HomeMy WebLinkAbout06-20-06
MICHAEL L. BANGS, ESQUIRE
J.D. #41263
429 SOUTH 18TH STREET
CAMP HILL, PA 17011
(717) 730-7310
ATTORNEY FOR PETITIONERS
CATHERINE A. McKINNEY, Settlor of )
The Patricia M. Kilkenny Famiiy) )
Irrevocable Trust and PATRICIA M. )
KILKENNY, )
Petitioners )
)
vs. )
)
COMMUNITY TRUST COMPANY, )
Respondent )
IN THE COURT OF COMMON PLEAS
OF CUMBERLAND COUNTY,
PENNSYLVANIA
ORPHANS' COURT DIVISIQN
NO. 2.1- OL? .55,3
PETITION FOR TERMINATION OF TRUST
~..~
\.0
AND NOW comes the Petitioners, by and through their attorney, Michael L. Bangs,
Esquire, who state as follows:
1. Catherine A. McKinney is an adult individual who resides at 6 Coover Court,
Dillsburg, York County, Pennsylvania (hereinafter "McKinney").
2. Patricia M. Kilkenny is an adult individual who resides at 603 Fairway Drive, Camp
Hill, Cumberland County, Pennsylvania (hereinafter "Kilkenny").
3. Community Trust Company is a trust company that is operated and licensed under the
Commonwealth of Pennsylvania with its principal place of business at 3907 Market Street, Camp
Hill, Cumberland County, Pennsylvania (hereinafter "Community").
4. McKinney is the Settlor under The Patricia M. Kilkenny Family Irrevocable Trust
("Trust") dated September 6, 2002. Attached hereto and marked as Exhibit A is a true and
correct copy of the Trust.
5. McKinney's mother, Patricia M. Kilkenny, is the beneficiary under the Trust.
1
.
6. Kilkenny had three primary assets that were transferred into the Trust including her
house with a market value of approximately $150,000.00; a Metropolitan Life Variable Annuity
No. 550008223 ("Annuity No.1") with an initial value of $100,000.00 but with an approximate
value now of $85,000.00; and a Metropolitan Life Annuity No. 55008217 ("Annuity No.2").
None of the assets need active management by Community.
7. Community has been charging a fee of a minimum Four Hundred ($400.00) Dollars
per month since the inception of the Trust and essentially the only monitoring or duty that it has
as a result of the nature of the assets contained in the Trust is the payment of the real estate taxes
annually for the house.
8. McKinney and Kilkenny became concerned about the ongoing charges incurred by the
Trust as it relates to the assets that are in the Trust for the benefit of Kilkenny.
9. Under 5.02 of the Trust, McKinney has a general power of appointment to some or all
of the principal of the Trust to herself, her estate or any other individual, in such proportions and
upon such terms as she deems advisable.
10. McKinney attempted to contact Community to ascertain why the charges were so
high as it relates to the assets being held by the Trust and to seek advice as to how to lessen those
charges.
11. McKinney and Kilkenny became concerned that the assets of the Trust are being
depleted and are not serving any purpose for Kilkenny.
12. Community never adequately responded to McKinney except to advise her that it is
justified in charging the fees monthly that it has done so since the inception under the terms of
the fee schedule in effect at Community.
2
.
13. McKinney and Kilkenny retained Michael L. Bangs, Esquire to review the matter
and to contact Community in an attempt to remove assets from the Trust.
14. By letter dated December 27,2005, Community was contacted and advised that
McKinney was exercising her general power of appointment under the assets in trust and
requested that they be transferred to Kilkenny, thus terminating the Trust. Further, the letter
requested that Community provide their attorney with the procedure to effectuate this change.
Attached hereto and marked as Exhibit B is a true and correct copy of the letter.
15. Well over a month later, by letter dated February 3, 2006, Community finally
responded to the previous correspondence. For the first time, Community advised that it would
charge a termination fee of $4,273.02 which it claims it is permitted to do under its charges.
McKinney or Kilkenny were not aware of these termination fees at the time of the inception of
the Trust. Attached hereto and marked as Exhibit C is a true and correct copy of the letter.
16. In response thereto, McKinney decided to exercise her general power of appointment
over two assets, the residence and Annuity No. 1 while leaving the Trust intact with Annuity No.
2.
17. Community was contacted by letter dated February 16, 2006 advising it of the
general power of appointment over two of the assets in the Trust and that the Trust would still
remain in place. Furthermore, Community was provided with a deed for the residence and the
appropriate forms needed to transfer Annuity No.1. Attached hereto and marked as Exhibit D is
a true and correct copy of the letter.
