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HomeMy WebLinkAbout11-21-07 '. '. SKARLATOS & ZONAlUCH LLP Bridget M. Whitley, Esq. Skarlatos & Zonarich Building 17 South Second Street, ~ Floor Harrisburg, Pennsylvania 17101 Telephone: (717) 233-1000 Facsimile: (717) 233-6740 Email: bmw@skarlatoszonarich.com Attorney for Eleanor F. Herendeen. Wife of James H Herendeen, deceased, by and through her son and attorney-in-fact, Donald Louser o ?O -:.~ ::0 ;~.J -0 :q:cp ~~~ C'C _,_..J :IJ ~D-l .J.> ~ <::::::) <:::> ....... Z C> <: N -0 ::r: ~ (J1 INRE: TRUST UNDER WILL OF JAMES H. HERENDEEN IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 1995-00777 NOTICE TO PLEAD TO: MANUFACTURERS AND TRADERS TRUST COMPANY, c/o Jean D. Seibert, Esquire, WION, ZULLI & SEIBERT, 109 Locust Street, Harrisburg, P A 17101 You are hereby notified to file a written response to the enclosed pleading within twenty (20) days from service hereof or a judgment may be entered against you. Dated: ~ /9, JOd? SKARLATOS & ZONARICH LLP By: Al~ >.t <ff-Utr Bridget M. . tIey, Esq. Attorney ID No. 33580 Skarlatos & Zonarich Building 1 7 South Second Street, 6th Floor Harrisburg, Pennsylvania 17101 Telephone: (717) 233-1000 Facsimile: (717) 233-6740 Email: bmw@skarlatoszonarich.com Attorney for Eleanor F Herendeen, Wife of James H Herendeen, deceased, by and through her son and attorney-in-fact, Donald Louser :::u ::0 rn FrIO G"") <:) (', 'r; :::0 :.::.r C,::J fTl ,...,.., ::r:.; CJ ~ :!J C"J rn C) --{1 ~ . . SKARLATOS & ZONARlCH LLP Bridget M. Whitley, Esq. Skarlatos & Zonarich Building 17 South Second Street, fJh Floor Harrisburg, Pennsylvania 17101 Telephone: (717) 233-1000 Facsimile: (717) 233-6740 Email: bmw@Skarlatoszonarich.com Attorney for Eleanor F. Herendeen, Wife of James H Herendeen, deceased, by and through her son and attorney-in-fact, Donald Louser r--.:) c::::J c::::> ...... :z:: <::) -< N a ~o 2j;g ';}IO ;,~ )> F;; -~:o ::z; ::rJ :Z(/):::::"" [)OO .." )9-n :x ~j:D __-' W.. .;:0 --, ~ IN THE COURT OF COMMON PLEAS Ul CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 1995-00777 IN RE: TRUST UNDER WILL OF JAMES H. HERENDEEN OBJECTIONS OF ELEANOR F. HERENDEEN TO THE FIRST AND PARTIAL ACCOUNT OF THE TRUST UNDER WILL OF JAMES H. HERENDEEN AND ANSWER WITH NEW MATTER TO THE PETITION FOR ADJUDICATION OF THE TRUSTEE, MANUFACTURERS AND TRADERS TRUST COMPANY AND NOW comes Eleanor F. Herendeen ("Objector"), through her son and attomey-in- fact, Donald Louser, by their attorney-at-law, Bridget M. Whitley, Esquire, of Skarlatos & Zonarich LLP, who files these Objections to the First and Partial Account of the Trust Under Will of James H. Herendeen together with an Answer with New Matter to the Petition for Adjudication of the Trustee, Manufacturers and Traders Trust Company, and in support thereof, avers as follows: 1. On October 25, 2007, Trustee and Petitioner, Manufacturers and Traders Trust Company ("Trustee"), filed a "First and Partial Account of Manufacturers and Traders Trust Company, Successor to Dauphin Deposit Bank and Trust Company, Trustee" ("Accounting"). 2. On October 25, 2007, Trustee and Petitioner filed a "Petition for Adjudication/Statement of Proposed Distribution Pursuant to Pa. O.C. Rule 6.9" ("Petition") .:0 :::o!:=Q rit '" '" c")C) ---- ::c:J ~:~ CJ 1T1 I-Tj :1'::) c::::J 1:-'-) 0 --n --rt -., o r -- rn C,? ~.::-) ~i . . requesting that distribution be awarded and that the dispositive provision of the noncharitable irrevocable trust established by the Last Will and Testament of James H. Herendeen be modified. I. OBJECTION TO ACCOUNTING: ~STMENTPERFORMANCE The Objector files the following objection to the Accounting: 3. The Trustee has failed to invest the trust fund in a manner that produces a reasonable income for Objector. 4. The Trustee has utilized mutual funds with high expense ratios, thereby depriving the Objector of additional income which could have been earned had the trust fund been invested in comparable funds with lower expense ratios. 