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HomeMy WebLinkAbout03-26-14 (2) N C� � � � � rn .�- � � c� � IN THE COURT OF COMMON PLEAS W z � � � � CUMBERLAND COUNTY � � � rn � rci � � t� ORPHANS' COURT DIVISION � � � � ;_�� � c„> 4 Q � ,� -*t e, c t„_, � c� � � N � O IN RE: ALMA H. ENGLE . � Late of the Township of Upper Allen . No. 21-2014-0045 �" W � Deceased : ANSWER AND NEW MATTER OF TRUSTEE TO PETITION TO COMPEL THE PAYMENT OF DECEDENT'S DEBTS AND ESTATE ADMINISTRATIVE EXPENSES FROM DECEDENT'S REVOCABLE MANAGEMENT TRUST AND NOW comes Wells Fargo Bank, N.A., Trustee of the Alma H. Engle Revocable Trust, by and through its counsel, McNees Wallace & Nurick LLC and in response to the Petition to Compel the Payment of Decedent's debts and Estate Administrative Expenses from Decedent's Revocable Management Trust ("Petition"), responds as follows: 1. Admitted upon information and belief. 2. Admitted upon information and belief, The Will of Alma H. Engle ("Will"), dated April 1, 2013, is in writing and speaks for itseif, It is believed that the Will was offered and admitted for probate. By way of further answer, as evidenced by the document attached as Exhibit B to the Petition, in January, 1989, Alma H. Engle (hereinafter "Decedent" or "Settior") established a revocable trust; per the terms of this trust, Decedent received income during her life and upon her death,trust assets are to be distributed to the beneficiaries named in her will, More specifically, Section II of the trust document states as follows: Disposition at Death: Upon my death my trustee shall pay the then remaining principal and any undistributed income to the beneficiaries in the amounts set forth in my Last Will and Testament, provided, however, no such funds shall be used to pay my bequests for a specific sum of money unless, and to the extent, that the assets of my estate shall be insufficient to fulfill any such bequest. In the event I die intestate, I direct my trustee to pay the entire corpus of this trust to my personal representative for the distribution as part of my estate, V" � Per the terms of this trust document (which was in effect at the time that Decedent executed her probated Will),there is no provision for the payment of expenses or debts of the Estate. It is noted that Decedent executed her Will nearly eight(8) months before her death; at that time and in the months thereafter, prior to her death,the terms of the Revocable Management Trust ("Trust") were capable of modification. To Trustee's knowledge, no effort was made by Decedent/Settlor to change the terms of the Trust to permit the payment of Estate debts and expenses. 3. Wells Fargo Bank, N.A., (hereinafter"Trustee") is Trustee of a Revocable Management Trust ("Trust"), said Trust agreement signed by Decedent on January 6, 1989;Trustee is without sufficient information or knowledge to form a belief as to the truth of the matter asserted and therefore the same is denied. 4. Denied. The fair market value of the Trust as of Decedent's date of death on December 26, 2013 was approximately$883,139.173. The fair market value of the Trust as of the date of this Answer is $895,001.62. 5. Denied as stated, The document establishing the Trust is in writing and speaks for itself. It is denied that it is a "poorly" written document. There is no evidence that Settlor was unhappy with or believed the Trust document to be "poorly" written. Indeed, upon information and belief, Petitioner's counsei was also counsel to Decedent and assisted Decedent with her estate planning, inciuding the drafting of the Will. To Trustee's knowledge, neither Decedent nor her/Petitioner's counsel sought a modification of the terms of the Trust. The Will failed to state or identify who the beneficiaries of the Trust are, or to direct payment of estate expenses or taxes from the Trust prior to distribution of the Trust corpus. The Will did not address or reference the Trust at all. Petitioner's counsel has admitted that he did not know of the existence of the Trust when he drafted Decedent's Will. 2 6, Denied in part and admitted in part.This averment is denied to extent that it paraphrases the Trust,which is a document that speaks for itself. It is admitted that the Trust directs distribution of the corpus upon Decedent's death to "the beneficiaries in the amounts set forth in [her] Last Will and Testament,"The Will failed to state or identify the beneficiaries of the Trust, or the amounts they should receive.The Will does name residuary beneficiaries, but does not indicate that the residuary beneficiaries named are the beneficiaries of the Trust. 