Justia Trusts & Estates Opinion Summaries

A case in the Supreme Court of Pennsylvania involved a dispute over the termination of a charitable trust. The trust was established by Richard H. Wells in 1965 for the sole benefit of his alma mater, the Virginia Military Institute (VMI), with the Virginia Military Institute Foundation (the “Foundation”) named as the beneficiary. Since its inception, the Trust has been managed by an independent corporate trustee, PNC Bank. The Foundation sought to terminate the Trust and receive the assets outright, arguing that it could manage the Trust with fewer expenses and higher returns.The lower courts denied the termination, concluding that the burdens of the Trust did not meet the statutory criteria for termination under Section 7740.3(e) of the Uniform Trust Act. The Foundation appealed to the Supreme Court of Pennsylvania, arguing that the lower courts erroneously considered Wells’ intent to create a trust, which the Foundation claimed was not relevant under the statute.The Supreme Court of Pennsylvania affirmed the lower courts’ decision. The court held that the Foundation failed to satisfy the statutory standard under Section 7740.3(e) of the Uniform Trust Act, which requires a showing that the administrative expenses or other burdens of the trust are unreasonably out of proportion to the charitable benefits. The court concluded that the expenses and burdens of the trust, including an annual excise tax and mandatory annual distribution under the Private Foundation Rules of the Internal Revenue Code, were not unreasonably out of proportion to the trust's charitable benefits. View "In Re: Trust B of Wells; Apl of: V.M.I. Foundation" on Justia Law

Appellant Joseph Koepfinger (“Father”) was a nonagenarian and father of several adult children, including Appellee Margaret Koepfinger (“Daughter”). In September 2016, shortly after the death of Father’s wife/Daughter’s mother, Father executed a power of attorney (“POA”), naming Daughter as his agent. The POA gave Daughter the authority to, among other things, create an irrevocable trust for Father; it further provided that Father could revoke the POA but only in writing. Soon after the execution of the POA, tensions began to build between Father and Daughter due to Father’s developing relationship with Madeline Masucci (“Masucci”). In 2017, Father allegedly orally informed Daughter that he revoked the POA and that he executed a new power of attorney, naming his son/Daughter’s brother as his agent. Daughter, however, claimed she was not informed of these events until May of 2018. In the meantime, in April 2018, acting as Father’s agent under the POA, Daughter created an irrevocable trust for Father, placing a substantial amount of his assets into that trust. Daughter named herself as trustee. After Daughter allegedly was informed that Father revoked the POA, she filed a Petition for Declaratory Judgment requesting, in relevant part, judicial declarations that: (1) the 2016 POA was not revoked at the time that she created the trust; (2) the creation and funding of the trust was within her scope of authority under the POA; and (3) the trust is valid. The issue this case presented for the Pennsylvania Supreme Court's review centered on whether a judicial determination that a power of attorney was void ab initio invalidated an irrevocable trust created by the purported agent under the void power of attorney. The orphans’ court answered this question in the affirmative, but the Superior Court reversed. The Supreme Court held that, when a court concludes that a power of attorney is a nullity, any action taken under the auspices of the power of attorney is likewise a nullity. Consequently, the Court vacated the Superior Court’s judgment and reinstated the orphans’ court’s order. View "In Re: Koepfinger" on Justia Law

The issue this case presented for the Pennsylvania Supreme Court was the validity of modified terms, made by agreement of the settlor and beneficiaries, for removal and/or replacement of a trustee by the beneficiaries of irrevocable inter vivos trusts. The trusts at issue were all created by Walter Garrison, “Settlor,” founder and CEO of CDI Corp., a successful computer serving company. The trusts all named Settlor’s son Mark Garrison and any children Mark would have as beneficiaries. In 2017, Settlor and Beneficiaries entered into agreements to modify the Trusts pursuant to section 7740.1(a) of the Pennsylvania Uniform Trust Act (“UTA”). Settlor passed away in February 2019. Proceeding under the modified provision, Beneficiaries acted to remove the existing independent co-trustees and to appoint Dr. Mairi Leining, Christina Zavell, and Michael Zavell in their place. The existing co-trustees, when notified of Beneficiaries’ action, advised that they did not recognize the modifications to the Trusts as valid or their purported removal thereunder. Seeking to uphold the co-trustee replacements, Mark filed a declaratory judgment petition to test the validity of the 2017 modifications. The Supreme Court determined the lower courts’ extension of its holding in Trust under Agreement of Edward Winslow Taylor, 164 A.3d 1147 (Pa. 2017) to unified action of beneficiaries and settlor of a trust under section 7740.1(a) was improper. Judgment was reversed and the matter remanded for further proceedings. View "Trust Under Deed of W. Garrison" on Justia Law

The issue presented for the Pennsylvania Supreme Court’s review in this case centered on the six-month time limit set forth in Subsection 2210(b) of Pennsylvania’s Probate, Estates and Fiduciaries Code. The surviving spouse here timely filed her election to take against the will, but, several years later, petitioned to revoke her election in an attempt to reclaim her testate share. The parties disputed whether a survivor who sought to revoke a statutory election against the will must do so within the six-month period specified in Subsection 2210(b), even though it speaks only to the time for filing the election, not to the revocation of a prior election. The Supreme Court concluded that the widow here was not permitted to revoke her election after the expiration of Section 2210’s six-month time limit. View "In Re: Est. of C. Jabbour" on Justia Law

