaries that prohibits self-dealing and conflicts of interest. Breach of that duty may expose the trustee to personal liability, surcharge, and removal, depending on the severity of the breach and its effect on trust administration.
Lebovitz & Lebovitz, P.A. advises Pittsburgh and Western Pennsylvania families on trustee misconduct, breach of fiduciary duty, surcharge actions, and trustee removal. These matters require a different legal framework than executor misconduct because trustee duties are governed by Pennsylvania’s Uniform Trust Code at 20 Pa.C.S. Chapter 77, not the estate administration statutes that apply to executors.
Lebovitz & Lebovitz, P.A. · Pittsburgh, PA 15218 · Serving Allegheny County and Western Pennsylvania.
Removal, surcharge, compelled accounting, and injunctive relief are each designed for distinct types of breach. A trustee who stole from the trust faces surcharge. A trustee who made bad investments without self-dealing may face a separate analysis. A trustee who simply refuses to communicate may face removal before any other remedy is available. The path depends on what the trustee did, not just on how the beneficiaries feel about it.
Illustrative example: The beneficiaries of an irrevocable trust discovered that the trustee had been paying himself advisory fees not authorized by the trust document for over a decade. The fees were substantial. The trustee’s position was that the compensation was reasonable for services rendered. Pennsylvania law under 20 Pa.C.S. § 7772 prohibits a trustee from benefiting personally from trust administration except as the trust expressly permits. The fees were not permitted. The Allegheny County Orphans’ Court surcharged the trustee personally for the full amount plus interest and ordered his removal. He was replaced by a corporate trustee. The case turned on the trust document language and the specific prohibition in the loyalty statute, not on whether the fees were market rate.
A trustee’s fiduciary breach typically follows one of these patterns:
The trustee is paying themselves fees the trust does not authorize.
Unauthorized compensation is a breach of the duty of loyalty under 20 Pa.C.S. § 7772. The trustee can be surcharged for every unauthorized payment and removed from office.
The trustee is investing trust assets in ways that benefit the trustee personally.
Self-dealing in trust investments is a direct breach of fiduciary duty. Pennsylvania courts void these transactions and hold the trustee personally liable for any loss to the trust.
The trustee has not provided an accounting despite your written request and the trust document’s requirements.
Pennsylvania trustees must keep beneficiaries reasonably informed under 20 Pa.C.S. § 7780.3. Failure to account is independently actionable and is often the first evidence of deeper misconduct. For the procedure to compel an accounting when a trustee refuses, see trustee refusing to account in Pennsylvania.
The trustee is making distributions that appear unequal: one beneficiary is receiving significantly more than another.
Whether unequal distributions constitute a breach depends on the trust document, the trustee’s authority, and the reasons for the disparity. A trustee with discretionary powers may have authority to make unequal distributions, or may be abusing that discretion. The trust document and the trustee’s accounting records determine which.
The trustee made investments that lost significant value.
Investment losses alone do not establish breach. The standard is whether the trustee followed a prudent investor process. Reckless or self-interested investment decisions can support surcharge even without self-dealing.
The trustee is withholding distributions the trust requires.
When a trustee refuses to make distributions the trust document requires, that failure is a breach of the duty to administer the trust in accordance with its terms. Orphans’ Court can compel distribution and hold the trustee liable for delay.
You do not need to know the legal name for what the trustee did before you call. You need to know that something is wrong and you want to understand your options.
Trustee breach of fiduciary duty is not a single claim. It is a category of conduct that leads to different remedies depending on what the trustee did and what the trust document says, and the wrong remedy leaves you with no recovery.
Lebovitz & Lebovitz, P.A. represents beneficiaries in Allegheny County Orphans’ Court trust breach proceedings. Call 412-351-4422 or schedule a consultation to discuss what happened and what can be done about it.
What Fiduciary Duty Means for a Pennsylvania Trustee
A Pennsylvania trustee’s fiduciary duty is a legal obligation to act solely in the interest of the trust beneficiaries rather than the trustee’s own interest, to keep beneficiaries informed, and to treat all beneficiaries impartially.
