HomeMy WebLinkAbout05-01-08
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYL VANIA
ORPHANS' COURT DIVISION
In Re: First and Final Accounting ofthe
May M. Moore Five- Year
Charitable Lead Annuity Trust
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No. 138 of2007
PETITION FOR REMOVAL OF TRUSTEE
FOR WASTE & MISMANAGEMENT OF TRUST
COME NOW the undersigned Petitioners, who are the sole beneficiaries and trust
protectors of the May M. Moore Five, Ten and Fifteen Year Charitable Lead Annuity Trusts, and
for their Petition for Removal of Trustee state to the Court as follows:
1. Judge Oler has previously ruled on all other matters in this case.
2. Petitioner Amanda Reed is a sui juris adult with an address of P. O. Box 1514,
Shepherdstown, West Virginia, 25443. Petitioner Araminta Finn is a sui juris adult with an
address of 8 Weil Drive, Thurmont, Maryland, 21788.
3. Respondent is, upon information and belief, a business entity incorporated under the
laws of the Commonwealth of Pennsylvania, with a principal place of business located at 3907
Market Street, Camp Hill, Pennsylvania, 17011.
4. Respondent is the Trustee under three (3) trusts created by May M. Moore under three
(3) separate trust instruments dated November 7, 2001. A true and correct copy of the five-year
trust (which is representative of all three trusts) is attached hereto and by this reference made a
part hereof as Exhibit "A."
5. The trust instruments directed the Respondent, for a compensation specified therein, to
hold and manage such trust estates for the benefit and use of the Petitioners, and the named
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THE MAY M. MOORE
FIVE YEAR CHARITABLE LEAD ANNUITY
TRUST
MA Y M. MOORE, now of 3300 Waynecastle Road, Greencastle, Franklin County,
Pennsylvania 17225 (hereinafter called the "Donor"), hereby establishes with COMMUNITY
TRUST COMPANY, now of3907 Market Street, Camp Hill, Cumberland County, Pennsylvania
17011 (hereinafter called the "Trustee"), AMANDA B. REED and ARAMINTA FLEGEL
(hereinafter "Trust Protectors") and DALE E. DANNER or JOHN R. KEELER, now of
KEELER & DANNER FINANCIAL SERVICES, LLP, now of 50 West Main Street, Suite B,
Mechanicsburg, Pennsylvania 17055 (hereinafter called "the Investment Counsel(s)") the
following irrevocable trust and the Trustee and Investment Counsel(s) hereby acknowledge and
accept the terms thereof and agrees, for themselves and their Successors in office, to hold property
received under its terrr_J as follows:
FIRST: This t':L~st shall be known as "THE MAY M. MOORE FIVE ~- EAR
CHARITABLE LEAD ANNUITY TRUST", and shall be administered as follows:
(A) Designation of Charities. From the date this trust instrument is
funded until the termination date, as defined below, the Trustee shall in each year
pay the annuity amount defined below to the following charities a~cording to the
following amounts, provided that the Trustee, with the advise and consent of
AMANDA B. REED and ARAMINl' A FLEGEL, may change or remove any
charity or the distribution percentage to any charity hereunder at any time prior to
the termination of the Trust so long as any change must conform to the
requirement that all annuity distributions shall be to Charities as described in
Sections 170(b)(1)(A), 170(c), 2055(a) and 2522(a) of the Internal Revenue Code
of 1986, or corresponding provisions of any subsequent federal tax laws
(hereinafter collectively called the "Code") :
NAME OF CHARITY
PERCENTAGE
1)
HABITAT FOR HUMANITY
100%
2)
3)
4)
5)
6)
1
EXHIBIT
j
D
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(B) Annuity Amount. Subject to the Article SECOND below, the
annuity amount for purposes of this trust instrument shall be FIVE PERCENT
(5%) of the initial net fair market value of the trust assets.
(C) Termination Date. The termination date of the trust hereunder
shall be FIVE (5) YEARS from the date of death of the Donor, provided that the
Donor, through her revocable trust or her estate has made the distributions to the
Charities listed above as required herein. If and in the event that the Donor,
through her revocable trust or her estate has not made the distributions to the
Charities listed above as required herein, then the termination date of the trust
hereunder shall be FIVE (5) YEARS from the date this Trust is initially funded.
(D) Distribution Upon Termination. On the termination date, the
trust shall terminate and the remaining trust principal shr.11 be distributed, in equal
shares, to AMANDA B. REED and ARAMINTA FLEGEL. If and in the event
that AMANDA B. REED or ARAMINTA FLEGEL r:~deceases the
termination date, then the Trustee shall distribute the predeceased individual's
share to their children, in equal shares. If and in the event that AMANDA B.
