HomeMy WebLinkAbout05-10-91
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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 GUARDrAN AD LITEM IN OPPOSITION
TO PETITION OF ROBERT M. MUMMA. II
FACTUAL BACKGROUND
Robert M. Mumma (the Testator) died on April 12, 1986, leaving a Last Will and Testament
with a Codicil, both of which have been duly probated in the Office of the Register of Wills in and
for Cumberland County to the above tenn and number. Robert M. Mumma IT (the Petitioner) is
one of fonr adult surviving children of the Testator and is named as one of the remaindennen of
trusts created in Testator's will.
On January 6, 1987. Petitioner executed a document entitled "Disclaimer by Robert M.
Mumma, IT". The disclaimer recited the provisions of trusts created under the will and concluded
with Petitioner's disclaimer of "all right, title and interest in and to the principal of the trust under
Article SEVENTH of the Will and the principal of the trust under Article EIGHTH of the Will. . ."
This disclaimer was filed in the Office of the Register of Wills on January 12, 1987.
On June 20, 1989, two and one-half years later, Petitioner filed a petition to revoke this
disclaimer. Answers were filed in opposition to the petition by the Executricesffrustees, Robert
M. Frey, guardian ad litem of the minor children of Petitioner, and by Linda Roth, a sister of
Petitioner. An order fmding the disclaimer valid and granting Petitioner's request to revoke his
disclaimer was entered by the Orphans' Court.
The Court made no finding of fraud, undue influence, or mistake. The decision was based
on the finding "that testator's testamentary intentions and desires must be honored and, in turn,
testator's grandchildren be treated equally." Orphan's Court D<>.-cision, page 7. To this decision,
the guardian ad litem has filed exceptions.
Page 1
734
LEGAL BACKGROUND
The statute in question is found at Chapter 62 of the Probate, Estates and Fiduciaries Code,
20 Pa.C.S.A. ~~ 6201 et seq. The provisions in question are as follows:
~ 6201. Right to disclaim
A person to whom an interest in property would have devolved by whatever
means, including a beneficiary under a will, an appointee under the exercise of a power of
appointment, a person entitled to take by intestacy, a donee of an inter vivos transfer, a
donee under a third-party beneficiary contract (including beneficiaries of life insurance and
annuity policies and pension, profit-sharing and other employee benefit plans), and a
person entitled to a disclaimed interest, may disclaim it in whole or in part by a written
disclaimer which shall:
(1) describe the interest disclaimed;
(2) declare the disclaimer and extent thereof; and
(3) be signed by the disclaimant
The right to disclaim shall exist notwithstanding any limitation on the interest in the namre
of a spendthrift provision or similar restriction.
~ 6205. Effect of a disclaimer
(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 the right of other
parties, be equivalent to the disclaimant's having died before the decedent in the case of a
devolution by 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.
Page 2
735
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ARGUMENT
I. The Decision of the Orphans' Court is in conflict with Sections
6201 et seq. of the Probate, Estates and Fiduciaries Code and
nullifies the legislative intent .
The crucial area for examination in reviewing whether a disclaimer can be revoked is the
statutory language rather than the language of the will. This examination starts with a
determination of whether it satisfies the provisions of Sections 6201 et seq. of the Probate, Estates
and Fiduciaries Code. The Orphans' Court correctly addressed this question as the first issue to
address and correctly found that the disclaimer met all the requirements. Orphan's Court decision,
pages 2 - 3. The Court erred, however, in centering its focus thereafter on the effect of the
disclaimer on the Testator's intent rather than on whether a disclaimer is authorized by statute.
