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HomeMy WebLinkAbout09-21-07 IN RE: ESTATE OF LOY T. HEMPT IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-77-231 MOTION TO CLARIFY OR AMEND ACCOUNTANT'S OBJECTION TO THE AUDITOR'S REPORT The Accountant in this matter, by his undersigned attorneys, hereby moves to clarify or amend the Accountant's Objection to the Report of the Auditor, and states as follows: Factual and Procedural Background 1. The Residuary Trust Under Will of Loy T. Hempt (the "Trust") has one lifetime income beneficiary, Jean Doris Hempt, and three groups of residuary beneficiaries: the Kalbach Family, the Mark Family, and the Hempt Family. 2. On July 23, 2002, the Accountant filed a Petition for Adjudicatiqn)and a Fi~ ;__ c::::; ~O --' -: .~ _:-~, (".., and Final Account for the Estate of Loy T. Hempt, Deceased and the Residuary!:r:~t U~er ", r-- ....-1T1 N Will of Loy T. Hempt (the "Account"). '." 3. .,--) [""'1 'i(~~ Objections to the Account (the "Objections") were filed on behalPQf;the :0 --I .,..;.. ~ w Kalbach Family and the Mark Family. .z:- 4. Pursuant to Orphan's Court Rule 8.1 et seQ., the Court appointed William A. Duncan as Auditor. 5. After a hearing, the Auditor issued his report to the Court on October 14, 2007. 6. On October 25, 2004, the Kalbach Family and the Mark Family filed various objections to the Auditor's report. 7. On the same day, Accountant, through its counsel, filed an objection to the Auditor's Report (the "Accountant's Objection"). 8. The parties' objections to the Auditor's Report have not yet been adjudicated by the Court, but have now been scheduled for argument on October 3, 2007. Motion to Clarify or Amend Accountant's Obiections 9. The Accountant's Objection disputes the Auditor's conclusion that the separation of the Trust into three separate trusts, on a non-pro rata basis, should be set aside. Accountant contends that the division of the Trust into three separate trusts was proper under 20 Pa. C.S. S 7191 (this statute has been deleted and re-enacted, in relevant part, at 20 Pa. C.S. S 7740.7). 10. The Accountant's Objection specifically referenced the fourth conclusion of law of the Auditor's Report, which stated, in part: The division of the Residuary Trust under the will of Loy T. Hempt into three separate trusts on a non-pro rata basis should not be confirmed and should be set aside. The assets comprising the Trust are not subject to easily ascertainable fair market values, can carry widely disparate values depending on various assumptions and at different valuation dates, and cannot meet the rigorous valuation allocations required by the statute [20 Pa. C.S.A. S 7191]. ... The division of the Loy T. Hempt Residuary Trust into three proposed separate trusts cannot be justified on the basis of the 1992 and 1999 amendments to Section 7191 of the Probate, Estates and Fiduciary Code unless the division had been made into the three trusts on a pro-rata basis reflecting the percentage interest of the remaindermen. ... 2 11. Based on this fourth conclusion of law, in Recommendation No.3, the Auditor recommended that: The three separate trusts should be reformed into one trust for the benefit of Jean Doris Hempt and any division of assets upon her death shall be pro-rata in accord with the respective interests of the remaindermen unless all parties consent to alternate allocations. 12. Recommendation No.3 is based upon the Auditor's fourth conclusion of law that the non-pro rata division of the Trust into three separate trusts was improper, and this conclusion is the subject of the Accountant's Objection. 13. The Accountant seeks to clarify that his Objection includes an objection to the Auditor's Recommendation NO.3. 14. The Accountant objects to the relief proposed by the Auditor's Recommendation No.3 because the Auditor erred in concluding that the Trust could not be divided into three separate trusts, on a non-pro rata basis, in accordance with 20 Pa. C.S.A. S 7191 (now, 20 Pa. C.S.A. S 7740.7). 