REED or ARAMINTA FLEGEL predeceases the termination date without
surviving issue, then the predeceased individual's share shall be distributed to the
surviving named individual.
(E) General Power of Appointment. AMANDA B. REED and
ARAMINTA FLEGEL are each hereby granted the power to appoint the
principal of this Trust, in any manner and in such proportions as they jointly or
individually deem advisable, up to the full value of their respective share of the
Trust. This power may only be fulfilled on or after the termination date. This
power shall be exercisable by either or both of their Wills, specifically referring to
this power of appointment of this Trust. The class of permissible beneficiaries to
this power of appointment is limited to AMANDA B. REED, ARAMINTA
FLEGEL, their spouses, ifmarried at the time of the exercise, their issue, or any
charity as defined herein. A proposed exercise to any other beneficiary shall be
void. If AMANDA B. REED and ARAMINTA FLEGEL fail, either in whole
or in part, to exercise this power of appointment herein granted, the unappointed
principal shall continue in trust and shall be administered according to the terms of
this trust.
SECOND: Payments of the annuity amount shall be subject to the following provisions,
notwithstanding any other provisions of this trust instrument:
(A). Order of Distribution in Payments. Payments for each taxable
year shall be made annually at the end of each taxable year of the trust. Payments
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shall be made first from the ordinary taxable income of the trust (including
short-term capital gains) which is not unrelated business income and, to the extent
not so satisfied, the annuity amount shall be paid from FIFTY PERCENT (50%) of
the unrelated business income, the long-term capital gains of the trust, the balance
of the unrelated business income, the tax-exempt income, any accumulated income,
and finally the principal of the trust, in that order. Any net income for a taxable
year in excess of the annuity amount may, in the discretion of the Trustee, be
added to principal.
(B) Proration of Payments. For a short taxable year and for the
taxable year in which annuity payments terminate, the Trustee shall prorate the
annuity amount on a daily basis.
(C) Corrective Payments. In the eV(':lt that the initial net fair market
value of the property held in the trust has been 'ncorrectly determined and as a
result a payment to the Charities under Article ?~,.~t, Section (A) (hereinafter "the
Charities") exceeds or is less than the payment required to be made hereunder,
then within a reasonable period after the final determination of the correct net fair
market value the Trustee shall pay to the Charities (in the event of an
undervaluation), or shall be repaid by the Charities (in the event of an
overvaluation) an amount equal to the difference between the amount which the
Trustee should have paid if the correct valuation had been used and the amount
which the Trustee actually paid.
THIRD: If any of the Charities is not an organization described in Sections 170(b)(1)(A),
170(c), 2055(a) and 2522(a) of the Internal Revenue Code of 1986, or corresponding provisions
of any subsequent federal tax laws (hereinafter collectively called the "Code") at the time any
payment is to be made to the Charities under Article FIRST above, the Trustee shall instead
distribute such payments to one or more organizations described in said Sections of the Code in
such proportions as the Trustee shall select.
FOURTH: This trust is intended to qualify as a charitable annuity lead trust so
that the value of the interest passing to the Charities is deductible as a charitable guaranteed
annuity under Sections 2055(e)(2)(B) and 2522 (c)(2)(B) of the Code and so that the
annuity distributions to the Charities will be deductible from the gross income of the trust
to the extent provided Section 642(c) of the Code; and, notwithstanding any other provisions of
this trust instrument, the trust is subject to the following provisions:
(A) Self-Dealing. The Trustee shall not engage in any act of
self-dealing. as defined in Section 4941 (d) of the Code, nor make any taxable
expenditures as defined in Section 4945(d) of the Code.
(B) Business Interests. Except to the extent provided in Section
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4947(b)(3) of the Code, the Trustee shall not retain any excess business holdings
(as defined in Section 4943(c) of the Code) which would subject the trust to tax
under Section 4943 of the Code, nor shall the Trustee acquire any assets which
would subject the trust to tax under Section 4944 of the Code or retain any assets
which would, if acquired by the Trustee, subject the trust to tax under said Section
4944.
(C) Corrective Action. If Section 4942 of the Code is at any time
applicable to this trust, the Trustee shall make such distributions at such time and
in such manner as not to subject the trust to tax under said Section 4942.
(D) Construction of Restrictions. No provision of this trust
instrument shall be construed to restrict the Trustee from investing the trust assets
in a manner which could result in the annual realization of a reasonable amount of
income or gain from the sale or disposition of trust assets.
(E) Additional Contributicm_ No additional contributions shall be
made to the trust after the initial contribution.