The Court noted in its decision, "One of the basic considerations in this entire matter is
what effect the disclaimer has on the testator's desires and intentions. The basic premise around
which all of trust and estates law revolves is that absent certain extenuating circumstances, the
testator's desires and intentions must be fulfilled." Orphan's Court decision, page 3. The Court,
however, fails to note that one of the foremost examples of "extenuating circumstances" is
statutory provisions to the contrary. As the Superior Court noted in a decision affirming the
decision of Judge Hess in Bloom v. Selfon.7 Fiduc. Rep. 2d 25,28 (1986),
At this point, it is useful to recall certain general principles of wills
construction. First, the primary goal of the court is to effectuate the intent of the
testatrix. The intent of the testatrix is of central importance and such intent may be
denied only where it is unconstitutional, unlawful or against public policy. J.n....m
Estate of Janney. 498 Pa. 398, 446 A.2d 1265 (1982). Except where a
statute dictates a contrary result, the court must respect a testatrix's wishes
even when they conflict with the best interest of her own family. See Estate of
Stewart. Pa. Super. 545,473 A.2d 572, aff d 506 Pa. 336,485 A.2d 391 (1984).
Bloom v. Selfon. 366 Pa.Superior Ct. 283, 288, 531 A.2d 12 (l987),aff d 520 Pa. 519, 555
A.2d 75 (emphasis added). Clearly, where, as in this case, the legislature has expressly and
directly entered the field and provided, through the recognition of the existence of disclaimers, a
means by which legatees may expressly alter the testamentary intent as expressed in the will, the
court must focus on the statute. If its effect is in conflict with the testamentary language, that
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736
testamentary language must be ignored as being unlawful and against public policy. Such a
conclusion is dictated by the Superior Court's statement of the law, by the law of statutory
construction, and by the established practice of will construction.
A. The language of the Probate, Estates and Fiduciaries Code
states that a disclaimer is binding
The Code makes no provision for the revocation of a disclaimer. To the contrary, it
stresses the binding nature of disclaimers. The obvious conclusion is that disclaimers are
irrevocable. Section 6205 states, "The disclaimer shall be binding upon the disclaimant and all
persons claiming through or under him." 20 Pa.C.S.A. ~6205(a) (emphasis added). Such
wording leaves no room for doubt. "Binding" as used in a statute means "obligatory", Johnson v.
District Attv. for the Northern Dis!.. 172 N.E.2d 703, 705 (Mass.); "true and conclusive",
Meunier's Case. 66 N.E.2d 198, 200 (Mass.), Acme Enl:ineerin~ Co. v. Jones. 83 N.E.2d 202,
207 (Ohio). Where, as in this case, the language is clear, the court may not disregard it. !lL.ri;
Fox's Estate. 494 Pa. 584,431 A.2d 1008 (1981); Shestack v. General Braddock Area School
llish, 63 Pa. Commonwealth Ct. 204, 437 A,2d 1059 (1981); Hyser v. Alle~henv County. 61
Pa. Commonwealth Ct. 169, 434 A,2d 1038 (1981) The Orphans' Court decision completely
ignores the statute by allowing the disclaimer to be revoked, thereby making voidable what was by
statute binding.
B. The Legislative intent can only be furthered by holding
disclaimers irrevocable
The express purpose of section 6201 et seq. and the predecessors thereof is to "obtain and
preserve tax advantages accruing from a change in the federal tax laws by the Revenue Act of
1942." See 20 Pa. C.S.A, ~6201, Official Comment--1976. The comment goes on to note that "a
disclaimer can never be effective for tax purposes if it is ineffective under State property law. One
purpose of Chapter 62 is to liberalize the property law requirements for disclaimer so that legitimate
attempts to avoid taxes on unwanted gifts will not be frnstrated by property law provisions that are
stricter than those required for tax purposes," I d. That the legislature had a specific intent to allow
persons to maximize tax benefits is further emphasized at section 6206(a) of the statute. The
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737
Pennsylvania legislature specifically broke from the uniform act which required that disclaimers be
executed within six months of vesting. The official comment states, ''This six-month limitation
greatly reduces its usefulness because it will invalidate many disclaimers that would have been
good at common law and would have been effective for federal estate tax purposes." 20
Pa.C.S.A. ~ 6206, Official Comment--1976. The decision of the Orphans' Court in the case at bar
directly undercuts the legislative purpose of promoting and preserving tax advantages created under
the Internal Revenue Code by making the requirements for compliance much stricter if not
impossible. A review of the Internal Revenue Code makes this point obvious.