A fiduciary is someone who holds a position of trust and is legally required to act in the interest of another person rather than their own. A trustee is a fiduciary to the trust beneficiaries. That relationship imposes specific legal obligations under Pennsylvania’s Uniform Trust Code that go beyond ordinary good judgment. A trustee who makes a bad decision while acting in good faith is not automatically liable. A trustee who makes a decision that benefits the trustee personally, or who ignores the trust document’s requirements, or who treats beneficiaries unequally without authorization, has breached a duty that Pennsylvania law takes seriously.
Trustee duties under Pennsylvania law are distinct from executor duties. Executors are governed by 20 Pa.C.S. Chapter 33. Trustees are governed by 20 Pa.C.S. Chapter 77. The duties are similar in structure but the statutes, standards, and remedies are different. A lawyer experienced in executor misconduct is not automatically experienced in trustee misconduct, and the distinction matters in Allegheny County Orphans’ Court proceedings.
The Three Core Duties Pennsylvania Trustees Owe
Pennsylvania’s Uniform Trust Code imposes three core duties on every trustee regardless of what the trust document says.
The duty of loyalty under 20 Pa.C.S. § 7772 requires the trustee to administer the trust solely in the interest of the beneficiaries. A trustee must avoid conflicts of interest and cannot profit personally from trust administration except as the trust expressly authorizes. Self-dealing transactions, unauthorized compensation, and investments that benefit the trustee at the trust’s expense are all violations of the loyalty duty.
The duty to inform beneficiaries under 20 Pa.C.S. § 7780.3 requires the trustee to keep beneficiaries reasonably informed about trust administration and to provide accountings when requested. A trustee who refuses to provide information, fails to account for trust assets, or conceals transactions from beneficiaries has breached this duty regardless of whether the underlying transactions were proper.
Impartiality under 20 Pa.C.S. § 7773 requires the trustee to act impartially between current and remainder beneficiaries. A trustee who systematically favors income beneficiaries over remainder beneficiaries, or who makes investment decisions that benefit one class of beneficiaries at the expense of another, has breached the impartiality duty even without any self-dealing.
The duty of impartiality does not require mathematically equal distributions. It requires the trustee to fairly consider the competing interests of all beneficiaries in light of the trust’s terms and purposes. Different treatment may be permissible when authorized by the trust or justified by legitimate fiduciary considerations, but favoritism based on personal bias, improper motive, or reasons inconsistent with the trust’s purposes may constitute a breach of fiduciary duty.
The impartiality duty applies to the extent the trust document does not otherwise direct. A trust that grants the trustee sole discretion over distributions, or that explicitly directs the trustee to prioritize one class of beneficiaries over another, has authorized conduct that would otherwise appear to be favoritism. A beneficiary who believes the trustee is violating the impartiality duty must first establish that the trust document does not authorize the disparity in treatment. This is why the trust document is the starting point for every breach analysis: the statutory duties yield to valid trust provisions that modify them.
Common patterns that raise impartiality concerns include: a trustee who funds one beneficiary’s college education from trust principal while refusing similar distributions to another beneficiary with equal need under the same standard; a trustee who provides detailed accounting information to one beneficiary while stonewalling another with the same legal right to information.
Another common pattern is a trustee who systematically invests for current income in a way that benefits income beneficiaries while depleting the principal that remainder beneficiaries will eventually receive. Whether any of these patterns constitutes a breach depends on the trust document, the distribution standard, and whether the trustee can articulate a legitimate fiduciary reason for the differential treatment.
The Pennsylvania Supreme Court held in In re Noonan’s Estate, 361 Pa. 26, 63 A.2d 80 (1949), that a trustee may not exercise trust powers to benefit themselves or third parties at the expense of beneficiaries: fiduciary loyalty is paramount and self-dealing or disloyal conduct violates the trustee’s core obligation regardless of discretionary language in the trust instrument.