In 2006, Rose Rellick (decedent) purchased two certificates of deposit ("CDs") listing as co-owners herself, her sister appellee Betty Rellick, and the daughters of her deceased brother George, appellee Kimberly Vasil and appellant Sharleen Rellick-Smith. Prior to purchasing the CDs, Decedent executed powers of attorney designating Betty and Kimberly as her attorneys-in-fact. It purportedly was Decedent’s intention that, upon her death, the proceeds of the CDs be divided equally among Appellant and Appellees. However, prior to Decedent’s death, Appellees removed Appellant’s name from the CDs. In March 2013, subsequent to Decedent’s death, Appellees cashed the CDs, which were worth approximately $370,000, and divided the money between the two of them. In 2014, Appellant filed an action against Appellees, claiming they breached their fiduciary duties to Decedent by removing Appellant’s name from the CDs and refusing to pay her any of the proceeds. Appellees filed a timely response to the complaint, but, relevant to this appeal, did not raise any affirmative defenses therein. Four months later, Appellees moved to dismiss the complaint, arguing that Appellant lacked standing and that her claim was barred by the statute of limitations. Appellees’ motion was ultimately granted on the basis that Appellant lacked standing. Notably, however, the trial judge determined that Appellees waived the statute of limitations defense by failing to raise it as a new matter in their answer, as required by Pa.R.C.P. 1030(a). The issue this case presented for the Pennsylvania Supreme Court's review was whether the Superior Court erred in affirming an order of the trial court that permitted the appellees to file an amended answer to include the affirmative defense of statute of limitations, which a different trial court judge previously ruled was waived. The Supreme Court concluded the second trial judge’s order violated the coordinate jurisdiction rule in this regard, thus the Superior Court erred in affirming the second court's order. The Superior Court decision was reversed, the trial judge's order vacated in part, and the matter remanded to the trial court for further proceedings. View "Rellick-Smith v. Rellick, et al." on Justia Law

Augustus Ashton died in October 1951; his will created a trust to be funded by the residue of his estate for the benefit of his family members and certain charitable interests (the “Trust”). The will created eight separate fixed annuities benefitting designated family members; five of those annuities terminated pursuant to their terms. Appellant Elizabeth Reed, Ashton's grandniece, was one of three remaining beneficiaries, entitled to $2,400 annually irrespective of the size of the Trust’s corpus for the remainder of her life, and then any surviving children or grandchildren born during her lifetime would receive a portion of her $2,400 share. Every beneficiary was entitled to the Trust’s income rather than its principal. After the termination of fixed annuity payments to all named beneficiaries, the Trust would continue to fund scholarships at the University of Pennsylvania in perpetuity. PNC Bank ("PNC"), the successor trustee, generated a Fourth and Interim Accounting for the period 1983 and 2017. Among other matters, PNC set forth two requests for adjudication: (1) divide the Trust in two, with the first to be funded with $5 million and dedicated to the named beneficiaries' annuity payments and the second to be funded with the balance of the Trust's current assets dedicated to University scholarships; and (2) to increase its fee for administering the trust, based on a percentage of the market value of the Trust as of the previous month. In this appeal by allowance, the Pennsylvania Supreme Court considered whether a vested beneficiary of the Trust had standing to challenge the Trust’s administration where her benefit consisted of a fixed annuity, and the Trust corpus was sufficient to provide the benefit for many years. The Supreme Court reversed the superior court insofar as it held Appellant lacked standing to object to transactions contained in the Fourth Account, and to PNC's request for additional compensation. "Appellant, as beneficiary under the Trust, had an interest which was harmed if the transactions of PNC as documented in the Fourth Account were improper as is alleged, and that her interest was substantial, direct, and immediate. It was substantial because any duties Appellant claims were breached were not owed to the general public, but to the beneficiaries.... any harm to Appellant’s interest in the trust res was not remote or speculative." View "Trust Under Will of Ashton" on Justia Law

The Pennsylvania Supreme Court granted review to determine whether the attorney-client privilege and the work product doctrine could be invoked by a trustee to prevent the disclosure to a beneficiary of communications between the trustee and counsel pertaining to attorney fees expended from a trust corpus. To reach that issue, the Court had to first address the question of whether the Superior Court erred in disclaiming jurisdiction on the basis that the trial court’s order rejecting the privilege claim was not a collateral order, and immediately reviewable as such. The Supreme Court held unanimously that the Superior Court had immediate appellate jurisdiction to review the privilege question on the merits, and therefore erred in concluding otherwise. As to the privilege issue itself, the Superior Court indicated that, notwithstanding its perceived lack of jurisdiction, there was no evidence by which to substantiate a claim of privilege on the merits, nor any argument presented to the trial court in support thereof. For those reasons, the court was left to conclude that the privilege was unavailable under the circumstances and that the communications at issue were subject to disclosure. The Supreme Court did not reach a consensus on whether the privilege may be invoked in the trust context. Because disclosure would nevertheless result from the competing positions set forth by a majority of Justices, the lower court’s alternative ruling was affirmed by operation of law. View "In Re: Estate of McAleer" on Justia Law