15. The Accountant also objects to the Auditor's Recommendation NO.3 to the extent that it appears to specify how the Trust's assets must be divided upon the death of Jean Doris Hempt, because: (a) the issue of how the Trust should be divided upon Jean Doris Hempt's death was not an issue that was before the Auditor for determination; and, (b) the recommendation is based upon the erroneous conclusion of law that the Trust cannot be divided on a non-pro rata basis. 16. The Auditor's Report states that his appointment was limited to determining the issues raised in the Objections to the Account and the Petition for Adjudication, none of which raised a question about how the Trust should be handled after the death of Jean 3 Doris Hempt. See Auditor's Report, Procedural History, at 11 5. The Auditor's statement of the "Questions to be adjudicated" did not include the question of how the Trust should be divided at the death of Jean Doris Hempt. See Auditor's Report, Questions to be adjudicated. 17. Accountant's Objection to the Auditor's fourth conclusion of law implicitly includes within it an objection to the Auditor's Recommendation No.3, which is based upon that conclusion of law. 18. Accountant files this motion to clarify its Objection on the record, so that there will be no confusion as to Accountant's position with regard to the Auditor's Recommendation No.3. 19. Accountant's Brief in support of its Objection includes his argument in opposition to the Auditor's Recommendation No.3, which is sufficient to bring the matter before the Court for adjudication. In re Chiara's Estate, 467 Pa. 586, 594, 359 A.3d 756, 760 (1976), affirmed per curiam, 478 Pa. 630, 387 A.2d 666 (1978)(holding that issue raised in brief should be considered by Orphans' Court). 20. In the event that the Court denies the requested clarification, Accountant requests that the Court permit Accountant to amend his Objection to include the following paragraph: Accountant also objects to Recommendation No.3 by the Auditor as follows: Because, as set forth above, the Auditor erred in concluding that the trust was improperly divided into three trusts, the Auditor also erred in recommending that the three trusts be reformed into one trust. The Auditor further erred in recommending that the division of the trust's assets upon the death of Jean Doris Hempt must be made pro rata, unless all 4 parties otherwise consent. The question of how the trust assets should be distributed at the death of Jean Doris Hempt was not presented to the Auditor for resolution, so the Auditor exceeded his Authority by addressing that matter. 21. An amendment of Accountant's Objection, if necessary, should be allowed to secure the just, speedy, and inexpensive determination of this action because the amendment has been sought prior to the determination of the Objection. Pa. Orphans' Court Rule 2.1; 20 Pa. C.S. ~ 3521. WHEREFORE, Accountant requests that the Court grant this motion to clarify the scope of Accountant's Objection to the Auditor's Report, or in the alternative, that the Court grant Accountant's motion to amend his Objection to include the paragraph referenced above regarding Accountant's Objection to the Auditor's Recommendation No.3. McNEES WALLACE & NURICK LLC BY~~ Donald B. Kaufman Attorney 1.0. No. 49674 Kimberly M. Colonna Attorney I.D. No. 80362 100 Pine Street P.O. Box 1166 Harrisburg, PA 17108-1166 (717) 232-8000 Ivo V. Otto III, Esquire Martson Deardorff Williams & Otto Ten East High Street Carlisle, PA 17013 Attorneys for Gerald L. Hempt, Trustee of the Residuary Trust under the Will of Loy T. Hempt Dated: September 21,2007 5 CERTIFICATE OF SERVICE The undersigned hereby certifies that a true and correct copy of the foregoing document was served upon this date by first-class mail, postage prepaid, addressed as follows: Daniel L. Sullivan, Esquire METTE, EVANS & WOODSIDE 3401 North Front Street P.O. Box 5950 Harrisburg, P A 17110-0950 Joel Zullinger, Esquire ZULLlNGER & DAVIS 14 North Main Street, Suite 200 Chambersburg, PA 17201 ~~ Donald B. Kaufman Of Counsel for Gerald L. Hempt, Trustee of the Residuary Trust under the Will of Loy T. Hempt Dated: September 21,2007