The Pennsylvania Superior Court applied this standard in In re Trust Under Agreement of John H. Ware, III, 816 A.2d 1266 (Pa. Super. 2002), illustrating that even a trustee vested with broad discretion must exercise that discretion reasonably, in good faith, and consistently with the purposes of the trust rather than personal preferences. The court rejected an approach that effectively substituted the trustee’s own judgment for the settlor’s intent.
Pennsylvania codified this principle directly in 20 Pa.C.S. § 7780.4, which provides that a trustee shall exercise discretionary powers in good faith and in accordance with the provisions and purposes of the trust and the interests of the beneficiaries, notwithstanding terms such as absolute, sole, or uncontrolled discretion. In Pennsylvania, words such as absolute, sole, or uncontrolled discretion do not eliminate judicial oversight. They expand the trustee’s decision making authority but do not excuse bad faith, dishonesty, abuse of discretion, or actions inconsistent with the trust’s purposes. This statute strongly undermines any argument that broad discretionary language grants the trustee unlimited or unreviewable authority: even a trustee with absolute discretion must exercise that discretion in good faith and in the interests of all beneficiaries. The existence of broad discretion does not eliminate judicial review. Rather, it changes the question from whether the court agrees with the trustee’s decision to whether the trustee exercised discretion in good faith and within the bounds established by the trust and applicable law.
Even when a trust grants the trustee sole, absolute, or uncontrolled discretion over distributions, Pennsylvania law does not permit arbitrary or bad faith decision making. A trustee may not use discretionary authority as a pretext to punish one beneficiary, reward another for personal reasons, or substitute the trustee’s own preferences for the settlor’s intent. Courts may intervene where discretion is exercised dishonestly, from an improper motive, or in a manner inconsistent with the purposes of the trust.
What Counts as a Breach
Not every trustee mistake is a breach of fiduciary duty. Pennsylvania courts distinguish between poor judgment exercised in good faith and conduct that violates a specific duty. A trustee who held a declining investment too long may have made a bad decision without breaching a duty. A trustee who held a declining investment because it was the trustee’s own company’s stock, or because selling it would trigger tax consequences that benefited the trustee personally, has breached the duty of loyalty.
The specific conduct matters. Breach claims that succeed in Allegheny County Orphans’ Court typically involve one of six patterns: unauthorized self-compensation, self-dealing transactions, failure to account over extended periods, investment decisions with undisclosed conflicts of interest, systematic distribution favoritism, and refusal to administer the trust in accordance with its written terms. The further a trustee’s conduct falls from these patterns, the harder the breach claim becomes to sustain.
The trust document also matters. Some conduct that would be a breach under the default UTC rules is permitted by the trust document itself. A trust that authorizes the trustee to charge management fees or to invest in related entities has permitted conduct that would otherwise be a loyalty violation. Reading the trust document carefully before evaluating a breach claim is essential, and it is one of the first things an attorney will do in a trustee misconduct matter.
When a Trustee Refuses to Follow the Trust Document
The trust document is the governing instrument. A trustee who ignores, misinterprets, or refuses to follow explicit trust provisions — regardless of their reasons — has breached the duty to administer the trust in accordance with its terms. Personal judgment about what would be better for the beneficiaries does not override what the document says.
Common violations include: distributing assets on a different schedule than the trust requires, making investments the trust document prohibits, refusing mandatory distributions, naming a different successor trustee than the document specifies, or making discretionary distributions the trust does not authorize. When a beneficiary can show the trustee violated a clear trust term, the burden shifts to the trustee to justify the deviation. A trustee who believes the trust language is ambiguous should petition Allegheny County Orphans’ Court for instruction before acting unilaterally — choosing one interpretation without court approval and later being found wrong creates personal liability for any resulting loss.
The remedies for trust document violations follow the same framework as other breach claims: surcharge for unauthorized distributions, removal for a pattern of non-compliance, and a compelled accounting to establish the full scope of the violations.
Your Remedies: Surcharge, Removal, or Compelled Accounting
Pennsylvania beneficiaries have several remedies available when a trustee breaches a fiduciary duty. The appropriate remedy depends on what the trustee did and what outcome the beneficiaries are seeking.