FIFTH: The trust hereunder is subject to the following provisions:
(A) Spendthrift Provision. No beneficiary shall have the power to
anticipate, encumber or transfer his interest in the Trust Estate in any manner other
than by the valid exercise of a Power of Appointment. No part of the Trust Estate
shall be liable for or charged with any debts, contracts, liabilities or torts of a
beneficiary or subject to seizure or other process by any creditor of a beneficiary.
(B) Distributions to Minors. Any distribution upon termination of the
trust which is to be made to a beneficiary under the age of twenty-one (21) may be
made in any amount, either directly or through a guardian of or custodian for the
beneficiary, or by payment to the beneficiary in person; and the receipt of the payee
shall, with respect to each such distribution, be a sufficient discharge to the Trustee
so that the Trustee need not see to the further application thereof.
(C) Definitions of Family. References to "child" or "children" mean
descendants in the first degree only, references to "grandchild" or "grandchildren"
mean descendants in the second degree only, and references to "issue" mean
descendants in the first, second or any other degree; in each case meaning lawful
descendants, whether by blood or by adoption and whether living on the date of
this trust instrument or born or adopted thereafter.
(D) Code. Unless otherwise stated, all references in this Trust to
section and chapter numbers are to those of the Internal Revenue Code of 1986, as
amended, or corresponding provisions of any subsequent federal tax laws
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applicable to this Trust.
(E) Other Terms. Unless the context otherwise requires, the use of
one or more genders in the text includes all other genders, and the use of either the
singular or the plural in the text includes both the singular and the plural.
SIXTH:
Management of the Trust.
(A) Donor's power to direct investments. Donor shall have the power in a fiduciary
capacity to direct the Trustee to purchase, sell, exchange, or otherwise acquire or dispose of
assets. In the case of a variable life insurance or annuity policy, Donor shall have the power in a
fiduciary capacity to direct the investment of the cash value of the policy among the investment
fund options provided in the policy.
During the Donor's lifetime, the Trustee shall not exercise any of the Trustee's powers
over these matters without receiving wr;tf:,:n directions from the Donor. Notwithstanding the
Donor's authority or the Trustee's limitations, contained in this section, if the Trustee, in the
exercise of its fiduciary duties, is required (1) to make a discretionary or non-discretionary
distribution to a trust beneficiary, (2) to pay trustee's fees, (3) to pay any taxes relating to the
trust, or (4) to pay any other costs or disbursements relating to the trust, the Trustee shall provide
the Donor written notice of such payment and an estimate of the liquidity requirements, and the
Donor shall have fifteen (15) calendar days (from the mailing of the notice) to advise the Trustee
which trust assets to liquidate in order to make the payment and meet the liquidity requirements.
If the Donor does not provide the advice to the Trustee within the fifteen (15) day period, then
the Trustee is authorized to liquidate those trust assets which it deems appropriate to meet the
liquidity requirements based on the Prudent Investor Rule contained in section 5.01(B).
During the Donor's lifetime and unless the foregoing powers have been relinquished or
delegated, the Trustee shall have no duty to review investments or to suggest investments and
shall not be liable to any beneficiary of this trust or any heir of the Donor for losses resulting from
such investments or from failure to make investments while the Donor retains these powers.
Donor, unless having relinquished this duty in writing, retains the obligation to review investments
or make investment suggestions.
Donor may release her power to control trust investments by written instrument delivered
to the Trustee and may reassume the power at any time be written instrument delivered to the
Trustee. If Donor dies or the Trustee receives certificates of two state licensed physicians that
Donor cannot exercise any of these powers, Donor shall be deemed to have released the powers
and the Trustee shall have full power to take any such action, subject to the terms and conditions
of the Prudent Investor Rule. Donor shall be deemed to have reassumed the powers if the
Trustee receives certificates from two licensed physicians that Donor has recovered the ability to
exercise the powers.
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Donor acting under this clause shall be deemed to have waived the doctor-patient privilege
to the extent necessary to implement this clause. Failure of physician to comply with the Trustee
in requests for information shall be deemed to be a release of the Donor's retained authority to
review accounts and make investment suggestion until such time as the physician complies. Any
person may transact business with the Trustee without inquiring whether the Donor has directed
the action and without inquiring whether the Donor has relinquished or become unable to exercise
the power.
(B) Incorporation of Prudent Investor Rule. Unless otherwise directed herein, the
Investment Counsel shall be subject to the Prudent Investor Rule (the "PIR") as adopted by the
Commonwealth of Pennsylvania at 20 P.S.C.A. 97201 et. seq., as hereby enacted or subsequently
amended, to manage and invest the assets of the trust.
