HomeMy WebLinkAbout04-26-11IN RE: ESTATE OF
SARAH MCCREA CHAPMAN
JONES, LATE OF LOWER
MIFFLIN TOWNSHIP,
CUMBERLAND COUNTY, PA
DECEASED
IN THE COURT OF COMMON PLEAS OF
CUMBERLAND COUNTY, PENNSYLVANIA
ORPHANS COURT DIVISION
N0.21-09-0329
N0.21-78-0442
PETITION FOR JOINDER OF CHARITABLE REMAINDER ENTITIES
AND FOR STAY OF RULE TO SHOW CAUSE RETURN DATE
1. Petitioner is John McCrea, the individual co-trustee of the charitable remainder
unitrust (CRUT) created pursuant to provisions of the Last Will and Testament of
Sarah McCrea Chapman Jones, late of Lower Mifflin Township, Cumberland
County, Pennsylvania, in 1978.
2. As established by the testamentary instrument, the CRUT pays annually to its
lifetime beneficiary, Alfred Chapman, son of the testatrix, a sum equal to five
(5%) percent of the fair market value of the trust res calculated on the last day of
the previous year. At the death of Alfred Chapman, the remainder of the trust fund
is to be distributed, according to the specified percentages, among the following
five charitable remainder entities: Dickinson College (1 / 10), Brown University
(3/10), Dickinson School of Law (2/10), The National Trust for Scotland (1/10),
and the Episcopal Diocese of Central Pennsylvania (3/10).
3. Alfred Chapman has, since before the inception of the CRUT, suffered from
chronic schizophrenia, a condition which requires institutional care. Since 1984,
he has resided at Greystone House, a long term psychiatric facility on the grounds
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of Friends Hospital in Philadelphia, Pennsylvania. A o ~~ = = ' ~~~'
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4. For the last several years, Alfred Chapman's living expenses and the exp~a~se~or c~~'
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his medicines and other medical care, have outstripped the annual paymer3ts~~rom =~ - ='
the CRUT, and today there exists a large deficit in his Friends Hospital mount. f_~, ~~`~ ~;
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5. A petition to reform the CRUT has been filed by Henry Chapman in his capacity
as plenary guardian and child of Alfred Chapman and by Katharine Chapman
Michalka and Karen Chapman in their capacity as children of Alfred Chapman.
6. The main thrust of the petition to reform the CRUT is to obtain an Order of Court
from the Orphans Court of Cumberland County to alter the provisions of the
CRUT by revoking the five (5%) percent annual payment limitation and
installing, in its stead, a power to invade the principal of the CRUT without
limitation to pay any and all "legitimate" expenses presented to the co-trustees by
Henry Chapman, the plenary guardian.
7. The five charitable remainder entities were not j oined as parties in the instant
proceeding which seeks to drastically reform the CRUT.
8. If the petition for reformation is granted, the expected consequences will be to
significantly diminish the financial expectations of the five charitable remainder
entities specified in the CRUT. Principal payments will have no cap, and, if the
CRUT becomes subject to the power to invade, alter or revoke for the beneficiary
use of a person other than a charitable organization, the Internal Revenue Service
will likely disqualify the trust as a charitable remainder unitrust, thus losing the
earlier charitable exemption for assets placed in trust, and causing the imposition
of additional estate tax, interest and penalties. US Treasury Regulations Sections
1.664-2(a)(4) and -3(a)(4); Private Letter Ruling 200340001.
9. The fair market value of the CRUT on December 31, 201 l , was $1,146,8 5 7.43
.The financial interests of the five charitable remainder entities make them
indispensable parties in the instant proceeding to reform the CRUT. It is
substantive law in Pennsylvania that the remainderman of any trust is a necessary
party in any proceeding which seeks to significantly change the interest of said
remainderman in the trust..
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10. One of the charitable remainder entities, Dickinson College, has recently entered
its appearance in the instant proceeding. Dickinson College is not a party to the
instant proceeding, so the effect of its entry of appearance is problematic at this
point in time.
11. In the instant proceeding, the Court has issued a Rule to Show Cause, returnable
May 13, 2011, why the five (5%) percent annual unitrust payment should not be
altered and revoked to permit unfettered invasion of principal of the CRUT.
12. Petitioner is by this petition requesting the Court to enter an Order (1) formally
joining the five charitable remainder entities as indispensable parties in the instant
proceeding and (2) staying the Return Date of the Rule to Show Cause for an
appropriate interval of time to allow the five charitable remainder entities an
opportunity to appear and file their responses or objections to the Petition and the
Rule to Show Cause issued in the instant proceeding.
Respectfully submitted,
Dated: April ~ ~ , 2011
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Jo McCrea, Co-Trustee
P ox 341
Newville, PA 17241
717.776.6656
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VERIFICATION
The facts set forth in the foregoing Petition are true and correct, to the best of my
knowledge, information and belief.
This Verification is made subject to the penalties of 18 Pa. C.S. §4904 relating to
unsworn falsification to authorities.
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Jo cCrea
CERTIFICATE OF SERVICE
I certify that I have served a true and correct copy of the foregoing Petition and
proposed Decree upon the following persons and in the manner specified after each
person's name:
Seth E. Mosebey, Esquire (hand delivery)
Martson Law Offices
10 East High Street
Carlisle, PA 17013
For co-trustee, M&T Bank
James D. Flower, Esquire (hand delivery)
Flower Law LLC
10 West High Street
Carlisle, PA 17013
For St. Johns Episcopal Church
Michael T. Foerster, Esquire first class mail, postage prepaid)
Office of Attorney General
Charitable Trusts & Organizations Section
14th Floor -Strawberry Square
Harrisburg, PA 17120
For Pennsylvania Attorney General
Jeffrey R. Boswell, Esquire first class mail, postage prepaid)
315 North Third Street
Harrisburg, PA 17101
For Henry Chapman, Karen Chapman & Katharine Chapman Michalka
Original Petitioners
Dana Scaduto, Esquire (hand delivery)
Dickinson College
P.O. Box 1773
Carlisle, PA 17013
For Dickinson College
Dated: Apnl , 2011
Jo cCrea