7. Denied in part and admitted in part.This averment is denied to extent that it paraphrases the Trust, which is a document that speaks for itself. It is admitted that the Trust directs distribution of the corpus upon Decedent's death to "the beneficiaries in the amounts set forth in [her] Last Will and Testament." The Will failed to state the beneficiaries of the Trust, or the amounts they should receive.The Will does name residuary beneficiaries, but does not indicate that the residuary beneficiaries named are the beneficiaries of the Trust, By way of further answer, it is believed that proper notice of the Petition was not given to the Office of Attorney General under Pa.O.C,R, 5,5. 8. Trustee is without sufficient information or knowledge to form a belief as to the truth of the matter asserted and therefore the same is denied and strict proof is demanded. By way of further answer, the extent of the estate expenses listed in this paragraph were never communicated to Trustee in detail nor were amounts given prior to the filing of this petition, 20 Pa.C.S. § 7755 provides a procedure for making a claim against the Trust and Petitioner has not followed that procedure, Part of the procedure for claiming against an inter vivos trust includes a showing that estate assets have been applied first to creditor's claims and have been exhausted, Trustee has never objected to paying appropriate expenses from the Trust. 9, It is admitted that the letter attached to the Petition as Exhibit C was received by Trustee, The letter, which notes that the terms of the Trust directs the Trustee to distribute trust assets to the 3 beneficiaries of the Trust and not to the Estate, is in writing and speaks for itself. Essentially, in its letter of February 28, 2014, Executor of Decedent's Estate is asking for an at-risk distribution of Trust assets to a party not entitled to receive trust assets under the Trust document. Moreover, Petitioner does not explain why the requested distribution exceeds estimated costs by approximately$5,000. By way of further answer,the extent of the estate expenses listed in this paragraph were never communicated to Trustee in detail nor were amounts provided prior to the filing of this Petition. Petitioner simply states that there are expenses and demands payment from the Trust. 10. Denied as stated. Some trust assets were liquidated in an effort to prepare for an agreement to distribute trust assets, including approval by the Trustee and approval by the Office of Attorney General and/or a court order interpreting the trust agreement to permit and to direct a distribution of the nature being requested. Trustee has never refused to pay for appropriate expenses, Approval was not obtained in the timeframe demanded by the Petitioner and no agreement was reached for the distribution of trust assets to any party. It is believed that Petitioner has not obtained the consent of the Estate beneficiaries and/or the Office of Attorney General for such a distribution. Moreover,there is an issue as to who the proper Trust beneficiaries are, as the Will does not reference the Trust or identify the beneficiaries. 11. Denied as stated. Mr. Pond indicated that he did not have authority to issue or release such a check and advised Petitioner's representative of the same. It was specifically discussed that the Office of Attorney General would need to be notified and a "no objection" letter obtained, Approval was not obtained. At no time, did Mr. Pond give Petitioner a date certain for the issuance of a check. Upon information and belief, a no objection letter has not issued from the Office of Attorney General, 12. Admitted upon information and belief. 4 13. Denied. This allegation is denied as a conclusion of law. It is denied that Trustee has caused any loss to the Estate. It is denied that Trustee has any duty to the Estate;Trustee's duty to distribute Trust assets is to the beneficiaries of the Trust (who have yet to be identified), but not to the Estate. Distributions to parties who are not beneficiaries of the Trust would be at-risk, inappropriate distributions of Trust assets. It is denied that a fiduciary should be surcharged for declining to elect to capture a 5%discount for the payment of inheritance tax. See, In re Estate of Schu/theis, 747 A.2d 918, 927 (Pa. Super, 2000)(held: even when estate had sufficient liquidity to pay inheritance tax, no surcharge of executrix and no loss to the estate as there was no delinquency). By way of further answer, it is denied that surcharge against the trustee is proper in this instance. It is denied that surcharge is appropriate against a trustee who administers a trust which, by its admitted