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HomeMy WebLinkAbout12-07-07 Jean D. Seibert, Esquire Attorney I.D. No. 41713 WION, ZULLI AND SEIBERT 109 Locust Street Harrisburg, PA 17101 717-236-9301 Attorney for Manufacturers and Traders Trust Company (") Co $'::0 \:R:E (") 'J) :e; r- "'.Zm 't- -. ::IJ ~;:: (f) ;:;<:::: ':)00 ClO-n \...J c: ;~ ~ I"...;) ~ c:::> --' o f"/1 ("') IN RE: TRUST UNDER WILL OF JAMES H. HERENDEEN IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PA ORPHANS' COURT DIVISION NO. 1995-00777 ANSWER TO OBJECTIONS OF ELEANOR F. HERENDEEN TO THE FIRST AND PARTIAL ACCOUNT OF THE TRUST UNDER WILL OF JAMES H. HERENDEEN AND ANSWER TO NEW MATTER AND NOW, comes Manufacturers and Traders Trust Company, by and through its attorneys, Wion, Zulli and Seibert, and files this Answer to Objections and Answer to New Matter of Eleanor E. Herendeen and respectfully represents the following: 1. Admitted. Also, it is admitted that Eleanor E. Herendeen is the income beneficiary. Trustee is, however, without information as to which of her children is the proper agent acting under a power of attorney document. 2. Admitted in part and denied in part. Admitted that Manufacturers and Traders Trust Company ("Trustee") did file a "Petition for Adjudication/Statement of Proposed Distribution Pursuant to Pa. O.C. Rule 6.9" ("Petition"). Denied that the "dispositive provision of the noncharitable irrevocable trust established by the Last Will and Testament of James H. Herendeen be modified." Trustee was, through the vehicle of the Petition, requesting the Court to provide some parameters by which some amount of principal could be distributed to Objector, the income beneficiary, each year, because of the position of the l ....J -0 - - ~ N (T\ remainder beneficiaries that the income beneficiary should receive no principal payments, as set forth in Objections to the subject Petition filed by Nancy Herendeen, Chari H. Briggs- Krenis and Solange Reoch, as remainder beneficiaries of the subject Trust, on November 26, 2007. 3. Denied. Trustee has invested this split interest trust fund in a manner that produces a reasonable income for Objector and also takes into consideration the fact that the remainder beneficiaries will receive the principal remaining upon the death of the income beneficiary. Trustee has statistics to substantiate the statement that the trust has earned income in excess of benchmark indices over an extended period of time. 4. Denied. Trustee has statistics to substantiate the statement that the average expense ratio of the funds in which the subject trust is invested is less than one percent. The lowest expense ratio of any fund in which the subject trust is invested is .25 percent. 5. Denied. The Trustee has invested in funds that are institutional funds and not retail funds. Objector must be referring to Morningstar rates that are for retail funds. Trustee has statistics to substantiate the statement that only two funds in which it invests are rated a two by Morningstar, with the remaining funds rated three or better. Index funds, of which the subject trust has holdings in several, are never rated higher than three. The Morningstar rating of a fund is only one measure of many which Trustee employs in deciding on the correct structure and mix of investments suitable for both the income and remainder beneficiaries. In consideration of the answers provided by Trustee to numbers 3, 4 and 5, Trustee objects to the request of Objector to appoint an auditor to take testimony and make findings of fact regarding the investment performance of Trustee, and objects to the Objector's request to have the auditor make a recommendation as to the amount ofa 2 surcharge to be imposed upon Trustee, such surcharge to 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. Such surcharge is directed by Objector to be paid to the Objector. 6. Admitted and by way of further information, Robert L. Keck in his letter indicated that a portion of the Trustee fee on the principal would be paid from the trust principal and a portion of the Trustee fee on the principal would be paid from the trust income. The Trustee fee on the principal has historically been paid as follows: Sixty-five percent (65%) of the Trustee fee is paid from principal and thirty-five percent (35%) of the Trustee fee is paid from income. All of the Trustee's five percent (5%) fee on income is paid from income of the Trust. A copy of the letter of Mr. Keck is attached hereto as Exhibit "A". 7. Denied. Objector must be misinterpreting the letter ofMr. Keck, because it was always the intent of the Trustee to charge some of the principal fee from principal and the remaining percentage to the income beneficiary. 