Evenly Divided Supreme Court Affirms Fiduciary Exception to Attorney-Client Privilege

Posted on by May 24, 2022

In a dispute over legal fees paid by a trustee, the Orphans’ Court had ordered the trustee to turn over to the beneficiaries unredacted invoices for legal fees paid, and an evenly divided Supreme Court has affirmed the order. In re: Estate of William K. McAleer, 248 A.3d 416, ___ Pa. ____, 6 WAP 2019 (4/7/2021) (per curiam order, opinion of Wecht, J., opinion of Saylor, J., opinion of Donohue, J.). 

The procedural history is somewhat complicated because the Superior Court had quashed the appeal, holding that the the order was not appealable as a collateral order under Pa.R.A.P. 313(a) because the order was not separable from the merits of the fee dispute. In the alternative, the Superior Court concluded that the attorney-client privilege did not apply. In re: Estate of William K. McAleer, 194 A.3d 587, 2018 PA Super 227 (2018).

The Supreme Court reversed the quashal, but then split on the issue of whether the attorney records were privileged. The opinion of Justice Wecht, explains the reversal of the quashal and presents his opinion in support of affirmance on the merits, with which Justices Todd and Dougherty joined. The opinion of Justice Saylor supported reversal on the merits, and the opinion of Justice Donohue, joined by Justice Mundy, also supported reversal on the merits. Chief Justice Baer did not participate in the consideration or decision of the matter.

 The Superior Court had concluded that the trustee had a duty to share information about the administration of the trust, and the trustee is privileged to refrain from disclosing opinions of counsel and communications with counsel only if counsel is retained for the personal protection of the trustee in connection with surcharge or removal. This is referred to by Justice Wecht as the “fiduciary exception” to attorney-client privilege, and Justice Wecht’s opinion concludes that, “where legal counsel is procured by a trustee utilizing funds originating from a trust corpus, the beneficiaries of that trust are entitled to examine the contents of communications between the trustee and counsel, including billing statements and the like.”

Some lawyers have said that, as a result of the evenly divided court, the issue of the “fiduciary exception” is not settled in Pennsylvania, but that is not consistent with the per curiam order. The order of the court says that “the Superior Court’s alternative substantive rationale for affirming the trial court’s disclosure order is hereby affirmed by operation of law.” Furthermore, the Superior Court affirmed the principle of the fiduciary exception, and that part of the opinion was not reversed and so remains binding on both the Superior Court and Orphans’ Courts. It is therefore difficult to escape the conclusion that the fiduciary exception is the law in Pennsylvania until the Supreme Court should decide to revisit the issue.

Proposed Amendments to Public Access Policy

The Administrative Office of Pennsylvania Courts has published proposed amendments to the Electronic Case Record Public Access Policy of the Unified Judicial System that would expressly include records of the Guardianship Tracking System and the Clerk of the Orphans’ Court within the scope of the policy, and make some stylistic changes. “Proposed Amendments to the Electronic Case Record Public Access Policy of the Unified Judicial System,” 51 Pa.B. 2160 (4/17/2021).

Comments should be submitted not later than May 17, 2021.

Proposed Rule for Digital Assets

Posted on by April 2, 2021

The Orphans’ Court Procedural Rules Committee has published a proposal for a new rule for Registers of Wills that would provide a cross-reference to 20 Pa.C.S. § 3908, which allows disclosure of digital assets through the filing of an affidavit with the Register. “Proposed Adoption of Rule 10.7 of the Pennsylvania Orphans’ Court Rules,” 51 Pa.B. 1796 (4/3/2021).

According to the report of the committee, the committee considered other approaches, such as restating the affidavit procedures in the rule or changing the petition for probate, but believed that the procedures in the statute were adequate and incorporation of those procedures into the rules by referencing the statute was appropriate.

For additional information about digital assets and the procedures for accessing those assets, see “Fiduciary Access to Digital Assets” (7/27/2020).

Ethics of Retaining Wills

Posted on by April 1, 2021

The Committee on Legal Ethics and Professional Responsibility of the Pa. Bar Association has issued Formal Opinion 2021-300 (3/5/2021), “Ethical Considerations for Lawyers Retaining Original Wills.” The opinion adopts and endorses New York State Bar Association Ethics Opinion 1182 (1/23/2020), “Disposition of Wills,” and concludes that, under Pa. R.P.C. 1.15, “lawyers must maintain original Wills until they (1) provide them to the client, the client’s executor or some other person authorized to possess the Will, (2) are notified that the client no longer needs the Wills to be stored (such as when a client drafts a new Will), or (3) are authorized to dispose of them by statute, rule or some other procedure.” (Capitalization in original.)