Surcharge is the primary financial remedy. A surcharged trustee is held personally liable for losses caused by the breach and must pay the trust from personal funds. Surcharge can include the amount misappropriated, investment losses caused by improper decisions, and interest from the date of the breach. For unauthorized compensation, surcharge typically equals every payment the trustee took plus interest. The beneficiary bears the burden of proving both the breach and the resulting loss. For investment breach claims, this typically requires expert testimony comparing the trustee’s decisions to what a prudent investor would have done and quantifying the difference in returns.
Removal ends the trustee’s authority to administer the trust. Pennsylvania courts can remove a trustee for breach of fiduciary duty and appoint a successor. Removal is discretionary. Courts consider whether the breach is serious enough to justify removal, whether lesser remedies would protect the beneficiaries, and whether a suitable successor is available. For a complete analysis of the removal process, see our page on trustee removal in Pennsylvania.
A compelled accounting forces the trustee to provide a full accounting of all trust transactions, assets, and disbursements. When beneficiaries suspect breach but lack the documentation to prove it, an accounting demand is often the first step. The accounting itself frequently reveals the evidence needed to support a surcharge or removal petition. The accounting demand is both an evidentiary tool and settlement pressure. A trustee facing exposure through an accounting may resign or settle rather than produce records that document the breach. For guidance on compelling an accounting, see our page on trust beneficiary rights in Pennsylvania.
What the Court Can Do
Allegheny County Orphans’ Court has broad authority over trustee misconduct under Pennsylvania’s Uniform Trust Code. The court has authority to compel the trustee to account, freeze trust assets to prevent further dissipation, void self-dealing transactions, surcharge the trustee personally, remove the trustee and appoint a successor, and award attorney fees against a trustee who acted in bad faith. Every remedy listed is discretionary and requires different proof standards. Whether any specific remedy is granted depends on the evidence presented and the severity of the breach. In urgent situations where the trustee is actively dissipating trust assets, emergency relief is available without waiting for a full hearing.
One practical reality: the trustee may defend using trust assets. Legal fees for both sides may come from the same trust the beneficiaries are trying to protect. Evaluate the strength of your documentary evidence before filing.
The court’s remedial authority is cumulative. A trustee can be surcharged and removed in the same proceeding. A self-dealing transaction can be voided and the trustee surcharged for any loss that resulted. The remedies are designed to make the trust whole and to deter future misconduct, not simply to punish the trustee. For a complete overview of trust litigation in Pennsylvania, see our page on trust litigation in Pennsylvania.
Can a Trustee Favor One Beneficiary Over Another in Pennsylvania?
Not usually. The starting point is always the language of the trust. If the settlor intentionally granted the trustee authority to prefer one beneficiary or respond to differing needs, a court will generally respect that intent unless the trustee acts in bad faith or outside the bounds of reasonable judgment. If the trust expressly authorizes unequal distributions or grants discretion to favor certain beneficiaries, the trustee may have broad authority. However, Pennsylvania law under 20 Pa.C.S. § 7780.4 still requires the trustee to act in good faith and in accordance with the trust’s purposes. A trustee with discretionary authority must exercise that discretion in good faith, in accordance with the terms and purposes of the trust, and in the interests of the beneficiaries, as required by 20 Pa.C.S. § 7780.4. Even broad discretionary language does not insulate a trustee from judicial review for abuse of discretion or bad faith. Beneficiaries have specific rights under Pennsylvania law when challenging improper favoritism, including the right to demand accountings and to petition for trustee removal when impartiality violations are severe.
When to Consult an Attorney About Trustee Conduct
The analysis of whether specific trustee conduct rises to a breach of fiduciary duty requires reviewing the trust document, the trustee’s accounting records, and the specific transactions at issue against the statutory duties in Pennsylvania’s Uniform Trust Code. That analysis cannot be done without the documents, and it cannot be done reliably without an attorney who handles trust litigation in Allegheny County Orphans’ Court.