8. Admitted. 9. Denied. The purpose of the Trustee in requesting the Court to consider establishing a certain percentage of the Trust res to be available on a yearly basis for the Trustee to distribute to the age 99 income beneficiary is to provide guidance to the Trustee. Trustee has sole discretion to determine whether or not there should be any distribution of principal to the income beneficiary, 4.A of the Last Will and Testament of James H. Herendeen in part states;..... "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" . . ... This would be more efficient than having to hold a hearing concerning a principal distribution, each time one is deemed necessary since the remainder beneficiaries 3 are opposed to any distribution of principal to the income beneficiary. Please see their Objections filed November 26,2007, as referenced above. 10. Denied, for reasons stated more specifically in paragraph 9, above. 11. Denied. Trustee is not requesting the Court to modify the dispositive provision ofthe trust under will of James H. Herendeen, but to have the court provide some parameters as to how to balance the tension between the income beneficiary and the remainder beneficiaries. 12. Admitted. 13. Admitted in part and denied in part. It is admitted that paragraph 10 ofthe Petition states that life tenant is very elderly and likely to incur additional living and medical expenses. It is denied that the Trustee requests that the distribution of the Trust principal be modified. The Trustee requests the court to consider that in addition to the income distribution that the Court execute an Order to permit the Trustee to distribute an amount over and above the income earned, such amount not to exceed four percent of the principal, as it deems appropriate. 14. Admitted. 15. Admitted. 16. Denied. Trustee's Petition does state circumstances that were not anticipated by the settlor, James H. Herendeen, in that he could not have anticipated that his wife, Eleanor Herendeen would survive until age 99 and need care at the costs set by professionals for the year 2007. By having the court Order that up to four percent of the trust principal can be expended each year, as the Trustee deems appropriate, there is a better balance between the income beneficiary and the remainder beneficiaries to allow for additional payments, 4 should the Trustee, deem appropriate. Trustee would make payments upon ascertainment of the Trustee of the income available to the income beneficiary, as provided in the Trust, from all sources known to the Trustee. WHEREFORE, Trustee, Manufacturers and Traders Trust Company, respectfully requests that this Honorable Court require the individual acting as the agent under a power of attorney document for the Objector, to furnish a certified copy of such document for examination by the Trustee, and further to deny Objector's request for an auditor to recommend a surcharge of the Trustee because of income earned by the income beneficiary and to recommend an amount of fees that has been charged incorrectly to the income beneficiary, to be returned to the Objector. And further that the Court execute an order permitting the Trustee, at its sole discretion and in consideration of other sources of income available to Objector, as income beneficiary, to distribute an amount of principal in anyone calendar year, not to exceed four percent of the balance of the Trust account, based on a calculation of the market value of the balance in the Trust account at the beginning of each such year. Respectfully Submitted: WION ZULLI & SEIBERT Date: r1c1!17t. 1M! ~ CJIYJ7 y D. Seibert orney I.D. No. 41713 109 Locust Street Harrisburg, PAl 71 01 717-236-9301 Attorneys for Trustee 5 CERTIFICATE OF SERVICE I, JEAN D. SEIBERT, hereby certify that I have this day served a copy of the foregoing ANSWER TO OBJECTIONS AND ANSWER TO NEW MATTER 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: Bridget M. Whitley, Esquire Skarlotos and Zonarich, LLP 17 S. Second Street, 6th Floor Harrisburg, PA 17101 Neil E. Hendershot, Esquire Goldberg Katzman, PC 320 Market Street P.O. Box 1268 Harrisburg, PA 17108-1268 Mt. Calvary Episcopal Church 125 North 25th Street Camp Hill, PA 17011 Date: December 7, 2007 ~~~L J . D. SeIbert VERIFICATION I verify that the statements made in the foregoing Answer to Objections and Answer to New Matter of Eleanor R. Herendeen are true and correct. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. Section 4904 relating to unsworn falsification to authorities. MANUFACTURERS AND TRADER TRAUSTCOMPANY Dated: December L, 2007 6