Generally, a transfer of property by gift is taxable to the donor under Chapter 12 of the
Internal Revenue Code, 26 U.S.C.A. ~250l et seq. An exception is made in the case of a
"qualified disclaimer" of an interest. 26 U.S.C.A. ~ 2518. A disclaimed interest is treated as
never having been received by the disclaimant and is, thus, an effective means by which a person
can transfer large sums by gift without incurring gift tax liability.
There can be no doubt of the tax benefits created by the Internal Revenue Code and the
Pennsylvania Probate, Estates and Fiduciaries Code. Using Petitioner's estimates of the value of
his father's estate, Petitioner would have been entitled to inherit between $10 and $20 million.
Without the availability of the disclaimer rules, the only way for Petitioner to transfer this property
to his children tax free would be through annual installments of $10,000.00 to each of his children.
Even ignoring earnings on the corpus, it would take in excess of 300 years for Petitioner to
transfer this property. If the property were not transferred by Petitioner, but remained in his
ownership until his death, the state inheritance tax and federal estate tax burden would be
enormous. A six percent inheritance tax on $10 million would require payment of $600,000.00.
The Federal Estate tax on a taxable estate of $10 million at current rates would be $4,583,000.00.
Given the fact that the Petitioner is listed as equal shareholder with the Testator in a number of the
assets, it is likely that Petitioner's taxable estate would greatly exceed $10 million.
To qualify for these tax benefits, a beneficiary must make a "qualified disclaimer." Section
25l8(b) states, "the term 'qualified disclaimer' means an irrevocable and unqualified refusal by a
person to accept an interest in property. . . ." The effect of the Orphans' Court decision in the case
at bar is to greatly undermine, if not totally eliminate, the ability to disclaim testamentary bequests
in Pennsylvania when the property is not transferred in the year disclaimed. On its face,
Page 5
738
Petitioner's disclaimer seemed to satisfy the Internal Revenue Code requirement that it be an
"irrevocable and unqualified refusal." In fact, the disclaimer expressly stated that the Petitioner
did thereby "absolutely, irrevocably and unqualifiedly renounce and disclaim all right, title and
interest. . . ." Nevertheless, despite the absolute terms of the written disclaimer stating that the
disclaimer was irrevocable, the Orphans' Court ruled that the disclaimer was revocable based
solely on the "finding that Testator's testamentary intentions and desires must be honored. . . ."
Were this decision to be applied throughout the Commonwealth, any testamentary bequest could
not be irrevocably disclaimed by the named beneficiary because it would, by its terms, alter the
testamentary intentions and, according to the Court's reasoning, would benefit living issue of the
disclaimant to the exclusion of unborn issue. The disclaimer could be revocable at the will of the
disclaimant at any time before it was received, thereby not satisfying the Internal Revenue Code.
This result would effectively nullify the clear purpose of the Pennsylvania legislature in
authorizing such disclaimers and setting the requirements for their enforcement. The ruling
violates several rules of statutory construction. It is a cannon of statutory construction that a
statute shall be construed to give effect to the intention of the statute. I Pa.C.S.A. ~192J. As
stated above, the legislature clearly exhibited an intent to allow disclaimers and to allow
disclaimants full opportunity to take advantage of tax savings available. As discussed above, the
effect of the Orphans' Court ruling is to make all Pennsylvania disclaimers revocable. Therefore,
no one in Pennsylvania could take advantage of the intended tax benefits and the clear legislative
intent has been frustrated.
A statute is not to be construed to lead to an absurd result. I Pa.C.S.A. ~1922(1). By
interpreting the statute in such a way that what is stated to be "binding" is in fact revocable at will,
the Court allows an absurd result. It is an equally absurd construction to hold that a statute which
expressly alters the intent of a testator should be voidable in those instances where its effect is to
alter the intent of the testator. Obviously, such a construction makes the statute completely
ineffective and wholly useless. The plain meaning of the statute is ignored to such a severe extent
that the result is absurd.
Finally, a statute IS to be construed so that it is to be effective and certain. I
Pa.C.S.A.~ 1922(2). By making a disclaimer revocable at the will of the disclaimant, the statute is
made ineffective and uncertain in effect. As was stated by Judge Reilly. President Judge for
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739
Fayette County, disclaimers are legal, binding obligations to be revoked only with an affirmative
showing of fraud, accident, mistake or incompetency on the part of the disclaimant. "If it were
otherwise, no deed, mortgage or other contract, regardless of the solemnity inherent thereto, could
ever have the finality the law so wisely attaches to the written bargains of knowledgeable persons."