The Donor desires that the Investment Counsel, consistent with the standards of tile PIR,
continuously assess the apprcrriate investment risk tolerance of the trust beneficiaries, a..ld then
invest the trust assets consistcp~ with the purposes, terms, and other circumstances of the or iUSt
and shall pursue an overall investment strategy reasonably suited to the Trust and the expressed
intent of the Donor.
The Donor believes, consistent with modern portfolio theory, that the trust total
investment return will be determined primarily by the trust's asset allocation; not market timing or
active management in security selection. The Donor believes that the trust should diversifY its
investments with regard to assets classes and individual securities to avoid uncompensated risk.
The Donor does not intend to prohibit the Investment Counsel from engaging in active
management of trust assets where the Investment Counsel reasonably believes active management
can aid in achieving the desired balance between risk and return and the intent of the Trust.
(C) Creation of Investment Policy Statement. The Donor directs that any Investment
Counsel, in managing and investing the assets of the trust estate, establish, in writing, an
appropriate investment policy statement. The investment policy statement shall be reviewed and
updated at least annually. In making the investment policy statement, the Investment Counsel
shall consider and the Donor shall address such issues as: the size of the trust assets; the intended
duration of the trust; liquidity demands and schedules; the duration of the fiduciary relationship;
the expected tax consequences of decisions and distributions between income and principal; the
role each investment will play in the overall investment strategy; the special value or relationship
of any particular asset to the overall intent of the trust; and, to the extent reasonably known, the
income and resources of the beneficiaries and related trusts. The Investment Counsel shall
annually discuss the projected distributions, expenses and costs of the Tf4-st account and shall
establish an asset allocation model and the investments shall comply to the model. In the event
that no consensus may be reached concerning the asset allocation model, the Investment Counsel
shall operate within the context of the asset allocation model established by the Donor, unless the
Investment Counsel obtains a bond or other security to assure the Donor or Trustee of the
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preservation of the Trust's goals.
(D) Employment of and Delegation to Investment Agent. The Donor directs that the
investment functions of the Trust shall be held by DALE E. DANNER or JOHN R. KEELER,
now of KEELER & DANNER FINANCIAL SERVICES, LLP, now of 50 West Main Street,
Suite B,Mechanicsburg, Pennsylvania 17055, in their individual capacities as the "Investment
Counsel(s)" for the Trust Account. Pursuant to the above-described authority, Donor delegates
Investment Functions to the Investment Counsel, in their individual capacity. In acceptance
thereof, the Investment Counsel shall be granted all investment authority under the governing
instrument and the laws of the Commonwealth of Pennsylvania, subject to the following
limitations:
(1) If the Investment Counsel invests in Mutual Funds,
then the Investment Counsel shall invest in funds with a minimum raLlg of three
(3) stars u:1':ler the Morningstar Rating system; and
(2) If the Investment Counsel selects any investment not
already an asset under the governing instrument at the time of funding of the
governing instrument, Investment Counsel must be able to demonstrate and
document performance history for such proposed investment for the preceding
three (3) years or the investment shall be approved in writing by the Donor or the
Trust Protectors; and
(3) The Donor understands that Investment Counsel
may derive a fee for the investment advisory services provided to
the Trust. The Donor understands that Investment Counsel may
derive a commission from the sale of securities and/or investment
products to, and on behalf of, the Trust. The fees and commissions
will be paid, either directly or indirectly, from the Trust Account by
the Trustee to Investment Counsel.
(4) This Investment Delegation may be changed,
amended or terminated by Donor at any time by thirty (30) days
advance written notice given to the Investment Counsel. As to the
Trustee, the investment direction change, amendment or
termination will become effective with advance written notice given
to, and signed by, the Donor. After the death of the Donor, the
Investment Delegation may be changed, amended or terminated by
a majority of the Trust Protectors at any time subject to the same
terms and conditions.
(5) If, prior to the time Donor or Trust Protectors
change, amend or revoke the Investment Delegation, the Trustee
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receives income or principal from any source, the Trustee is
authorized to invest the funds in a money market-type account at
the Trustee's discretion, including an account from which the
Trustee derives a SEC section l2(b)-1 and/or sweep fee.
(6) Trustee agrees to use its best efforts to execute any
and all investment directions given to it in writing by the Investment
Counsel, provided that Trustee will not be liable to Donor, Trust
Protectors, current income beneficiaries and remaindermen if the
investments cannot be executed due to circumstances beyond the
control of the Trustee, including delay outside the control of the
Trustee.
(7) Unless otherwise directed, the Investment ~ounsel
shall be subject to the Prudent Investor Rule (the "PIR") as adopted by the
Commonwealth of Pennsylvania at 20 Pa.C.S.A. 97201 r7. 3eq., as enacted or
subsequently amended, to manage and invest the assets of the trust.
