An agent’s deposit of a refund check payable to the principal into a bank account in the joint names of the principal and agent was an act of self-dealing and a breach of fiduciary duty by the agent because she commingled the funds of the principal with the funds of the agent, and so a surcharge on the agent was imposed. A receipt signed by a beneficiary for two rings of the decedent was upheld over the testimony of the beneficiary that she received only one ring. A tax penalty was directed to be paid by the estate and not imposed on one co-executor when there were delays and miscommunications between the one co-executor and the attorney for the estate. Other objections to the account of the executors and agent were was dismissed for failures of proof. Finnie Estate, 12 Fid.Rep.3d 203 (Montgomery O.C. 2022).
A right of first refusal granted to daughter and her husband by her father’s will was exercisable by daughter alone after her divorce from her husband when an offer to purchase the property was received by the executors more than 10 years after the death of the testator. Beck Estate, 12 Fid.Rep.3d 201 (Montgomery O.C. 2022).
The Superior Court has followed the plurality opinion in In re Estate of McAleer, 248 A.3d 416 (Pa. 2021), and held that the “fiduciary exception” to the attorney-client privilege and attorney work product doctrine is not contrary to the law in Pennsylvania, affirming an order of the Orphans’ Court compelling discovery of documents related to the legal services performed by counsel to trustees. In re: Trust Established under Agreement of Sarah Mellon Scaife, Deceased, Dated May 9, 1963, 276 A.3d 776, 2022 PA Super 93 (5/23/2022), app. den., 169 WAL 2022 (1/24/2023).
There were three appeals from the discovery order and the Superior Court released three opinions which appear to be identical in substance, but with different docket numbers and naming different appellants. The appeal of PNC Bank as corporate trustee (722 WDA 2021) was published as 2022 PA Super 93. The opinions related to the appeals of the individual trustees (696 WDA 2021) and counsel to the trustees (697 WDA 2021) were released as non-precedential.
Decedent gave instructions to attorney for the preparation of a will, but she died in the hospital without signing the will because COVID-19 protocols prevented her attorney or others from delivering the will to her for her signature, and so the will could not be probated. The conversations between the administrator and one of the intestate heirs were not sufficient to constitute a gift of the decedent’s real estate to the intended beneficiaries, or to apply equitable estoppel to the heirs. Administrator’s commission of 6% approved, but legal fees relating to equitable claims (but not the unsigned will) were denied. Bennett Estate, 12 Fid.Rep.3d 185 (Monroe O.C. 2022).
Value of rings determined by purchase prices from four years before, rather than an appraiser by a jeweler who did not actually examine the rings and misstated the size of the diamond in one of the rings. Compensation of the administrator at $104 an hour, or 14.3% of the estate, was reduced to 5% when there was nothing special or extraordinary in the estate warranting additional compensation. Johnson Estate, 12 Fid.Rep.3d 181 (Monroe O.C. 2022).
A will which directed the executor (who was the decedent’s long-time companion and later spouse) to distribute the residue of his estate “according to my wishes” would result in a distribution by intestacy, and so a later will which left the residue to the spouse was a substantial benefit. There was conclusive evidence that the decedent suffered from a weakened intellect before executing the new will, and that the decedent’s spouse influenced and controlled the decedent’s decisions, and that the new will was the product of the spouse’s undue influence. Roscher Estate, 12 Fid.Rep.3d 151 (Berks O.C. 2021), rev’d, 119 MDA 2022 (Pa. Super. 11/29/2022), (non-precedential; insufficient evidence of weakened intellect).
Executor surcharged for expenses of maintaining the decedent’s residence after it remained unsold four years after the death of the decedent, but not for the expenses of maintaining a vacation home which was made available for use by beneficiaries. Tobias Estate, 12 Fid.Rep.3d 143 (Montgomery O.C. 2021), affirmed in part, reversed in part, vacated in part, and remanded, 446 EDA 2021 and 2176 EDA 2020 (Pa. Super. 1/19/2022) (non-precedential).
[Note: Only the holding of the court that was affirmed has been summarized.]
The Supreme Court Orphans’ Court Procedural Rules Committee is planning to propose amendments to Pa.R.O.C.P. 5.50 governing the petition to settle a small estate in accordance with 20 Pa.C.S. § 3102.
In addition to technical and stylistic changes, the proposed amendments would address three issues:
- Requiring the probate or lodging of the original will with the Register, rather than attaching it to the petition.
- Allowing an explanation for why an inheritance tax return has not yet been filed.
- Clarifying that the petition may be served by notice to interested parties, rather than by citation.