Estate of Mike Horvath. Decea~ed. 27 Fayette LJ. 106 (1964). The disclaimer in that case was
made prior to the enactment of the disclaimer statute in this case. The need for legal finality and
certainty, however, is equally essential and controlling in both cases.
C. Court decisions indicate that the statute should be considered a
mandate of law, not a rule of construction
The Chapter of the Code on disclaimers need not be analyzed in a vacuum. While the
reasoning of the Orphans' Court might lead one to the conclusion that no statute may be construed
to alter the intent of a testator, such a conclusion is incorrect. Several other laws codified in the
Probate, Estates and Fiduciaries Code expressly abrogate the testamentary intent An examination
of these statutes leads one to conclude, as stated above, that, where the testamentary intent is in
conflict with a statute on the matter, the statutory language controls and the testamentary language
must be ignored as unlawful or against public policy. The following are given as illustrative
examples:
Rule Against Perpetuities. The common law rule is codified in the Probate Code at
section 6104. Where a will creates an interest which violates the rule, the invalid interests are void.
This has been held to be not a rule of construction but a "positive mandate of law" to be followed
without regard to testamentary intent. In re Schmick's Estate. 35 Berks 131 (1943).
Modification by divorce. Section 6111.1 voids testamentary provisions in favor of a
spouse if, subsequent to the making of the will, the testator and spouse are divorced. See, Bloom
v. Selfon. supra.
Spousal election. The current law allowing a spouse to elect against the will of a
decedent and the prior laws so allowing directly alter the testamentary intent stated in the will. The
purpose of these laws was to restrict the ability of a testator to exclude a surviving spouse. See In
re Zeil!:ler's Estate. 381 Pa. 436, 113 A.2d 271 (1955); Seltzer's Estate. 189 Pa. 574, 42 A. 289
(1899). The similarity between laws providing for disclaimers and laws providing for spousal
Page 7
740
elections was recognized in Matter of Estate of BrewinGton, 313 NW2d 182, 185-186 (1981):
"The statutory right to disclaim a legacy, like the statutory right of a surviving spouse to elect to
take an intestate's share, is in derogation of the common law right of every testator to make a free
disposition of his worldly goods."
Family Compromises. Section 3323 provides for the compromise and settlement of
any disputes regarding estates through the entry of agreements of compromise. This statute was
objected to where its effect was to alter the testamentary intent in Hay's Estate. 9 Fiduc. 2d 141
(1988). The objecting heirs argued, "We as well as all Americans have been brought up to believe
that a clearly written will is sacred and that it cannot be 'rewritten' for the convenience of either the
majority or minority of the beneficiaries named therein." Id., at 145. This argument was rejected
by the court: "Sometimes good reasons exist for disregarding testamentary directions." Id., at
147, quoting John Marshall Gest, "Drawing Wills and the Settlement of Estates in Pennsylvania"
at page 66 (1909).
For the same reason that these statutes supersede testamentary intent, so too should the
statute authorizing disclaimers supersede a contrary testamentary intent.
II. The Orphans' Court literal construction of the term "predecease"
is not in keeping with construction of the will or statute.
The Orphans' Court erred in imposing strict meaning to the term "predecease" in the will
and thereby destroying the broader scheme set forth in the will. The Court ruled that "the effect of
the disclaimer is that Petitioner's children will not be treated equally, as the Testator intended,
because only those ehildren alive prior to the Testator's date of death will take under the will."
Orphan's Court decision, page 4.