5. The Trustee has utilized mutual funds which have earned only one, two or three stars from the Morningstar rating service, when comparable four and five star funds were available. WHEREFORE, the Objector requests that this Court appoint an auditor to take testimony and make fmdings of fact regarding the investment performance of Trustee, and make a recommendation to the Court of the amount of a surcharge that should be imposed upon the Trustee, representing the amount of income that should have been earned over the period of time covered by the accounting, less the amount that was actually earned, and to award the surcharge sum to the Objector. II. OBJECTION TO ACCOUNTING: EXCESSIVE TRUSTEE FEES ALLOCATED TO INCOME The Objector files the following additional objection to the Accounting: -2- 6. By letter dated November 17, 1995, Robert L. Keck, the then Assistant Vice President and Trust Officer of Trustee, indicated that a portion of the trustee fee on principal, and the trustee's 5% fee on income, would be paid from the income receipts of the trust. 7. Trustee has unfairly allocated too much of the trustee fee to income and has charged more than a 5% fee on income. WHEREFORE, the Objector requests that this Court appoint an auditor to take testimony and make fmdings of fact regarding the amount of trustee fee that should have been charged and allocated to income, adjust the accounting to reflect any reduction in the amount of the trustee fee paid from income, and distribute the adjusted income in hand to Objector. III. ANSWER TO PETITION The Objector files the following answers to the numbered paragraphs in the Petition: 8. Paragraphs 1 through 9, inclusive, Paragraphs 11 through 12, inclusive, and Paragraphs 14 through 19, inclusive, are all ADMITTED. 9. Paragraph 10 is DENIED. The averments of Paragraph 10 request the Court to modify the dispositive provision of the noncharitable irrevocable trust established by the Last Will and Testament of James H. Herendeen and in response thereto, Objector asserts the defense of failure to state a claim upon which relief can be granted for the reasons more specifically set forth in Objector's New Matter herein. 10. Paragraph 13 is DENIED. The averments of Paragraph 13 request the Court to modify the dispositive provision of the noncharitable irrevocable trust established by the Last Will and Testament of James H. Herendeen and in response thereto, Objector asserts the defense of failure to state a claim upon which relief can be granted for the reasons more specifically set forth in Objector's New Matter herein. - 3 - \ . WHEREFORE, Objector requests that: (a) The Court determine the proper distribution of income and principal after ruling upon the Objections raised; and, (b) Trustee's request to modify the dispositive provision of the trust be denied. IV. NEWMATTER In further answer to the Petition, the Objector files the following new matter: 11. Paragraphs 10 and 13 of the Petition request the Court to modify the dispositive provision of the noncharitable irrevocable trust established by the Last Will and Testament of James H. Herendeen and in response thereto, Objector asserts the defense of failure to state a claim upon which relief can be granted. 12. The Last Will and Testament of James H. Herendeen provides for the following disposition of the income and principal of the trust: The Trustee shall hold, invest and reinvest the principal of this Trust and shall collect and payout all of the net income therefrom in quarter-annual installments, or oftener, in its sole and absolute discretion, to my wife, ELEANOR F. HERENDEEN, during the term of her natural life. In addition to the net income, the Trustee may, in its absolute and uncontrolled discretion, pay to or apply for the benefit of my said wife so much of the principal of this Trust as it shall deem needful or desirable, from time to time, for her reasonable health, support and maintenance, taking into consideration the standard of living to which she was accustomed at the time of my death, and any income available to her for such purposes from all sources known to the Trustee; provided, however, that under no circumstances may my said wife compel or force my Trustee to make paYment or application of the principal of this Trust. 13. Although the Petition's Paragraph 10 acknowledges that ". . . Eleanor F. Herendeen, now age 99 . . . is extremely elderly and likely to incur additional living and medical expenses. . ." (See Petition, ~10), Paragraphs 10 and 13 of the Petition request, in relevant part, -4- . . that the distribution of the amount of Trust principal be modified such that the total annual distribution of principal cannot exceed 4% of the total assets of the Trust. (See Petition, ~~1 0, 13.) 14. The Uniform Trust Code, which has been enacted into law in Pennsylvania, has a specific statutory procedure governing modification of a noncharitable trust by a court: "fi 7740.2. Modification or termination of noncharitable irrevocable trust by court - UTC 412. (a) UNANTICIPATED CIRCUMSTANCES.