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HomeMy WebLinkAbout09-27-89 IN THE ESTATE OF ROBERT M. MUMMA, DECEASED IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION NO. 21-86-398 BRIEF OF ROBERT M. MUMMA, II, IN SUPPORT OF PETITION TO REVOKE DISCLAIMER 1. Introduc tion Robert M. Mumma, II, ("Petitioner") is one of four adult surviving children of Robert M. Mumma, Deceased ("the Testator"). The Testator died April 12, 1986, leaving a Last Will and Testament dated May 19, 1982, together with a Codicil dated October 12, 1984 ("the Will"). The Testator was also survived by his wife, Barbara McK. Mumma. She, together with another adult surviving child, Lisa Mumma Morgan ("the Executrices/Trustees") is a personal representative of the estate of the Testator, as well as a trustee of the two testamentary trusts created by the Will. On January 6, 1987, Petitioner executed a document prepared for him by Arthur Klein, Esquire, a partner in the Philadelphia law firm of Morgan, Lewis & Bockius. This firm was then representing the Executrices/Trustees and providing professional services in the administration of the Testator's estate. The document was called "Disclaimer By Robert M. Mumma, II". It recited the provisions of the trusts created in Article SEVENTH and Article EIGHTH of the Will. Those provisions were similar, directing that principal be held in trust for the benefit of the Testator's wife during her lifetime, and, upon her death, be paid over to the Testator's children, share and share alike, per stirpes and not per capita. t" ,- ...'j ;J". i The particular language of the document signed by Petitioner was that he ...for himself, his successors and assigns. intending to be legally bound, does hereby, pursuant to Section 6103 of the Pennsylvania Probate, Estates and Fiduciary Code, absolutely, irrevocably and unqualifiedly renounce and disclaim all right, title and interest in and to the principal of the trust under Article SEVENTH of the Will and principal of the trust under Article EIGHTH of the Will and refuses to accept any benefits whatever under said Articles of the Will. The so-called "Disclaimer" was filed in the Office of the Register of Wills on January 12, 1987. On June 20, 1989, Petitioner filed his Petition to Revoke Disclaimer. It was framed in the form of a rule to show cause and made returnable August 28, 1989. Answers to the Rule have been filed by the Executrices/Trustees, by Robert M. Frey, Esquire, guardian ad litem of the minor children of Petitioner, and by Linda Roth, an adult surviving child of the Testator. At the hearing on August 28, 1989, no testimony was received, and the Court directed briefs to be filed on the issue of whether Petitioner may revoke his disclaimer. II. Argument A. The Court should permit Petitioner to revoke his disclaimer in order to give effect to the intention expressed in the Will of the Testator. The Will of the Testator provided for a gift-over to children of any child who predeceased him. The relevant language of Article EIGHTH is as follows: In the event any of my said children shall predecease me leaving issue {included adopted children} surviving, then and in that event their share above provided shall pass to such issue. The gift-over is designated to be made per stirpes and not per capita. L C'J' .;.,;. "') c Section 6205 of the PEF Code spells out the effect of Petitioner's disclaimer. It reads, in relevant part, as follows: (a) In general - A disclaimer relates back for all purposes to the date of the death of the decedent or the effective date of the inter vivos transfer or third-party beneficiary contract as the case may be. The disclaimer shall be binding upon the disclaimant and all persons claiming through or under him. (b) Rights of other parties - Unless a testator or donor has provided for another disposition, the disclaimer shall, for purposes of determining ~ rights of other parties, be equivalent to ~ disclaimant's having died before the decedent i.!!. the ~ of !!. devolution Ex. will or intestacy or before the effective date of an inter vivos transfer or third-party beneficiary contract, except that, when applying section 2104(1) (relating to rules of succession) or analogous provisions of a governing instrument, the fact that the disclaimant actually survived shall be recognized in determining whether other parties take equally or by representation, and except that if, as a result of a disclaimer, property passes to a fund in which the disclaimant has an interest or power which he has not disclaimed, the disclaimant shall retain his interest or power in the fund as augmented by the disclaimed property. (emphasis added) Because the effect of a valid disclaimer is to treat the disclaimant as having predeceased the decedent, if Petitioner is not permitted to revoke his disclaimer, Petitioner's two living children will not inherit Petitioner's share of the remaining principal in the two testamentary trusts. One of these children was born in 1987, after the date of death of the Testator, and, if Petitioner is considered to have died before the Testator (whose date of death was April 12, 1986), only the child born in 1982 will receive a share of the principal remaining in the trusts. ! fortiori, if Petitioner has any more children, either natural or adopted, they will not receive a share of the trust principal. This is contrary to the intention expressed by the Testator in the Will. It is clear that the Testator intended the gift-over of principal to be shared by all grandchildren who actually survived their parent. The Testator did .L. ;-0 ...,..