This interpretation takes a literal reading of "predecease" stated in the statute and then
applies it to the language in the will. The literal reading is in error. Section 6205(b) states that the
effect of a disclaimer is to be "equivalent" to the disclaimant having predeceased the testator "for
purposes of determining the rights of other parties." The literal interpretation applies the concept of
"predecease" not only to the rights of other parties but also to the existence of other parties. The
interpretation loses sight of the purpose of the disclaimer as explained herein: to effectuate
transfers of property to heirs with a minimum of tax impact. As was noted by the Supreme Court
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741
of Kansas, "A disclaimer is a renunciation of a property right, not a change of status or
relationship. It is the surrender of this right which relates back. The fiction of predeceasing comes
into play for one purpose only, that of indicating the disposition and descent of the interest
disclaimed." Matter of Estate of Estes, 718 P.2d 298 (Kan. 19861.
The decision of the Orphans' Court in this matter extends the effect of the disclaimer
beyond this fiction. The Orphans' Court should have looked to the broad scheme of the will and
the stated intent of the statute. If the Petitioner is deemed to have predeceased the Testator, the
right to property descends to Petitioner's children. Thus, the Petitioner is deemed to have
predeceased the Testator for purposes of descent of the interest as stated in~. No requirement
exists in the will or statute that the Petitioner be deemed to have predeceased the Testator for
purpose of determining the membership of the class of surviving issue. All surviving issue of the
Petitioner would equally benefit and no harm would be done to the Testator's intent.
The interpretation also seems to conflict with Judge Hess's interpretation of "predeceasing"
in Bloom v. Selfon. supra, at 28: "Common sense, in part, impels us to the conclusion that the
phrase 'in the event my spouse predeceases me' is less a pre-condition and more a provision to
address the situation where the primary beneficiary could or would not inherit." This decision has
been affirmed by the Supreme Court which said:
The clear intent to be discerned from the present will is that the husband's
uncle, Selfon, was given precedence over testatrix's brother and sisters, who, in
fact, were not intended to receive anything under testatrix's will. Nevertheless,
appellants argue that the bequest to Selfon was made absolutely conditional upon
the death of testatrix's husband, in that testatrix stated in paragraph IV of the will
that the estate should pass to Selfon "[i]f my said husband predeceases me." We
believe this language does not evidence an intent that Selfon should be denied
receipt of the bounty where the former husband is still living, where, due to
divorce, the latter is disqualified from taking under the will. The effect of the
language in question was analyzed correctly in the decision below, wherein the
Superior Court stated:
These words, however, may also be viewed as part of a broader scheme, i.e., a
method by which the testatrix describes her order of preference regarding who
should enjoy her estate. It is overwhelmingly likely that the only reason for the
predecease clause was to provide a fallback beneficiary in case the husband was
1 Kansas statute K.S.A. 59-2293, although not identical to Pennsylvania, is similar:
(a) Unless the decedent or donee of the power has otherwise provided, the property, interest or power
disclaimed as provided in K.SA 59-2291 and amendments thereto shall descend or be distributed as if the
disclaimant had predeceased the decedent.... In evel) case, the the disclaimer shali relate back for all
purposes to the date of death of the decedent or the donee. as the case may be, except that. in the case of a
beneficiary under the terms of an inter vivos trust, the disclaimer shall relate back to the dale of the n-ansfer.
Page 9
742
no longer available to take under the will. Once the husband is barred by
divorce from taking the gift, the time of his death no longer has any apparent
significance. Therefore, as the trial judge noted in his opinion, "[c]ommon
sense, in part, impels us to the conclusion that [the predecease clause] . . . is
less a precondition and more a provision to address the situation where the
primary beneficiary could or would not [take under the will] . . ."
366 Pa.Super. at 289,531 A.2d at 15.
Construction of the predecease clause as transitional language in the will's
recitation of fallback beneficiaries, rather than as language making the gift
conditional, is indeed compelled by a common sense understanding of the
unmistakable testamentary scheme of the will. It would have been highly illogical
for testatrix to have made disposition of her estate dependent upon the death of a
former spouse who is no longer a qualified beneficiary. We fmd no indication in
the will that use of the phrase, "[i]f my said husband predeceases me," was
intended to mean anything other than, "if my husband is no longer able to take as a
beneficiary." To conclude otherwise would be to place undue technical emphasis
upon testatrix's use of the word "predeceases," with the result that testamentary
scheme would be defeated.