terms, does not provide for the requested distribution of trust assets to pay for settlor's estate debts or taxes. Executor has not given notice to the Office of Attorney General despite that fact that there are charitable beneficiaries of the Estate and of the Trust. See, Affidavit of Service filed by John S. May, Esquire (which provides notice of the Petition only to Wells Fargo). The proposed distribution requested in the Petition will diminish the distribution to charitable and other remainder beneficiaries. Moreover, it is inappropriate to surcharge a fiduciary where service is improper and incomplete,there is inadequate time to prepare for a hearing and there is no hearing on the facts, Trustee has attempted to resolve issues with Petitioner and proposed an orderly manner in which to proceed, consistent with the PEF Code. Petitioner did not even wait 24 hours for a response from Trustee before filing the instant Petition. 14. Denied. This is a conclusion of law and is denied as such. By way of further answer, it is inappropriate to surcharge a trustee for counsel fees incurred by an estate that is requesting an at-risk distribution of trust assets to a party(the Estate) who is not, by that party's own 5 _ _ _ __ _ _ _ _ admission, entitled to receive a trust distribution, There is no explanation of whether or not Petitioner pursued the consent and joinder of the beneficiaries; Petitioner does not indicate if any beneficiary or the Office of Attorney General consents to or objects to the relief requested. The record does not reflect that the estate and trust beneficiaries were given notice of the Petition and the relief requested therein. 15, Denied. Insofar as this is a conclusion of law, it is denied as such. Insofar as a response is necessary, Trustee never agreed to make a distribution to the Estate. While it is strongly urged that no surcharge is appropriate, it is averred that surcharge cannot be imposed without a hearing and there is no immediate or irreparable harm (that cannot be satisfied with the imposition of money damages)to warrant the granting of relief without a hearing where there is a dispute about the facts and the law. Trustee is unsure how Petitioner reached its calculations regarding tax owed in this admittedly insolvent estate. As Petitioner has cited an incorrect value for the Trust, it is likely that the tax calculation in the Petition is not accurate. New Matter 16. On January 6, 1989, Decedent/Settlor established the revocable Trust,the terms of which are attached to the Petition as Exhibit B, 17. Per the terms of the Trust, Decedent/Settlor received income during her life and upon her death, trust assets are to be distributed to the beneficiaries named in her will. 18. Section II of the trust document states as follows: Disposition at Death: Upon my death my trustee shall pay the then remaining principal and any undistributed income to he beneficiaries in the amounts set forth in my Last Will and Testament, provided, however, no such funds shall be used to pay my bequests for a specific sum of money unless, and to the extent,that the assets of my estate shall be insufficient to fulfill any such bequest. In the event I die intestate, I direct my trustee to pay the entire corpus of this trust to my personai representative for the distribution as part of my estate. 6 19. Per the terms of the Trust, there is no provision for the payment of expenses or debts of the Decedent/Settlor. 20. The Trust was in effect, and had been in effect for over twenty(20)years, when Decedent/Settlor executed her probated Will. 21, Decedent/Settlor, who was represented by counsel, executed her probated Wili nearly eight(8) months before her death. 22, At the time Decedent/Settlor executed her probated Will, the terms of the revocable Trust were capable of revision. 23. Decedent/Settlor made no request to modify the terms of the Trust to permit or direct the payment of Estate debts and expenses. 24, Counsel for Decedent/Settlor (now counsel for Petitioner) made no request to modify the terms of the Trust to permit or direct the payment of Estate debts and expenses. 25. Petitioner is seeking to compel an at-risk distribution of Trust assets to a party not entitled to receive trust assets under the Trust document. 26. Certain creditors of Decedent may file a claim against the Trust pursuant with 20 Pa.C,S.A. §7755(a) and (b), This section of the Probate Estate and Fiduciaries Code ("PEF Code") establishes the process for filing a claim and making a claim against an inter vivos trust. 27. Claims under 20 Pa,C.S.A. 7755(a) are limited to claims determined immediately before the Settlor's death. 