} ~, I not intend that one living grandchild (and all after-born grandchildren) would not receive a share of the trust principal because of a determination (required by the law of disclaimers) that the Petitioner died prior to April 12, 1986, and, therefore, was survived only by his child who was born in 1982. Again, for purposes of the disclaimer, Petitioner's second child was born a year and a half after his decease. Our Courts have said that "A Court's responsibility is not to protect the family's interest but to give effect to the testator's intention." Estate of Stewart, 325 Pa. Super. 545, 473 A.2d 572, 575 (1984). Clearly, Testator wished to provide for all of Petitioner's living children in the event a gift-over was necessary. To carry out the wishes of the Testator, this Court should permit Petitioner to revoke the disclaimer dated January 6, 1987. Only by this action can an unfair result, a result certainly not intended by the Testator, be avoided. The Testator's clear intention was to benefit all of his children and grandchildren. It is a reasonable assumption that all of the Petitioner's children are the natural objects of his bounty. Equally reasonable is the assumption that all of the Petitioner's children were the objects of the Testator's bounty under the provisions of the two trusts. The way to achieve the intended result is to permit the Petitioner to revoke the disclaimer. This will allow the Petitioner to receive his one-quarter share of the two testamentary trusts and, thereafter, have the ability to treat all of his children equally in his own estate plan. Effectuation of the Testator's intent is a sufficient reason for l~ permitting revocation of a disclaimer. Zepps Estate, 4 Fiduc. Rep. 281 ^ (Montgom. Co. 1984). The instant case presents an even stronger case for 66 allowing this Petitioner to revoke his disclaimer. Failure to allow the revocation of disclaimer can work a very real hardship on one--or more--of the Petitioner's children, who will be left with nothing from their grandfather's estate because of the effective date of the disclaimer. Allowing revocation, on the other hand, will permit all of the Petitioner's children to receive an equal share of their grandfather's estate. This was the Testator's intention as spelled out in the Will. The Will should be given full force and effect, and its provisions should be honored by the Court. Revocation of the disclaimer should be allowed to avoid wreaking havoc with the straightforward intention and plain meaning of the Will and to allow Testator's bounty to be distributed as he intended. B. The purported disclaimer is invalid and ineffective because it does not satisfy the statutory requirement to "describe the interest disclaimed". The Register of Wills proceedings docket show that the Federal estate tax return in this estate was filed July 13, 1987, and that the Pennsylvania inheritance tax return was filed July 20, 1987. The latter return lists a gross estate in excess of Fifteen (15) Million Dollars. The vast bulk of the Testator's estate would be held in the two trusts created by the Will, the principal of which was purportedly disclaimed by the Petitioner in the document dated January 6, 1987, and filed January 12, 1987. Can there be any doubt that the Petitioner was not fully knowledgeable of the value of the two trusts he purportedly disclaimed in January of 1987, if the supposedly reliable information concerning value which he had at that time was a ..fbi statement from Attorney Arthur Klein that the estate would be worth only Nine (9) Million Dollars? Even comparing Attorney Klein's statement of value with the inheritance tax return valuation demonstrates that Petitioner did not make his disclaimer with a full knowledge of the facts. And, furthermore, if the estate's value will be even higher, as averred by Petitioner, in the range of Forty (40) Million to Seventy (70) Million Dollars (which increased value is admitted in part in the answer to petition filed by the Executrices/Trustees, Paragraph 10), it is even more apparent that Petitioner lacked full knowledge of the facts and could not satisfy the requirements of the disclaimer statute to (1) describe the interest disclaimed; and, (2) declare the disclaimer and extent thereof. It almost goes without saying that there is a great difference between disclaiming a one-fourth (1/4) interest in Nine (9) Million Dollars and disclaiming a one-fourth (1/4) interest in Fifteen (15) Million or Forty-Three (43) Million or Seventy (70) Million Dollars. In the first instance, Petitioner would be disclaiming Two and One-Quarter (2-1/4) Million Dollars, and his older minor child would have the distinct possibility of inheriting One and One-Eighth (1-1/8) Million Dollars on his eighteenth birthday. If the value of the estate falls in the high end of the range, the minor child's share could exceed Eight (8) Million Dollars. It is reasonable to assume that Petitioner, as a concerned father, would have refused to sign the disclaimer if he had known that the Testator's estate was worth far more than Nine (9) Million Dollars. Petitioner would have wished to exert more control and guidance over his childrens' separate estates at their moment of majority. 6') - '" ...