520 Pa. at 524-525, 555 A.2d at 77-78.
Although the statutory language is different in this case, the same reasoning should apply to
interpretation of the predecease clause in the Testator's will. Common sense leads one to conclude
that the statute speaks in terms of "predeceasing" because wills commonly speak in those terms.
Therefore, to avoid the confusion over language which resulted in the litigation in Bloom, the
statute used the term "predecease" rather than "fail to qualify." The Orphans' Courts' technical
interpretation of "predecease" extends the fiction beyond its obvious purpose and leads to an
absurd result. As stated above, such a conclusion violates the rules of statutory construction. 1
Pa.C.S.A. ~1922(1).
III. The Orphans' Court decision is in conflict with related areas of
law in Pennsylvania.
While it is correct that the law of Pelmsylvania regarding the revocation of valid disclaimers
provides little guidance, there is ample guidance available in related areas of law to resolve the
question. As noted by Justice Papadakos in his dissent recently in Bilfgins v. Shore. 523 Pa.148,
565 A.2d 737 (1989), the law regarding third-party beneficiary contracts, gifts, trusts, powers,
and agency are all intertwined, and courts have not always been in agreement as to which law
should apply. Id. at 745. Justice Papadakos' dissent and Justice Flaherty's opinion announcing
Page 10
743
the judgment of the coon both attempted to reach a decision which was consistent with related
areas of law. (See, for instance Justice Flaherty's opinion at 741 noting that the decision is
consistent with concept of a gift.) By the same token, the law regarding disclaimers should be
construed in light of related Pennsylvania doctrines, most notably inter vivos gifts and third-party
beneficiary contracts. The Orphans' Coon decision in the case at bar, reaching a conclusion in
conflict with these related areas of law, was an error of law and should have been decided in a
manner to reach consistency.
A. The decision is in conflict with the law of inter vivos gifts.
In analyzing the issue of the enforceability of a disclaimer, an obvious parallel can be found
in the Pennsylvania cases dealing with the enforceability of an inter vivos gift. The fact that a
disclaimer is a form of gift is evident from Interoal Revenue Code treatment of them as gifts subject
to gift tax, absent the meeting of certain requirements. Internal Revenue Code ~250l et seq.
It is a well established rule that for a gift to be valid, "two essential elements are requisite:
An intention to make an immediate gift, and such an actual or constmctive delivery to the donee (a)
as to divest the donor of all dominion and control...." Post Estate v. Commonwealth Bank and
Trust Company. 500 Pa. 420, 422, 456 A.2d 1360 (1983); see also Lessner v. Rubinson. 382
Pa. Superior Ct. 306,555 A.2d 193, 197 (1989); alloc. granted Pa., 568 A.2d 1248 (1989).
There can be no doubt that the requirements of an inter vivos gift were met in this instance.
Petitioner's disclaimer of his interest took effect immediately and expressed in the present tense
his intent to renounce and disclaim. Furthermore, the language clearly divests Petitioner of all
dominion and control. Had the disclaimer not divested Petitioner of all dominion and control, the
present court proceedings would be unnecessary. Thus, Petitioner made a valid gift.
A valid gift having been made, the burden rests on Petitioner to prove that the gift should
not be honored. Petitioner did not meet his burden. The rule remains the same as was stated by the
Supreme Court in 1893:
If there is no evidence which tends to prove that the donor was incompetent to
the make the gift, or which raises a suspicion of fraud or undue influence on the
part of the donee, the capacity of the donor and the faimess of the transaction will
be presumed, unless the relation between the parties is such that the policy of the
law casts upon the donee the burden of showing that the gift was the voluntary and
intelligent act of the donor. In the absence of such evidence this burden does not
Page 11
744
rest on children who receive gifts from their parents. These gifts are, prima facie,
good, and it requires something more than the mere relation of parent and child to
nullify them, or to impose on the donee the burden of showing that they are free
from any taint of fraud or undue influence: Worrall's ApJJealllO Pa. 349.
Yeakel v. McAttee. 156 Pa. 600, 27 A. 277 (1893). By allowing the Petitioner to revoke his
disclaimer, the Orphans' Court decision has removed the burden which exists for all other gifts and
allows a gift by disclaimer to be made at the whim of the disclaimant without any burden
whatsoever. Such a ruling was an error of law.