Any comments on the proposed amendments should be submitted by July 15, 2022.
“Proposed Amendment of Pa. R.O.C.P. 5.50,” 52 Pa.B. 3057 (5/28/2022).
For previous comments on Rule 5.50, see “Proposed Rule for Small Estate Petitions and Rights of Creditors” and “New Rule for Small Estate Petition.”
The Pa. Supreme Court is allowing an appeal from a decision of the Superior Court on the following issue (as stated by the petitioner):
Did the Superior Court err by not enforcing modifications to trusts under 20 Pa. C.S.A. §7740.1(a), which were agreed to by both the settlor and all beneficiaries to allow for the replacement of trustees by a majority of beneficiaries after the death of the settlor?
Trust under Deed of Walter R. Garrison, 587 MAL 2021, 588 MAL 2021, 589 MAL 2021 (5/18/2022).
The Superior Court had affirmed a decision of the Orphans’ Court holding that a trust modification that allowed the beneficiaries to remove and replace trustees was ineffective even with the consent of the settlor. Garrison Trusts, 10 Fid.Rep.3d 189 (Montgomery O.C. 2020), aff’d 1429 EDA 2020 (Pa. Super. 9/27/2021) (non-precedential).
[DBE Comment: As previously noted, the decisions made no sense, because even a material purpose of a trust can be modified, or an otherwise irrevocable trust can be terminated, with the consent of the settlor and all beneficiaries. Both courts thought that they were following the Supreme Court’s decision in Trust under Agreement of Edward Winslow Taylor, 640 Pa. 629, 164 A.3d 1147 (2017), and a Uniform Law Comment to what was enacted as 20 Pa.C.S. § 7740.1, but the issue in Taylor was an attempted modification by the beneficiaries under subsection (b) and not a modification with the consent of the settlor under subsection (a), and the UTC comment addresses subsection (b) and not subsection (a).]
[1/27/2023 Update: The Supreme Court reversed the Superior Court. In re: Trust under Deed of Walter R. Garrison, ___ Pa. ___, ___ A.3d ___, 61 MAP 2022, 62 MAP 2022, and 63 MAP 2022 (1/19/2023).]
[Update (8/24/2023): The Supreme Court has reversed the Superior Court and reinstated the judgment of the Orphans’ Court.]
The Pa. Supreme Court is allowing an appeal from a decision of the Superior Court on the following issue (as stated by the petitioner):
What is the effect of a Power of Attorney which is not executed in conformance with the statute and did the Superior Court commit reversible error by reversing the trial court which held that a trust was void and terminated as it was created by a Power of Attorney which was later declared void ab initio?
In re: Joseph L. Koepfinger, an Individual, 162 WAL 2012 (5/12/2022).
The opinion of the Superior Court can be found at 123 WDA 2020 (2/4/2021) (non-precedential). According to that opinion, the power of attorney that was used to create the trust was signed in 2016 but was not notarized, as then required by § 5601(b)(3)(i)). In a declaratory judgment action by the principal, the lower court had held that the power of attorney was therefore void, and the trust was therefore void, relying on Vine v. Commonwealth of Pennsylvania, State Employees’ Retirement Board, 607 Pa. 625, 9 A.3d 1150 (Pa.Super. 2010). The Superior Court reversed (or perhaps vacated) the lower court order because the Vine decision was reversed when the legislature amended 20 Pa.C.S. § 5608, which protects people who rely on a power of attorney in good faith.
[DBE Comments (replacing initial comments): The Superior Court’s opinion is largely incoherent. The court says that reliance on Vine was error, but also says that § 5608 was not applicable to the validity of the trust. The court therefore seemed to recognize that the validity of the trust and the liability of the agent/trustee were two separate issues, and yet treated the legislative reversal of Vine as a reversal on both issues, rather than on just the issue of liability. It also isn’t clear whether the court vacated the trial court’s order (which would allow the trial court to reconsider the issue) or reversed the order (and so held the trust to be valid). (The word “vacate” is on page 5 of the opinion, but the opinion concludes with “reversed,” with a footnote declaring that the trust might still be terminated due to fraud or mistake, implying that the trust is otherwise valid.) More puzzling still, the court observed that “neither the [trial] court nor [the principal] points to anything in the law in force at the relevant time that would automatically render an irrevocable trust created pursuant to a POA void ab intitio because the POA is ultimate found to have been improperly executed.” This suggests that the actions of an agent under an improperly executed power of attorney might nevertheless be valid, and the Superior Court apparently decided that issue by ruling against the principal without remanding to allow the trial court to address it.]