~, ,-..,.;, In the analogous situation of an election to take against a Will, the prevailing view has been that an election to take against a Will may be revoked or set aside where it was made through ignorance or mistake as to a material fact affecting the rights of the electing party. Re: Woodburn Estate, 138 Pa. 606, 21 A. 16 (1891). A widow's election can be withdrawn, even absent fraud, if not made with full knowledge of all essential facts. Re: McCutcheon's Estate, 283 Pa. 157, 125 A. 843 (1925). This was the reasoning employed by the Court in Day's Estate, 22 Fiduc. Rep. 662 (Del. Co. 1971), one of the few reported cases dealing with question of revoking a disclaimer or renunciation. Revocation of a disclaimer and renunciation was allowed, based in part upon the following finding of fact: 1. The disclaiming parties did not know the extent of their interest in the decedent's estate or the value of the decedent's estate at the time the instrument was executed. Day's Estate, page 663. It is reasonable to suggest that the legislature intended that a disclaimant should know not only the nature, but also the value, of the interest to be disclaimed. The language in the second statutory requirement which mandates that the disclaimant declare "the extent" of his disclaimer demonstrates that some reasonable approximation of value be stated in the disclaimer document. This requirement acts to insure that the disclaimant knows what he is doing, and that he knows what value of money or property he is giving up when he signs the disclaimer. 6/~ ~- C. its face Probate, The purported disclaimer is invalid because it was made under the wrong Estate. and Fiduciary Code. and ineffective on section of the Two different parts of the Probate, Estates and Fiduciaries Code ("the PEF Code") deal with the subject of releases. Section 6103. referred to in the Petitioner's disclaimer. is entitled Release ~ disclaimer of power or interests. The relevant part of that section reads as follows: (a) Powers and interest releasable.---Any power of appointment. or power of consumption, whether general or special. other than a power in trust which is imperative, and any interest in, to, or over real or personal property held or owned outright. or in trust. or in any other manner which is reserved or given to any person by deed. will or otherwise....may be released or disclaimed, either with or without consideration by written instrument signed by the person possessing the power or the interest and delivered as hereinafter provided.... This section shall not apply to ~ interest that may be disclaimed under Chapter 62 (relating to disclaimers.) (emphasis added) What is fairly clear from the language of this section is that it is applicable to present interests, as opposed to future interests. It is equally clear that Articles SEVENTH and EIGHTH of the Will created, at least in so far as the Petitioner was concerned, future interests, that is, interests to come into the Petitioner's possession or enjoyment at a future time, after his mother's death. The other part of the PEF Code which is concerned with disclaimers is Chapter 62 of Title 20. added by Act 1976. July 9, P.L. 562. No. 136, sections 2 and 3. Chapter 62 contains detailed sections stating who may disclaim. what a disclaimer must contain, what interests are subject to disclaimer, how 8 disclaimer is filed, delivered and recorded. the effect of a disclaimer, and what may constitute a bar to disclaimer. Section 6201 gives the right to disclaim to any "person to whom an interest in property would have devolved by whatever means. including a beneficiary under a will..." Section 6203. Interests subject to disclaimer specifies the following: IU ~~ ., A disclaimer in whole or in part may be made of any present or future interest, vested or contingent, including a possible future right to take as an appointee under an unexercised power of appointment or under a discretionary power to distribute income or principal. ' Since the Petitioner has no present interest in the principal of either of the trusts created by the Will, he had no interest which he was capable of disclaiming under Section 6103, and he should be permitted to revoke said disclaimer. This conclusion is supported by the fact that Section 6103 was amended in 1976 (at the time Chapter 62 was enacted) to add as its last sentence: "This section shall not apply to an interest that may be disclaimed under Chapter 62 (relating to disclaimers)." Since Petitioner has only a future interest in the trusts, and since Chapter 62 specifically applies to future interests, to make a valid and effective disclaimer of such interest, the petitioner would have to make the disclaimer pursuant to the provisions of Chapter 62. The Petitioner did not do this in the document dated January 6, 1987, and filed January 12, 1987. Therefore, the Court should permit Petitioner to revoke the disclaimer, because it was invalid and ineffective in the first instance. III. Conclusion For all of the above-stated reasons, this Court should grant the Petition to Revoke Disclaimer, as filed by the Petitioner, Rober M. Mumma, II. Respectfully 'tted William C. Costopoulos, Esquire KOLLAS, COSTOPOULOS, FOSTER & FIELDS 831 Market Street P.O. Box 222 Lemoyne, PA 17043 Telephone: (717) 761-2121 ATTORNEY FOR PETITIONER L,' C .,...; ....~,,,;) ,., gg ~ ~~ 00- r""\c!' ~ c~:; -0 ~'~,~_ N r; __ -.I iii... 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