The opinion does not identify any “statute, rule or some other procedure” by which a lawyer might be able to dispose of an original will in his or her possession.

The opinion suggests that lawyers retaining original wills and other documents take steps to maintain current contact information for clients, and to consider whether to continue storing wills or to advise clients about alternative methods of storing and safeguarding documents.

Comments to Proposed Amendment to Pa.O.C. Rule 10.5(a)

Posted on by March 26, 2021

The following comments have been submitted to the Orphans’ Court Procedural Rules Committee on the proposed rule change for notice by successor personal representatives.

March 26, 2021

Pamela S. Walker, Counsel
Orphans’ Court Procedural Rules Committee
Supreme Court of Pennsylvania
Pennsylvania Judicial Center
PO Box 62635
Harrisburg, PA 17106-2635

Via Email orphanscourtproceduralrules@pacourts.us

Re: Proposed Amendment of Rule 10.5 of the Pennsylvania Orphans’ Court Rules, 51 Pa.B. 1651 (3/27/2021)

Dear Ms. Walker:

I agree with the general principle that a notice of estate administration should be given to interested parties when there is a change in personal representatives, just as a notice to current trust beneficiaries is required under 20 Pa.C.S. § 7780.3(g) whenever there is a change in trustees, but I think that there are two weaknesses in the proposed change to Rule 10.5(a).

The first weakness is that the proposed reference to “a personal representative to whom letters have been granted” and the reference in the amended note to “all personal representatives” when taken together would suggest that, when two personal representatives are granted letters, both must give notice. That would be unnecessary, and I think that the problem is in the wording of the note and not the wording of the rule itself.

The other weakness is that there can be a change in personal representatives without a grant of letters. For example, it is possible for letters to be granted to two persons and for one of them to die during the administration of the estate, leaving the survivor to serve as sole personal representative. While there is currently no rule or statute allowing the resignation of a personal representative, it may be possible for a will to allow the resignation of a co-executor. Regardless of how it might happen, I think the loss of a personal representative is also worthy of a notice to interested parties, just as the loss of a co-trustee would require notice under § 7780.3(g).

My final comment is that the phrase “to whom letters have been granted” seems superfluous because a personal representative is necessarily a person to whom letters have been granted.

I would therefore suggest the following changes in the wording of the rule and the note:

  • Rule 10.5(a) should be amended to read, “Within three (3) months after [the] a grant of letters, and whenever there is a change in personal representatives, [the] a personal representative [to whom original letters have been granted] or the personal representative’s counsel shall send a written notice of estate administration in the form approved by the Supreme Court to:”
  • The note should be amended to read “Subparagraph (a) applies to an original grant of letters and to all changes in personal representatives, including a grant of letters to a successor personal representative and the death of a personal representative when there are other personal representatives who continue to serve.”

Thank you for your consideration of these comments and suggestions.

Sincerely yours,
Daniel B. Evans

Proposed Rule Change for Notice by Successor Personal Representatives

Posted on by March 26, 2021

The Orphans’ Court Procedural Rules Committee has proposed an amendment to Pa.O.C. Rule 10.5(a), regarding notice of estate administration, that would change “the personal representative to whom original letters have been granted” to “a personal representative to whom letters have been granted.” The Note to Rule 10.5 would be amended to state that the rule applies to a successor personal representative. According to the publication report of the committee, “Requiring successor personal representatives to notify the interested persons of the change in representative ensures the recipients are aware of the change and know to whom they should look for information going forward.” “Proposed Amendment of Rule 10.5 of the Pennsylvania Orphans’ Court Rules,” 51 Pa.B. 1651 (3/27/2021).

Comments may be submitted to orphanscourtproceduralrules@pacourts.us by May 7, 2021.

(A comment has been submitted.)

Checking Status of Inheritance Tax Returns

Posted on by March 6, 2024

There is now a page on the Department of Revenue “Pennsylvania Tax Hub” website (https://mypath.pa.gov) where you can find the status of an inheritance tax return that has been filed, based on the decedent’s social security number and last name. From the home page, ignore the login box and scroll down to click on “Track My Inheritance Tax Return” in the lower left corner of the home page.

There seem to be only three responses:

  1. That no return has been received
  2. That a return has been received but has not yet been processed (which they say could take six months).
  3. That a return has been received and has been processed (meaning that a notice of appraisement has been issued or is about to be issued).

This could be useful in confirming that a return was received, and whether or not it has been reviewed.

[Updated 3/6/2024 to correct link.]