The underlying controversy entailed will-, estate-, and insurance-contest litigation commenced in 2008 by Appellee Jeffrey Stover in his capacity as the attorney for Appellant, David Clark, who was the testator’s brother. In 2010, Appellee Stover also lodged a second complaint on behalf of Monica Clark, the testator’s mother, now deceased. After the claims in both actions failed, Appellant and Mrs. Clark filed this legal malpractice action in 2015, advancing claims of professional negligence and breach of contract against Appellee Stover and his law firm. Upon Appellees’ motion, the common pleas court awarded summary judgment in their favor, finding, as relevant here, that Appellant and Mrs. Clark were aware of the alleged negligence and the asserted breach more than four years before they lodged the malpractice action. Since the applicable statutes of limitations provided for commencement of a negligence action within two years after accrual, and a contractual action within four years after breach, the county court found the claims to be untimely. The Superior Court affirmed on the "occurrence rule." The Pennsylvania Supreme Court granted discretionary review to address the "continuous representation rule," under which the applicable statutes of limitations would not run until the date on which Appellees' representation was terminated. Appellant maintains that this rule should be adopted in Pennsylvania to permit statutes of limitations for causes of action sounding in legal malpractice to be “tolled until the attorney’s ongoing representation is complete.” While the Supreme Court recognized "there are mixed policy considerations involved, as relating to statutes of limitations relegated to the legislative province, we conclude that the appropriate balance should be determined by the General Assembly." The Superior Court judgment was affirmed. View "Clark (Est of M. Clark) v. Stover, et al" on Justia Law

In this discretionary appeal, the Pennsylvania Supreme Court was asked to determine the burden of proof for a settlor of an irrevocable trust in order to void the trust on grounds of fraudulent inducement in the creation of the trust. The corpus of the Trust at issue here consisted of numerous assets totaling approximately $13 million, including two real estate property companies called Japen Holdings, LLC, and Japen Properties, LLP (collectively “Japen”). Although acquired during the marriage, Japen was owned 100% by Husband. Unbeknownst to Wife, among Japen’s assets were two residential properties in Florida. When presented with the Trust inventory of assets, Wife did not question its contents, which included Japen, but not a listing of its specific holdings, e.g., the Florida Properties. Approximately four months after the creation of the Trust, Wife discovered that Husband had been having an affair and that his paramour was living in one of the Florida Properties. Wife promptly filed for divorce. A month after that, she filed an emergency petition for special relief to prevent dissipation of the marital assets, including assets in the Trust. Wife argued that Husband’s motive in creating the Trust was to gain control over the marital assets and avoid equitable distribution. A family court judge accepted Wife’s argument by freezing certain accounts included in the Trust and directing Husband to collect rent from his paramour. The Supreme Court held that a settlor averring fraud in the inducement of an irrevocable trust had to prove by clear and convincing evidence the elements of common-law fraud. In doing so, the Court rejected the analysis set forth in In re Estate of Glover, 669 A.2d 1011 (Pa. Super. 1996), because it represented an inaccurate statement of the elements required to establish fraud in the inducement. The Court affirmed the Superior Court’s ruling that the complaining settlor did not prove fraud in the inducement. View "In Re: Passarelli Family Trust" on Justia Law

The issue this matter presented for the Pennsylvania Supreme Court's review involved the alleged forfeiture of a parent’s share in his child’s estate where his child died without a will. Specifically, the question was whether an adult decedent, who became disabled after reaching the age of majority, was a dependent child for purposes of the forfeiture statute. Generally, where an intestate decedent dies without a spouse or issue but with living parents, his or her parents were entitled to inherit the individual’s estate as tenants by the entirety. Notably, the Code did not define the phrase “dependent child.” Decedent was 18 years old when he sustained gunshot wounds, rendering him a paraplegic. At age 37, he died intestate without a spouse or issue, and Appellant (“Mother”) was granted letters of administration. Decedent’s estate subsequently recovered a $90,000 wrongful-death award, which became the estate’s sole asset. Mother filed a petition for forfeiture of estate, asserting that Appellee (“Father”) forfeited his share of the estate by allegedly failing to perform his duty of support. After Father’s motion for judgment on the pleadings was denied, the orphans' court held a hearing. The Supreme Court held that the concepts of a dependent child and the parental duty of care, as they were referenced in Section 2106(b) of the Probate, Estates and Fiduciaries Code, contemplated a legally-imposed parental duty stemming from a state of dependency arising under the established law of the Commonwealth. The Court also agreed with the orphans’ court that in this matter, Mother failed to demonstrate Decedent was a dependent child – and concomitantly, that Father had a duty of care – as required to obtain relief under that provision. View "In Re: Estate of Small" on Justia Law