--The court may modify the administrative or dispositive provisions of a noncharitable irrevocable trust, make an allowance from the principal of the trust or terminate the trust if, because of circumstances that apparently were not anticipated by the settlor, modification, allowance or termination will further the purposes of the trust. To the extent practicable, the modification or allowance shall approximate the settlor's probable intention. (b) INABILITY TO ADMINISTER EFFECTIVELY.--The court may modify the administrative provisions of a noncharitable irrevocable trust if adherence to the existing provisions would be impracticable or wasteful or impair the trust's administration. (c) DISTRIBUTION OF PROPERTY.--Upon termination of a trust under this section, the trustee shall distribute the trust property in a manner consistent with the purposes of the trust." 20 Pa.C.S. ~7740.2 15. Accordingly, by statute, in order to approve a modification of the dispositive provisions of a trust, the Court must find that: there were circumstances that were not anticipated by the settler; modification will further the purposes of the trust; and, that the modification approximates the settlor's probable intention. 16. Trustee's Petition fails to state: the existence of circumstances that were not anticipated by the settler; that modification will further the purposes of the trust; and that the modification sought would approximate the settlor's probable intention; therefore, Trustee's Petition fails to state a claim upon which relief can be granted. WHEREFORE, Objector requests that: (a) Trustee's request to modify the dispositive provision of the trust be denied. (b) The Court grant relief consistent with the Objections outlined above, the Answer to this Petition, and the New Matter raised. Respectfully submitted, SKARLATOS & ZONARICH LLP Dated: November ICJ ,2007 ~. Yt1 J/ij; Bridget%tley, Esq. ., Attorney ID No. 33580 Skarlatos & Zonarich Building 1 7 South Second Street, 6th Floor Harrisburg, Pennsylvania 17101 Telephone: (717) 233-1000 Facsimile: (717) 233-6740 Email: bmw@skarlatoszonarich.com Attorney for Eleanor F. Herendeen, Wife of James H. Herendeen, deceased, by and through her son and attorney-in-fact, Donald Louser - 6- ~ , VERIFICATION I, Eleanor F. Herendeen, through my son and attorney-in-fact, Donald Louser, hereby certify that the facts set forth in the following "OBJECTIONS OF ELEANOR F. HERENDEEN TO THE FIRST AND PARTIAL ACCOUNT OF THE TRUST UNDER WILL OF JAMES H. HERENDEEN AND ANSWER WITH NEW MA ITER TO THE PETITION FOR ADJUDICATION OF THE TRUSTEE, MANUFACTURERS AND TRADERS TRUST COMP ANY" ("Objections, Answer and New Matter") are based upon information which I have furnished to counsel, as well as upon information which has been gathered by counsel and/or others acting on my behalf in this matter. The language in the Objections, Answer and New Matter is that of counsel and not my own. I have read the Objections, Answer and New Matter, and to the extent it is based upon information which I have given to counsel, it is true and correct to the best of my knowledge, information and belief. To the extent that the content of the Objections, Answer and New Matter is that of counsel, I have relied upon counsel in making this Verification. I hereby acknowledge that the facts set forth in the aforesaid Objections, Answer and New Matter are made subject to the penalties of 18 Pa.C.S.A. ~904 relating to unsworn falsification to authorities. Dated: November a 2001 By: n d ouser, son and attorney-in-fact for Eleanor F. Herendeen, wife of James H. Herendeen, deceased ,. , ... CERTIFICATE OF SERVICE I, Bridget M. Whitley, hereby certify that I have this day served a copy of the foregoing OBJECTION upon the person(s) indicated below by depositing a copy of the same in the United States Mail, postage prepaid, at Harrisburg, Pennsylvania, and addressed as follows: Jean D. Seibert, Esq. Wion, Zulli & Seibert 109 Locust Street Harrisburg, P A 17101 Ruth Ann McMillen Manufacturers & Traders Trust Co. 213 Market Street Harrisburg, PA 17101 Mt. Calvary Episcopal Church 125 North 25tli Street Camp Hill, P A 17011 Nancy Herendeen 83 Citrus Park Lane Boyton Beach, FL 33436 Chari H. Krenis 2310 Ashmead PI. N. W. Apt. 302 Washington, DC 20009-1432 Solange Reoch 2917 State Street Dallas, TX 75204 Dated: November l!l., 2007 bgr ~~/II1JL;