(8) Except as otherwise provided in this Agreement, the
duties and responsibilities of the Donor, the Trust Protectors, the
Investment Counsel and the Trustee will be controlled by the terms
of the Trust as more fully described in the Trust Agreement.
(E) Trust Protector Directed Investments. Upon the death of the Donor,
AMANDA B. REED and ARAMINTA FLEGEL, as the Trust Protectors, may select, in
writing delivered to the Trustee, either the investments or the Investment Counsel for the Trust,
provided that both AMANDA B. REED and ARAMINTA FLEGEL must agree to such listed
investments and counsel in writing to the Trustee under such terms and conditions as the Trustee
may require including, but not limited to, indemnification agreements. If AMANDA B. REED
and ARAMINTA FLEGEL assume or otherwise accept such responsibility, then the Trustee
shall be exempt from claims of the remaindermen for the investment decisions made by such
Trust Protectors or the Investment Counsel(s).
(F) Nonliability of Trustee for Directed Investments. The Trustee shall not be
liable to any beneficiary or to any heir for an appointed Investment Counsel's acts or failure to act,
in directing the investments of the trust where the Investment Counsel was appointed by the
Donor or the Trust Protectors.
(G) Delegation to Investment Counsel bv Trustee. In the absence of
appointment of an Investment Counsel by. the Donor or the Trust Protectors, the Trustee may
delegate investment responsibilities to any Investment Counsel for any reason and regardless of
the Trustee's own skills concerning investments; provided, however, Investment Counsel so
selected shall be either registered as an Investment Advisor with the U.S. Securities and Exchange
8
Commission, a Trust Company, or a state chartered or national bank with fiduciary powers. If
investment powers are delegated to Investment Counsel, the Trustee shall abide by the Investment
Counsel's decision but shall not be held liable or otherwise surcharged for losses directly
attributable to investments made on the Investment Counsel's advice as consistent with the
standards established for delegation to Investment Counsel under the PIR standards for delegation
of investment powers at 20 Pa.C.S.A. 9 7206. While the investment powers are delegated to
Investment Counsel, the Trustee shall not be required to review trust investments or take action
on trust investments unless the Trustee receives written instructions from Investment Counsel.
The Trustee may, but shall not be required to demand a bond from any professional Investment
Counsel.
The Trustee shall have the power exercisable in the Trustee's discretion to discharge such
Investment Advisor and to employ other counselor to administer the trust without such counsel.
Consistent with the standards of the PIR, the Trustee shall have th;:, responsibility to prudently
select :lrty Investment Counsel and shall only be required to disctarge Investment Counsel if
appriz~n of facts clearly indicating that Investment Counsel is nor' p~rforming competently.
Furthermore, the Trustee shall not be held liable for any actions of the professional Investment
Counsel provided that the Trustee has exercised reasonable care in selecting such Investment
Counsel and has established a specific scope and term of delegation or responsibility for such
Investment Counsel.
(H) General Powers. The Donor directs that the general management functions of the
Trust shall be held by COMMUNITY TRUST COMPANY, now of 3907 Market Street, Camp
Hill, Cumberland County, Pennsylvania 17011, in its capacity as Trustee. In addition to other
powers, the Trustee shall have the following powers with respect to the trust and its property, in
each case to be exercised from time to time at discretion and without order or license of court;
provided that no power granted herein may be exercised by the Trustee if such exercise would in
any way defeat the intent of the Donor that the trust hereunder qualifY as a charitable annuity lead
trust so that the value of the interest passing to the Charities is deductible as a charitable
guaranteed annuity under Sections 2055(e)(2)(B) and 2522(c)(2)(B) of the Code and so that the
annuity distributions to the Charities will be deductible from gross income of the trust to the
extent provided by Section 642(c) of the Code:
(I) To retain indefinitely, and to invest and reinvest in, stocks, shares, general or
limited interests, obligations and other securities or any other kind of personal or
real property, even though any or all of the investments made or retained are of a
character or size which but for this express authority not be considered proper for
a trustee;
(2) To sell, to exchange, to lease and to make contracts concerning personal or real
property, for such consideration and upon such terms as to credit or otherwise as
the Trustee considers advisable, which leases and contracts may extend beyond the
term of the trust; to give options on real or personal property of the trust; to
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establish depreciation, depletion, tax or any other reserves; and to execute deeds,
transfers, leases, and other instruments of any kind;
(3) To hold securities or other property in the name of the Trustee or of any other
person, firm or corporation, without indication of any fiduciary capacity;
(4) To compromise or submit to arbitration any claim or matter in dispute;
(5) To give general or special proxies or powers of attorney (which mayor may not be
discretionary and with power of substitution) for voting or acting with respect to
securities; to deposit securities with, or transfer them to, protective committees,
voting trustees or similar bodies; to join in any reorganization; and to pay
assessments or subscriptions called for in connection with securities held by the
Trustee;
(6) To employ investment counsel and consult 'Nith them concerning the investments
and management of the trust; to employ a custodian, attorneys and any other
special service; and, in addition to the compensation and expenses of the Trustee,
to pay the compensation and expenses of such investment counsel, custodian,
attorneys and other special services;
(7) To credit particular receipts or gains, and to charge particul"ar disbursements or
losses or charges, to income or to principal of the trust or to apportion them
between income and principal, whether such credits or charges relate to bonds
acquired at a premium, to reserves or to any other matter, all as the Trustee
considers fair and reasonable in each case; and
(8) To make any division or distribution of, or payment from, the trust, in kind by the
fair and reasonable allotment and transfer of specific securities or other personal or
real property or undivided interests therein, at then current values, in lieu of cash,
as a part or the whole of anyone or more shares or payments. The adjusted basis
for federal income tax purposes of any trust property which the Trustee distributes
in kind to charity must be fairly representative of the adjusted basis for such
purposes of all trust property available for distribution on the date of distribution.
