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HomeMy WebLinkAbout12-20-78 Dennis C. Caverly C. Marius Haayen INDEX -2- 5 10 December 14, 1978 Carlisle, Pennsylvania MR. DEARDORFF: May it please the Court, this is the time and place set for the hearing on the petition filed by Farmers Trust Company, which is the guardian for Sara Stone Miller, an incompetent. This petition has been filed pursuant to Section 5536 of the Probate, Estates and Fiduciaries Code. Section 5536 was enacted in 1976. I have an extra copy of that section here, Your Honor. THE COURT: I have it right ln front of me. MR. DEARDORFF: That section was enacted ln 1976 and it specifically allows the Court to substitute its own judgment for the incompetent with respect to matters such as gift giving and estate planning. Section 5536 requires the petitioner to satisfy the Court that there are sufficient funds in the incompetent's estate so that such gifts could be made and that such gifts are within the intentions of the incompetent and that such gifts will benefit the estate. THE COURT: I did not hear the original hearing. The parties in interest are listed in paragraph three of your petition, are they children of the deceased to a prior marriage? MR. DEARDORFF: They are brothers and sisters and nieces and nephews. -3- THE COURT: Do you have proof of service? MR. DEARDORFF: Yes, we do, Your Honor, in the copy of the notice that we filed and also my affidavit that it was mailed, which I have marked as Petitioner's Exhibit B, is the copy of the notice that we mailed. And Petitioner's Exhibit BI is my affidavit of service of the notice. And with the notice we mailed a copy of the petition. What we have here is Petitioner's Exhibit B2 are all the return receipt cards since these were sent certified mail. THE COURT: You have return receipts for each one of these parties that were notified? MR. DEARDORFF: There is only one card where someone not the addressee signed, but it shows that it was delivered at that residence. On every other card as far as I could see, the addressee received it and signed it. THE COURT: Has your office received any questions or anything from any of these people? MR. DEA~DORFF: No. 1ve have not received any communications at all. I was over in Courtroom I and asked if anyone was there involved in the Sara Stone Miller hearing and no one was involved. THE COURT: You may proceed with your witnesses. -4- DENNIS C. CAVERLY, called as a witness, being first duly sworn according to law, testified as follows: BY MR. DEARDORFF: Q Mr. Caverly, state your full name? A Dennis C. Caverly. Q What 1S your address? A R.D. 1, Carlisle. Q Where are you employed? A Farmers Trust Company. Q What is your occupation there with Farmers Trust? A Senior Vice President and Trust Officer. Q How are you connected with Sara Stone Miller? A Farmers Trust Company has been appointed guardian of Mrs. Miller's estate. Q She is an incompetent, is that right? A That's correct. Q I have marked Petitioner's Exhibit A. And I will show that to you, Mr. Caverly. Is that a copy of the court order appointing Farmers Trust as guardian for the Sara Stone Miller estate? A Yes, it is. Q Mr. Caverly, are the following persons the parties who are interested in the estate of Sara Stone ~1iller, and I will list -5- them: Jake W. Stone, B. F. Stone, Ruth Stone, Steven J. Stone, Bernice S. Porter and Randolph C. Stone? A They are. Q Are you aware of any other persons who are interested 1n the incompetent's estate? A No. Q Can you tell us where the incompetent 1S residing at this time? A Homewood Church Home here in Carlisle. Q Do you know the costs that are being incurred? A Well, the annual cost is approximately $15,000. They are just raising their rates at Homewood, so it will be somewhat more than that, between $15,000 and $20,000 a year. Q Are you aware of any other expenses that would be incurred? A No, other than for incidentals like clothing or toiletries or something like that. Q As far as a big estimate for those expenses, would you say __ A $1,000 a year would more than cover it. Q Can you tell us what the income of the incompetent is? A It's approximately $45,000 a year. Some of that is from tax-free bonds. Q I have here Petitioner's C and D, and I will ask you if you can identify what those are? A They are the 1040 individual income tax returns from 1976 and 1977. -6- Q What does the income appear to be for Sara Stone Miller for those years? A In 1976 taxable income is $36,309 -- I am sorry, that's adjusted gross income. And on '77, it's $35,114. What do you think her anticipated earnings for this year Q to be? A Q A Q About $45,000. What is the gross value of her estate? In excess of $800,000. Mr. Caverly, are you aware of any charitable contributions that Sara Stone Miller has made in the past several years? A Yeah. She has made contributions to Lafayette College major contributions to Lafayette College, as well as the church and so on here in the community. Q I will show you what is marked as Petitioner's Exhibit E and ask you if you will identify that document? A This is a letter from John Falcone of Lafayette College indicating that the gifts that Mrs. Miller gave to them, and they have invested them in an income fund, total $31,001.92. Q When did those gifts start? A The first one was made in March of 1972. Q When was the last gift made? A December of '76. Q Mr. Caverly, are you familiar with the will of Sara Stone Miller as her guardian? -7- A Yes, I am. Q I will show you what has been marked as Petitioner's Exhibit F and I will ask you to identify that? A This is a copy of paragraph thirteen from the will. Do you want me to explain it? Q Yes. A In it she gives $100,000 to Lafayette College as a memorial to her late husband, Walter M. Miller. This memorial may be designated and contributions made toward it in my lifetime. In such case my Executors shall deduct from this bequest such lifetime