B. The decision is in conflict with the law of third-party
beneficiaries of contractual gifts.
While not a contractual gift for the benefit of third-parties, the disclaimer is very similar as
it is a gift in the form of a formal document contemplating payment to third parties. The law
regarding contractual gifts was recently reviewed by the Supreme Court in Bi~~ins v. Shore.
supra., in a decision affmning Pennsylvania adherence to the first Restatement on Contracts rule
on contractual gifts and rejecting the "modem" rule. The decision is relevant to the matter before
the Orphans' Court because it contained an extensive review of the law of contractual gifts.
Interestingly, the Orphans' Court decision conflicts with both the opinion announcing the decision
of the Court and the dissenting opinion of Justice Papadakos.
The rule in Pennsylvania as stated in the opinion is "that a donee beneficiary's contractual
rights vest immediately, that they may not be modified by the contracting parties unless the power
to modify has been expressly reserved in the contract, and that t.l-te donee beneficiary has a right of
action to enforce the benefit conferred by the contract" [d. at 739; citing Lo~an v. Glass. 136 Pa.
Superior Ct. 221, 7 A.2d 116 (1939), qff dper curiam, 338 Pa. 489, 14 A.2d 306 (1940). Under
this rule, Petitioner would not be allowed to revoke his disclaimer since he did not expressly
reserve the right to do so.
Conversely, Justice Papadakos urged that Pennsylvania should adopt Section 311 of the
Second Restatement of Contracts which would allow the modification of a beneficiary's rights
unless there was an express provision prohibiting such a right. [d.. at 745. In the case at bar, the
Petitioner specifically stated that his disclaimer could not be revoked. Thus, allowing revocation of
the disclaimer is in conflict with the law of contractual gifts as stated in Section 311 of the Second
Page 12
745
Restatement of Contracts. For the Orphans' Court to allow the revocation of a disclaimer which
expressly stated that it was irrevocable is an error of law in direct contradiction to the law of
Pennsylvania as recently stated by the Supreme Court.
IV. Section 6205 does not have the effect that only children alive
at Decedent's death would take under the will.
As argued herein, it is unnecessary to address the issue of the effect of the disclaimer on the
modification of the Testator's intent Nevertheless, it should be noted that the Orphans' Court
construction of the will is incorrect in the conclusion that by honoring the disclaimer, children of
the Petitioner born after the death of the Testator would not share in the Estate.
The decision of the Orphans' Court is based on incorrect construction of the terms of the
Testator's will. Using this improper construction as a starting point, the Court then reaches the
conclusion that Section 6205 works a hardship because it causes a result which the Testator did not
intend. In fact, what causes the hardship is the improper construction of the Testator's will.
The Court states at page 4, "The effect of the disclaimer is that Petitioner predeceases the
Testator, with Petitioner's share under the will passing to any issue Petitioner has living at the
time." The error is in the phrase "living at the time." Nowhere within the four corners of the will
is it specifically stated that only issue living at the time of Testator's death may share in the
residuary. It states in relevant part "In the event any of my said children shall predecease me
leaving issue surviving, then and in that event their share above provided shall pass to such issue."
The will does not specify that the time of surviving is the Testator's death, nor is it reasonable that
the Testator would have made such a specific proviso. The clause is a general provision to make
the purposes of the will effective in the event of occurrences after the date of the will which could
not be predicted.
Not only does the will not make a specific requirement that only children living at
the date of Testator's death could share in the estate, but the rules of will construction would urge
the opposite conclusion. The rules of construction are set forth in the Probate, Estates and
Fiduciaries Code at Section 2514, 20 Pa.C.S.A. ~ 2514. Subsection (5) states that the time to
ascertain membership in a class is the time when the bequest is to take effect in enjoyment, "except
that the issue then living of any member of the class who is then dead shall take per stirpes the
Page 13
746
" .
share which their deceased ancestor would have taken if he had then been living." Under this
construction, all issue would share in Petitioner's share.
The established case law of Pennsylvania on remainders requires the same interpretation.