In the event that a named charity is serving as Trustee hereunder, the Trustee may in its
discretion (i) mingle or combine any of the investments or property of this trust with other funds
held by the charity as Trustee in one or more partnerships with investment objectives that the
Trustee deems appropriate, or any other common fund in which each of the several contributing
trusts shall have an undivided proportionate interest and (ii) invest any of the property of this trust
in units of the General Investments Account of the charity and thereby commingle the trust
property with other funds held by the charity for investment purposes; provided, however, that in
any event the trust hereunder shall at all times be identified by the charity as a separate and
10
distinct trust and shall so be commingled, combined and invested for convenience of
administration only.
SEVENTH: References in this trust instrument to the 'Trustee" mean the trustee,
whether original or successor, for the time being in office. Any Trustee may resign by giving
written notice to the Charities and the named remainder beneficiaries and to the one or more
persons of full legal capacity then entitled to accounts as provided in Article EIGHTH below.
In case of any vacancy in the office of Trustee, a successor Trustee may be appointed in
writing by the Donor, if the Donor is then living and of full legal capacity, or if the Donor is not
then living and of full legal capacity, by the Trust Protectors, or if none, by the Charities Each
such appointment shall take effect upon written acceptance of the office; provided that neither the
Donor nor a member of the Donor's family shall be appointed as Trustee.
No Trustee named herein or appointed oS provided above need furnish any bond or surety.
No one dealing with the Trustee need inquire CV~I~~ming the validity of anything the Trustee
purports to do or need see to the application of any money paid or property transferred to or
upon the Trustee's order.
EIGHTH: The Trustee shall render an account of the trust at least as often as annually to
the Donor during the Donor's lifetime, and thereafter to the beneficiary or beneficiaries to whom
the remainder interest would be distributed under paragraph (b) of Article .FIRST above if the
trust were to terminate on the last day of the period for which the account is rendered; and if the
Donor or any such beneficiary is not of full age and legal capacity when an account is rendered,
such account shall instead be rendered to his or her legal guardian or similar legal representative,
if any. The written assent to any such account by each person of full legal capacity to whom it is
rendered as provided above shall fully protect the Trustee as to all matters and transactions stated
in such account or shown thereby. The failure of any person to whom an account has been
rendered to object in writing within thirty (30) days of receipt of said account shall be deemed an
assent thereto. Nothing in this Article shall be deemed to give anyone the power to modify the
terms of this trust instrument or to alter or shift any beneficial interest created hereunder.
NINTH: The taxable year of this trust shall be the calendar year.
TENTH: This trust shall be irrevocable and shall not be subject to alteration or
amendment, except that the Trustee may in writing amend this trust instrument at any time or
times to enable the trust hereunder to continue to qualify as a charitable annuity lead trust as
described in Sections 2055(e)(2)(B) and 2522(c)(2)(B) of the Code, regulations thereunder and
decisional law. No income or principal of the trust shall be used for the benefit of the Donor or to
pay premiums on any policy of insurance on the. life of the Donor; no loans shall be made, directly
or indirectly, from the trust hereunder'to the Donor; no property shall be bought from, sold to,
exchanged with or leased to or from any person for less than full and adequate consideration in
money or money's worth; and the Donor shall not have the power to control in any manner the
11
administration of the trust hereunder. In the event that any power does exist in this document
which would be in violation of the Code, then such power shall be declared null and void and the
remaining pOwers and authorities shall remain intact. The Trustee shall take all necessary and
proper actions to preserve the charitable intent of this Trust.