28. As a matter of law, a fiduciary who fails to take advantage of a 5%discount for the early payment of inheritance tax is not subject to surcharge; there is no loss to the estate for failing to take advantage of a 5% discount. See, in re Estate of Schultheis, 747 A.2d 918, 927 (Pa. Super. 7 2000)(held: even when estate had sufficient liquidity to pay inheritance tax, no surcharge of executrix and no loss to the estate as there was no delinquency). 29. Petitioner has not obtained the consent of the Estate and/or Trust beneficiaries to the relief requested in the Petition. 30. Petitioner has not obtained the consent of the Office of Attorney General to the relief requested in its Petition. 31. Trustee's duty to distribute Trust assets is to the beneficiaries of the Trust but not to the Estate as an entity, nor to the Estate's counsel or fiduciary. Unfortunately, Decedent failed to state or identify beneficiaries of the Trust in her Will and her Will does not direct that estate expenses or taxes be paid from the Trust, despite the fact that she could have included such a provision. 32. Distributions to parties who are not beneficiaries of the Trust would be at-risk, inappropriate distributions of Trust assets. 33. Surcharge of a fiduciary for failing to make a distribution is not appropriate where the document under which the fiduciary serves does not authorize the distribution. 34. Notice of the Petition was not given to the Office of Attorney General; accordingly, the Petition was filed in violation of Pa,O.C.R, 5.5. 35. Petitioner served Trustee via electronic mail, but failed to comply with Pa.R.C.P. 205.4, concerning service by electronic transmission, There has been no agreement to serve papers via electronic mail, nor was there a pleading, prior to the filing of this Answer with New Matter that contained an electronic email address. 36. Service of the instant Petition is improper and incomplete. Trustee was improperly served via electronic mail, Service was not properiy made to the Office of Attorney General and it is believed that no service has been made to the beneficiaries of the Estate, The beneficiaries of 8 the Trust are currently undetermined due to Decedent's failure to name or identify them in her Will. WHEREFORE,Trustee asks that the relief sought in the Petition be denied. McNEES WALLACE & NURICK LLC March 'o , 2014 By: Kendra D. McGuire, Esquire Attorney I,D. No. 50919 kmcguire@mwn,com McNees Wallace & Nurick LLC 570 Lausch Lane, Suite 200 Lancaster, PA 17601 (717) 581-3734 Counsel for Trustee, Wells Fargo Bank, N.A. 9 - -_ __ _ _ VERIFICA7iON i, Laura K. Ritchie, Vice President of Weils Fargo Bank, N.A.,Trustee of the Alma H, Engle Revocable Management 7rust, being duly authorized to do so,verify that the facts set forth in the foregoing Answer and fVew Matter are true and correct to the best of my knowledge, ir►formation and belief. I understand that false statements herein are made subject to the penalties of 18 Pa. C.S. §4404, relating to unsworn falsification to authorities. WfLLS �ARGO BANK, N.A,,TRUSTEE �r � / r Date: � alD �!1/ By; �??�i-� �, i2�r� Laura K. Ritch9e Vice President CERTIFICATE OF SERVICE I hereby certify that I have served upon all persons listed below a true and correct copy of the foregoing document on this date via hand delivery to: John S. May, Esquire May, Metzger& Zimmerman, LLP 49 North Duke Street Lancaster, PA 17602 Via first class mail to: Heather Vance Rittman, Esquire Senior Deputy Attorney General 14`h Floor, Strawberry Square Harrisburg, PA 17120 McNEES WALLACE & NURICK LLC Dated: March 26, 2014 BY: endra D. McGuire, Esquire Attorney I.D. No. 50919 kmcguire@mwn.com McNees Wallace & Nurick LLC 570 Lausch Lane, Suite 200 Lancaster, PA 17601 (717) 581-3734 Counsel for Trustee, Welis Fargo Bank, N.A. _ _ _ _ IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION In re: : ALMA H. ENGLE : No. 21-2014-0045 Late of the Township of Upper Allen : Deceased : NOTICE TO PLEAD To: John S. May, Esquire May, Metzger& Zimmerman, LLP 49 North Duke Street Lancaster, PA 17602 You are hereby notified to file a written response to the enclosed New Matter contained in Answer and New Matter of Trustee to Petition to Compel the Payment of Decedent's Debts and Estate Administrative Expenses From Decedent's Revocable Management Trust within twenty (20) days from service hereof or a judgment may be entered against you. McNEES WALLACE &NURICK LLC Dated: March � , 2014 By: endra D. 1 cGuire, Esquire Attorney LD. No. 50919 kmcguire@mwn.com McNees Wallace &Nurick LLC 570 Lausch Lane, Suite 200 Lancaster, PA 17601 (717) 581-3734 Counsel for Trustee, Wells Fargo Bank,N.A.