Trust not Voided for Fraud in Inducement

Posted on by January 25, 2021

Failure to list property addresses in the schedule to an irrevocable trust was not sufficient evidence of fraud in the inducement to void the trust when the corporate owners of the properties were listed and were accurately valued, there being no duty to disclose every individual asset of the corporations.  Passarelli Family Trust, 2019 PA Super 95 (3/28/2019) (en banc), rev’g 7 Fid.Rep.3d 63 (O.C. Chester Co. 2016). (The previous decision of a three-judge panel, 2017 PA Super 366 (11/16/2017), was withdrawn and en banc rearg. granted, 3150 EDA 2016 (1/12/2018).)

Update: An appeal was allowed by the Supreme Court,  235 MAL 2019 (9/11/2019), and the Supreme Court has affirmed, ___ A.3d ___, 71 MAP 2019 (Pa. 12/22/2020).

Out-of-State Conservator without Authority to Contract for Incapacitated Person

Conservator appointed in California did not have authority to bind his conservatee to an arbitration agreement in Pennsylvania when the conservator did not follow the procedures to transfer or register the conservatorship under the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act, 20 Pa.C.S. Ch. 59. There was also no agency relationship that would allow the conservator to bind the conservatee. McIlwain v. Saber Healthcare Group, Inc., 2019 PA Super 122.

Incoherent Statement of Issues Warrants Dismissal of Appeal

A pro se appellant’s statement of issues on appeal which was 32 pages long and a “discursive, argumentative, and incoherent rant” violates R.A.P. 1925(b) and should be considered to waive all issues. The appeal should also be dismissed on its merits because the appellant failed to produce sufficient evidence of lack of testamentary capacity or undue influence. Fluellen Estate, 9 Fid.Rep.3d 130, No. 540 AP of 2018 (Philadelphia O.C. 1/22/2019), aff’d, 3557 EDA 2018 (Pa. Super. 12/17/2019) (non-precedential).

Annuitant Has Standing in Trust Disputes

A beneficiary who is entitled to an annuity from a trust has standing to object to the account of the administration of the trust, to object to the division of the trust, to object to a new fee schedule for the corporate trustee, and to petition for the appointment of an individual co-trustee. In re: Augustus Trask Ashton Testamentary Trust, 9 Fid.Rep.3d 151, No. 1039 ST of 1952 (Philadelphia O.C. 2/25/2019), aff’d in part, ___ Pa. ___, ___ A.3d ___, 36 EAP 2020 (Pa. 10/4/2021), (with concurrence by Wecht, J.).

EIN Application Requires SSN for Fiduciary

Posted on by April 1, 2019

The Internal Revenue Service has announced that, starting May 13, all applications for an employer identification number (EIN), whether submitted on-line or on Form SS-4, will require the name of an individual and either a Social Security number (SSN) or individual tax identification number (ITIN) for the “responsible party” of the entity for which the EIN is requested. IR-2019-58 (3/27/2019).

A “responsible party” is a person who ultimately controls or owns the entity or who exercises ultimate effective control over the entity. For estates and trusts, that would normally seem to be one of the personal representatives or trustees. (However, the instructions to Form SS-4 somewhat confusingly state that the responsible party for a trust is a “grantor, owner, or trustor,” which doesn’t seem right, especially for a testamentary trust.) For those estates or trusts for which the personal representative or trustee is a bank or trust company, the new requirement would apparently prevent the application from using the name and EIN of the corporate fiduciary, and would instead require the name and SSN of a trust officer responsible for the estate or trust.

This new requirement is intended to prevent one entity (such as a corporation or partnership) from applying for a EIN for another entity. The IRS apparently wants to be able to identify an individual responsible for the operations of the new entity, probably so that it will be easier to investigate possible frauds or evasions.

Emergency Guardianship Precludes Decisions by Ward

The appointment of an emergency guardian of the person or estate renders the alleged incapacitated person legally incapable of making decisions about matters expressly assigned to the guardian. Whether an emergency guardianship of the estate is still valid more than 30 days after the issuance of the order (cf. 20 Pa.C.S. § 5513) was not raised in the trial court, and could not be raised outside of the Orphans’ Court, and so would not be considered on appeal. Gavin v. Loeffelbein, 205 A.3d 1209, 74 MAP 2017 (Pa. 3/26/2019).

Executor Compensation Denied for Delays

Counsel fees of 5% of the first $100,000 of the estate and 3% of balance over $100,000 were approved, but should have been paid from residuary estate and not proceeds of sale of property that had been specifically devised. Executor’s commission of the same amount was denied due to delays in the administration of the estate and failure to comply with court orders. Surcharge imposed on the executor for interest on inheritance tax and some of the legal fees incurred by the objectant were imposed on the executor as a sanction for his contempt of court. Klingel Estate, 9 Fid.Rep.3d 51 (O.C. Monroe 2018).

(An earlier opinion confirmed other objections to the executor’s account.)