ELEVENTH: The original of each alteration or amendment of this trust instrument by
the Trustee, each resignation or appointment of a Trustee, and each acceptance of appointment,
shall be kept attached to the original trust instrument, which shall be held by the Trustee. Anyone
may rely on a copy, certified by a notary public, of this trust instrument or of any writings
attached thereto as fully as on the original document; and anyone may rely fully upon any
statements of fact certified by anyone who appears from the original document or a certified copy
thereof to be a Trustee hereunder.
TWELFTH: This trust instrument and the trust hereunder shall be governed, construed
and administered in accordance with the provisions of the Code from time to time applica ble
thereto and by the laws of the Commonwealth of Pennsylvania from time to time in force
SIGNED and SEALED this ~ day of November, 2001, for the purposes stated
herein.
dm,adVk 1 8 ~ , (loA
MAY M. MOORE, DONOR \
COMMONWEAL TH OF PENNSYL VANIA
COUNTY OF CUMBERLAND
On this, the ']iIlday of November, 2001, before me, a Notary Public, the undersigned
officer, personally ap~red MAY M. MOORE, known to me (or satisfactorily proven) to be the
person whose name is subscribed to the within Trust Agreement, and acknowledged that she
executed the same for the purposes therein contained.
SS:
IN WITNESS WHEREOF, I have set my hand and official Seal.
-dfu) (rtUl1Jc -7
Notary Public
My Commission Expires:
, Notarial Seal
I Teri L. Walker, Notary Public
Lemovne Bora, Cumberland County
I My Commission Expires Jan. 20, 2003
'M8Ii:bar. Penney'iVanla Association 01 Notaries
12
The foregoing Trust Agreement was delivered, and is hereby accepted, at Camp Hill,
Pennsylvania, on November _,2001.
ATTEST:
COMMUNITY TRUST COMPANY,
TRUSTEE
~Sc;.r7 .,( ~~s-e//
4".s<s;r~r-/qr7/ 0a::YC~
B~~~
KlMBE Y. TH -T ER,
PRESIDENT
~~--'7~.~
~~
WITNE
/:' .Pi
ARAMINTA FLEG L, ~
TRUST PROTECTOR
-----
WI~~
/1
ill /1
, /1 If '
. ~ b- I
(.U;1'ItJvr,drV g , . f2P~ )
-
AMANDA B. REED,
TRUST PROTECTOR
ATTEST:
KEELER & DANNER FINANCIAL
SERVICES, LLP
BY: ~ E ~__~
DALEE.DANNER,GENERAL
PARTNER
13
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYL VANIA
ORPHANS' COURT DIVISION
In Re: First and Final Accounting of the
May M. Moore Five- Year
Charitable Lead Annuity Trust
No. 138 of2007
ORDER OF COURT
NOW on this Z-rt L day of $ pt
, 2007, the Court, having reviewed the
foregoing Stipulation of the parties, FINDS that the relief requested in the Stipulation is
appropriate.
The Court therefore ORDERS that the Trustee shall release the sum of$196,792.43 to
Remainder Beneficiary Amanda B. Reed, and the sum of $196,792.43 to Remainder Beneficiary
Araminta A. Flegel.
The Court further ORDERS that all remaining funds shall be held in escrow pending
further Order of Court.
IT IS SO ORDERED.
By the Court,
IsI g. (JJ-l,J~ ~2lA ~.
Judge
r-'-,_,)
ATRUE COpy FROM RECORD
In Testimony wheret, I hereunto
set my hand and the seal
of said Court at Carlisle, PA
~,!~,,;:,:Yotcx.1u~r_20 0"1 C\ .
~,. r\;~Q.~ ~:t;\
Clerk of' e Orphans Court U
" Cumberland County
;'.)
,---,
~-'
EXHIBIT
J
i ~
09/14/2007 15:58
717-731-%27
GATES HALBRUNER HATe
PAGE 132/133
No.1085 P.2/4
SeP.13.2007 8:59AM
eMI
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS' COURT DIVISION
In Re: First and Final Accounting of the
May M. Moore Five. Year
Charitable Lead Annuity Trust
No. 138 of2007
STIPULATION
,:)
COME NOW the Community Trust Company~ as Tnlstee in the above captionedmatte.r, __l
along with Araminta A Flegel and Amanda B. Reed, Beneficiaries of said Trust, and the
Commonwealth ofpermsylvania, Office of the Attorney General, as parens patriae and far their
Stipulation. state to tbe Court a.<; follows:
1. At issue in this case is the Proposed Accounti.ng~ filed by the Tmstee, Community Trust
Company~ for the May M. Moore Five-Year Charitable Lead Annuity Trust.