The Supreme Court stated the rule in Minni~ v. Batdorff, 5 Pa. 503 (1847):
When there is an immediate gift to children, those only living at the testator's death
will take; but it is now settled, that where a particular estate or interest is carved
out, with a gift over to the children of the person taking that interest, or of any other
person, the limitation will embrace not only the objects living at the death of the
testator, but all who shall subsequently come into existence before the period of
distribution. Such a remainder vests in the objects to whom the description applies
at the death of the testator, subject to open and let in others answering the
description as they are born successively. [d., at 504-505. (emphasis in original)
Construction of Testator's will should reach the conclusion that the determination of the members
of the class of remaindermen cannot now be determined since the life tenant is still living and that
the Testator intended to keep the class open until the death of the life tenant or until the actual death
of the Petitioner.
Guidance can be found in McDowell National Bank v. Apple~ate. 479 Pa. 300, 388 A.2d
666 (1978). In that case, as in the case at bar, the question was whether the class of beneficiaries
closed at the date of death or remained open. As in this case, the testator did not directly express
his intent on this matter. The Supreme Court found that the scheme of distribution indicated that
the class was to remain open after his death. Among the relevant indicators was a provision to
prevent application of the Rule Against Perpetuities, designation of beneficiaries by the class
designation of "children" of his named son and daughter, and the use of language including all of
the children of his named son and daughter.
This Coun has held that where a testator employs a class designation, his intent is to
include "not only those known to him but all that may come into the class described
unless there is some contrary intent manifested." Earle Estate. 369 Pa. 52, 58, 85
A.2d 90,93 (1951) (bequest to male children of testator's sons bearing family name
included grandsons born after testator's death); accord, Wanamaker's Estate. 335
Pa. 241, 6 A.2d 852 (1939) (bequest to "grandchildren" included all grandl:hildren,
including those born after testator's death); cf. Robinson's Estate. 266 Pa. 251,
109 A. 924 (1920) ("The use of the word 'children' necessarily implies all children
and an intention to treat all alike," including son estranged for twenty-two years).
"It is well settled that if a perS\)fi qualifies within the exact meaning of language
describing a class he will be held to be a member of that class unless other
language in the instrUment expressly or by clear implication indicates a contrary
extent."
Page 14
747
.-: ..
Earle Estate, 369 Pa. at 58, 85 A.2d at 93 (citing cases).
By contrast the present case differs significantly from those holding that the
testator intended to limit the class of beneficiaries to those living at the time of his
death. In Smith's Estate. 226 Pa. 304, 75 A. 425 (1910), a bequest to
grandchildren attaining age twenty-one was specifically limited to those "living at
the time of my death." Cf. Wallace's Estate. 299 Pa. 333, 149 A. 473 (1930)
(rights of beneficiaries determined as of time of death where testator defmed rights
of beneficiaries by reference to his own death).
We therefore believe that testator did not intend to close the class of
beneficiaries upon his death. No language or circumstances indicate a contrary
intent
479 Pa at 306, 388 A.2d at 669. While it may be argued that these cases may distinguished
because they did not deal with the possibility of after born children of a predeceased child, the
conclusion should be the same. Where the time for enjoying the benefit of a bequest remains in the
future, as in the case at bar, the membership of the class should be considered open until the time
for enjoyment, unless the testator specifically indicated an intent to the contrary.
CONCLlJSION
Petitioner's request to revoke his disclaimer should have been denied. Simply stated,
properly executed disclaimers are binding. Petitioner's disclaimer, having satisfied all the statutory
requirements for a valid disclaimer, must be enforced as a legally binding document. No
consideration of the effect of the modification of the testator's intent should be given.
Even though testamentary intent is irrelevant, no violation of the intent of the Testator is
done because proper construction of the will leads to the unavoidable conclusion that issue of the
Petitioner born after the death of the Testator would be entitled to share in the corpus of the trust to
the same extent as any issue born prior to the Testator's death.
Res.l\ectfullr s. ub~tted, j~
f ~~c-/\- 0 . ';J-i /
Robert G. Frey, Esquire
Attorney for Guardian ad litem
5 South Hanover Street
Carlisle, Pennsylvania 17013
(717) 243-5838
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