contributions. Unless otherwise designated, all contributions to Lafayette College made after the execution of this will shall be considered contributions made towards this memorial. Q So, in other words, if she gave $6,000 from her income this year, that would corne off her -- A That would reduce the $100,000 bequest, yes. Q Was this Exhibit F or this provision in her will out of a signed copy of her will? A Yes, out of a signed copy, I believe October of 1970. Q This is her only will as far as you know? A As far as we know, yes. Q From your experience with her estate and her income and her expenses, do you feel that there is enough income and enough assets there to make a yearly gift of $6,000 to Lafayette College? -8- A Yes, we do. Q Have you determined what amount of tax this would save? A Yes. We calculate that her income tax for 1978 will be about $10,400. If she were to make the gift of $6,000, the tax with the deduction off would be about $7,900 to $8,000. She would save approximately $2,500 in taxes to make this gift. Q So if she didn't make this gift, she would only net out of this $6,000 approximately $3,500? A About $3,500 would be the cost to her to make a $6,000 gift, that's right. Q But if she does make this $6,000 gift, on her death the estate will actually have -- there will be more in the estate because of the deduction from Lafayette to go to the heirs? A Right. It saves that $2,500, because the $6,000 is going to reduce the $100,000 bequest, so that does not affect the beneficiaries and we will save $2,500 in taxes that will remain in the estate. Q So, in other words, the heirs are actually making money if this charitable contribution can be made? A Yes. MR. DEARDORFF: Those are all the questions I have, Your Honor. Do you have any questions? BY THE COURT: Q This might have been answered before, prior to Farmers -9- appointment as her guardian, were they in any way handling her affairs prior to that time? A No, we weren't. THE COURT: I have no further questions. MR. DEARDORFF: At this time I will also move that the var10US Exhibits A through F be introduced as part of the record including Exhibits B, Bl and B2, which are proof of service. THE COURT: They are all admitted. C. MARIUS HAAYEN, called as a witness, being first duly sworn according to law, testified as follows: BY MR. DEARDORFF: Q Mr. Haayen, will you please state your full name for the record? A C. Marius Haayen. Q Where is your present address? A My office address or home address? Q Home address. A 223 Conway Street. Q Mr. Haayen, what 1S your occupation? A I am a certified public accountant. Q What is your connection with Sara Stone Miller? -10- A We have prepared her tax returns for I estimate approximately ten or twelve years. Q Are you familiar with her income? A Yes, I am. Q Just approximately what has been her income in the last few years per year? A It has been around I recall around $35,000 to $40,000 that we have reported as adjusted gross income on her tax returns. Q Are you familiar with any charitable contributions she might have made? A Yes. Her principal charity in the past several years has been Lafayette College. Q Do you recall approximately how much these contributions have been? A In 1976 the contribution was approximately $6,000. And ln 1975 it was approximately $3,000. Q Have you done any computations to decide whether an annual gift of $6,000 to Lafayette College would be advantageous to her as far as her income tax and her estate planning is concerned? A Yes. In the past several years her tax bracket has been approximately forty percent to forty-two percent, her top tax bracket. So a contribution of a figure of $5,000 or $6,000 based on her prior contributions would be a tax savings of forty percent of that or $2,400 to $2,500. -11- Q You are not familiar with her will though, are you? A No, I am not. MR. DEARDORFF: Those are all the questions I have. Do you have any questions? BY THE COURT: Q will you be preparing the tax return this year since the Farmers Trust Company is now her guardian? A I anticipate we probably will be preparing the tax return, yes. Q You have listed two years where she has made contributions to Lafayette College, '76 and '77, do your records indicate any other years ln which she has made contributions to Lafayette College? A She has consistently made contributions to Lafayette College for about the past six or seven years. I only have the past three returns with me. In '77 Mrs. Miller was not very well. And we had quite a bit of difficulty preparing her tax return. So we took the standard deduction. ~ve were unable to find exactly what her contributions were. So we took the standard deduction for '77. I know for the prior five or six years to '77 she did make substantial contributions to Lafayette College. Q The figure of $35,000 to $40,000 in the last several years, that would not, of course, include interest from tax-free bonds, is that correct? -12- A That's correct. THE COURT: I have no other questions. MR. DEARDORFF: Your Honor, just for the record too, we have that one letter from Lafayette College outlining all the con- tributions she has made in the last six years. That's Exhibit E. That is all we have, Your Honor. (Whereupon, Court adjourned at 1:55 P.M.) -13- IN RE: ESTATE OF IN THE COURT OF COr~10N PLEAS OF CUMBERLAND COUNTY, PENNSYLV.ANIA SARA STONE MILLER AN ALLEGED INCOMPETENT ORPHANS' COURT DIVISION 407 ORPHANS' 1978 I hereby certify that the proceedings and evidence are contained fully and accurately in the notes taken by me on the hearing of the above cause and that this is a correct tran- script of same. /"I! i)) '~\' ,:..(. A i, /, l.- \, J . ) . .i 1),.Lll//)ka (. tl)k.() (IL;~)- Barbara E. Nickolas Official Stenographer The foregoing record of the proceedings upon the hearing of the above cause is hereby approved and directed to be filed. ~. Date "LO) ICf li' ~~~~l'Y'~' Ninth Judicial District -14-