2. TIle Beneficiaries bave filed Objections ta said Accounting.
3. Th.e Court is currently considering the Tnlstee's Petition to Require an Accounting of
Additional Investment Counsel.
4. Pursuant to the Proposed Accounting, the Tnt.~ee ha.cc proposed to distribute $213,810.88
to Amanda B. Reed ll&"1d $213~gi(j.87 llJ Ari:1.u1lnta A. Fl.::gt":t.
. 5. Ms. Reed and Ms. Flegel are the only beneficiaries of the Trust.
6. Without any admission of liability or release from liability by any party to this litigati~
all parties stipulate and agree that the Trustee may release the sum. of $196,792.43 to each
respective beneficiary (total of$393,584.86 released). and that the remaining funds for the Five.
Year Trust be held in escrow pending the outcome of this litigation.
:r
09/14/2007 15:58
717-731-9627
GATES HALBRUNER HATe PAGE 03/03
No.IOSS P.3/4
Sep.13. 2007 B:59AM eM!
7. Undersigned coun8el for the Beneficiaries has spoken with Attomey Michael T. Foerster,
counsel for the Attorney General's Office, who has no o~iectjon to this Stipulation.
WHEREFORR, the parti e... respectfully reque.crt that the Court enter an Order allowing the
Trustee to make the distributions requested herein.
Respectftdly subn1itt~
Date:
q~ 3 /{;J7
I..I~
111. ~
James M. Stein. Attorney for Beneficiaries
Dick. Stein, Schemel, Wine & Frey, LLP
13 West Main Stre~ Suite 210
Waynesboro, Pennsylvania 17268
(71.7) 762.1160 PABarNo.84026
Approved as to fO.nn and content.
Date:
Sarah E. McCarroll, Attorney for Trustee
Gates. Halbruner & Hatch. PC
1013 Mumma Roa4 Suite 100
Lcmoync, Permsylvania 17043
(717) 731-9600 P A Bar No. C( It o;;l..
-2-
DICK, STEIN, SCHEMEL, WINE & FREY, LLP
A ITORNEYS AT LAW
WILLIAM S. DICK
JAMES M. STEINI
PAUL T. SCHEMEL2
J. EDGAR WINE
JOHN W. FREY
13 WEST MAIN STREET
SUITE 210
W A YNESBORO, P A 17268
(717)762-1160
(717) 762-6040 (FAX)
January 23, 2008
11 NORTH CARLISLE STREET
SUITE 103A
GREENCASTLE, P A 17225
(717) 597-0200
VIA FACSIMILE
Sarah E. McCarroll, Attorney for Trustee
Gates, Halbruner & Hatch, PC
Fax: (717) 731-9627
Re: May M. Moore Five-Year Charitable Lead Annuity Trust
Dear Ms. McCarroll:
As we discussed in our telephone conversation yesterday, it was my clear understanding that the
escrow account we established in our Stipulation of September 27, 2007 would be held and managed by
Morgan Stanley. As of the date of this letter, Community Trust Company still had control of the escrowed
funds.
This is particularly disturbing in light of the termination fee Community Trust paid to itself on
November 20, 2007, approximately two (2) months after the escrow account was established. In addition,
the Community Trust Company paid itself trustee fees on October 9, November 6 and November 7, 2007.
I have attached a copy of the Community Trust statement for your review.
Aside from the impropriety of Community Trust paying itself funds out of an escrow account
which was created to safeguard those funds until this matter is resolved, Community Trust has also fmiher
breached its fiduciary duty by taking trustee fees in the months of October, November, and December,
after all of the principal funds had been paid out of the trust. There was no trust for the trust company to
manage in the months of October, November, and December, and thus there should have been no fees
charged.
As you are aware, by virtue of the Objections to the Accounting, my clients are disputing all fees
charged and taken by Community Trust Company. Consequently, all funds remaining after the
disbursements to my clients made pursuant to the Order of September 27,2007, should have remained in
the escrow account. We expect that all of the funds removed from the account, charged by Community
Trust Company, or taken by Community Trust will be returned to the escrow account, and that the proper
arrangements will be made for the escrow account to be shifted to Morgan Stanley or an independent third
party to hold until the resolution of this matter. If all of the monies are not returned and the escrow
account transferred within two (2) weeks of the date of this letter, my clients will have no choice but to
address this matter with the COUli.
Please contact me with any questions or concerns this may cause you. Otherwise, I hope to have
this issue resolved in the very near future.
Sincerely,
--L... ~
James M. Stein
EXHIBIT
JMS/ewr
Attachment
cc: Amanda Reed & Araminta Finn
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