Contact Lebovitz & Lebovitz, P.A. if any of the following describe your situation: the trustee has not provided an accounting despite your request; the trustee appears to be paying themselves fees or compensation not authorized by the trust; you have reason to believe the trustee is investing trust assets in ways that benefit the trustee personally; distributions required by the trust document have not been made; or you have received an accounting that does not add up and you cannot determine where trust assets have gone. The sooner a potential breach is identified and documented, the more remedies remain available. Assets that have been dissipated are harder to recover than assets that can still be frozen.
Frequently Asked Questions About Trustee Breach of Fiduciary Duty in Pennsylvania (FAQ)
What is a breach of fiduciary duty by a trustee in Pennsylvania?
A breach of fiduciary duty occurs when a trustee violates one of the specific legal obligations imposed by Pennsylvania’s Uniform Trust Code, including the duty of loyalty under 20 Pa.C.S. § 7772, the duty to inform beneficiaries under 20 Pa.C.S. § 7780.3, or the duty of impartiality under 20 Pa.C.S. § 7773. Not every mistake by a trustee is a breach: the conduct must violate a specific duty, not merely represent poor judgment.
What can I do if a trustee breaches their fiduciary duty?
Pennsylvania beneficiaries can petition Allegheny County Orphans’ Court for several remedies including surcharge (personal liability for losses), removal of the trustee, compelled accounting, and voiding of improper transactions. The appropriate remedy depends on the specific conduct and what outcome the beneficiaries are seeking.
Can a trustee be sued personally for breach of fiduciary duty?
Yes. A trustee who breaches a fiduciary duty can be surcharged personally and required to pay the trust from personal funds for any losses caused by the breach. Surcharge can include misappropriated amounts, investment losses, and interest from the date of the breach.
Is a trustee liable for investment losses?
Not automatically. Pennsylvania applies a prudent investor standard: a trustee who follows a reasonable investment process in good faith is not liable for losses. A trustee whose investment decisions were influenced by self-interest, or who failed to diversify without justification, may be liable for resulting losses even without outright theft.
How is trustee breach different from executor breach in Pennsylvania?
Trustee duties are governed by Pennsylvania’s Uniform Trust Code at 20 Pa.C.S. Chapter 77. Executor duties are governed by the estate administration statutes at 20 Pa.C.S. Chapter 33. The duties are similar in structure but the statutes, standards, and Orphans’ Court procedures are different. An attorney who handles executor misconduct is not automatically familiar with trustee misconduct litigation.
How long do I have to bring a claim against a trustee in Pennsylvania?
The statute of limitations for breach of fiduciary duty claims against trustees in Pennsylvania depends on when the beneficiary knew or should have known about the breach. An attorney can evaluate the specific timeline and whether any limitations period has run based on the trust document and the trustee’s accountings.
Can a trustee favor one child over another in Pennsylvania?
Sometimes. Whether a trustee may favor one beneficiary over another depends primarily on the language and purpose of the trust. Pennsylvania law recognizes that a trustee may have broad discretionary authority, but that discretion must still be exercised in good faith and consistently with the trust’s terms and purposes under 20 Pa.C.S. § 7780.4. A court may intervene if the trustee exceeds the bounds of that discretion or otherwise breaches fiduciary duties.
The trustee is favoring my sibling over me. Is that legal?
It depends on what the trust document says and whether the different treatment is based on legitimate fiduciary reasons or personal bias. Pennsylvania law requires trustees to act impartially under 20 Pa.C.S. § 7773, but impartiality does not mean mathematically equal distributions. A trustee may permissibly favor one beneficiary when the trust authorizes it or when differing circumstances and needs justify it. However, favoritism based on personal relationships, family politics, or other improper motives may support a claim that the trustee breached fiduciary duties, depending on the governing instrument and the surrounding facts. The trust document and the trustee’s stated reasons for the differential treatment are the starting point for any analysis.
For related issues see our pages on trustee removal in Pennsylvania, trust litigation in Pennsylvania, trust beneficiary rights, trustee defense, and co-trustees in Pennsylvania.
The legal problem usually starts long before the lawsuit. A trustee who refuses to account rarely refuses once. Early documentation determines what the court can recover.