18. Approximately one month later, by letter dated March 13, 2006, Community
contacted McKinney's attorney and advised that it would be having the deed revised by another
3
.
attorney and that it would expect the payment of a termination fee in the amount of $3,098.10 as
a result of the removal of these assets.
19. Community has no authority to charge termination fees when the Trust is not being
terminated.
20. Community was contacted on or about March 16, 2006 and advised that the assets,
including the real estate and Annuity No.1, should be removed from the Trust immediately.
21. Community was contacted again on or about April 5, 2006 again requesting that the
assets be removed immediately.
22. Under cover letter of April 24, 2006, Kilkenny and McKinney's attorney received a
draft Receipt and Release Agreement which Community indicated had to be signed prior to the
release of the assets. The Receipt and Release Agreement included the charging of a termination
fee for the removal of these assets.
23. The Trust is not being terminated and there is no requirement that a Receipt and
Release Agreement be prepared, nor is there any authority for Community to charge a
termination fee.
24. Community was contacted on or about April 26, 2006 demanding that the assets be
removed immediately.
25. From December, 2005 through the current time, Community has continued to charge
the monthly fee to the Trust in the amount of $400.00 or more.
26. Community has ignored the request by McKinney to remove two of the assets from
the Trust under her general power of appointment.
4
..
~
27. Community has a fiduciary responsibility to McKinney and/or Kilkenny in its role as
trustee.
28. Community has breached its fiduciary responsibilities to McKinney and/or Kilkenny
which include, but are not limited to, the following:
A. By its failure to act upon the general power of appointment of
McKinney over some of the principal of the Trust, namely the house and Annuity
No.1;
B. By its failure to timely respond to McKinney, Kilkenny, or their legal
counsel;
C. By its charging of excessive fees for work performed for the Trust;
D. By its demand to be paid termination fees that are not warranted under
the Trust or any other agreements signed by McKinney and/or Kilkenny related to
the Trust and the management of the Trust; and
E. By the delay in responding to legitimate requests made by McKinney,
Kilkenny or their legal counsel.
29. Community has continued to ignore the requests made by McKinney, Kilkenny or
their legal counsel to remove the house and Annuity No.1 from the Trust while it continues to
charge fees for managing the assets of the Trust.
30. McKinney and Kilkenny have incurred legal costs as a result of Community's failure
to property act as a trustee.
31. Community continues to ignore the legitimate requests made by McKinney and/or
Kilkenny for the removal of the assets from the Trust.
5
.
'l
32. McKinney and Kilkenny have lost confidence in Community's ability to manage the
assets of the Trust by its breach of its fiduciary duties and failure to respond to their proper
inquests.
WHEREFORE, Petitioners request this Honorable Court to order and direct Community
to do the following:
A. Terminate the Trust immediately without imposition of termination
fees;
B. Sign the beneficiary change forms necessary to transfer the
Metropolitan Life Annuities;
C. Transfer the residence to Kilkenny;
D. Repay to Kilkenny and/or McKinney all fees charged by Community
from December, 2005 to the present;
E. Pay all attorney's fees incurred by McKinney and Kilkenny for matters
related to and including the averments contained in this Petition; and
F. Such other relief as the Court may deem proper.
Respectfully submitted,
~lGM
MICHA L L. BANGS
Attorney for Petitioner
429 South 18th Street
Camp Hill, PA 17011
(717) 730-7310
Supreme Court ID #41263
7~
6
..
...
VERIFICATION
I hereby verify that the statements made in the foregoing Petition 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.
/ /
Date: {;, / /3/() {"
I
7
VERIFICATION
I hereby verify that the statements made in the foregoing Petition 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.
Date: f I ~/3 .. t:J. ~
~>n ~?'7
PATRICIA M. KIL Y
8
.
.-----j
I
. ,
/
THE
PATRICIA M. KILKENNY
FAMILY IRREVOCABLE TRUST
TIDS TRUST AGREEMENT is executed in triplicate on this b 14 day of September,
2002, by and between and CATHERINE A. McKINNEY, (hereinafter called "Settlor") and
COMMUNITY TRUST COMPANY, located at 3907 Market Street, Camp Hill, Cumberland
County, Pennsylvania (hereinafter called "Trustee").
ARTICLE I.
PARTIES, PERSONAL DATA AND DISCLAIMER
1.01. Parties and Personal Data. Settlor, CATHERINE A. McKINNEY, is the
daughter of PATRICIA M. KILKENNY, the Beneficiary of the Trust created herein.
Throughout this Agreement: (a) "Settlor" shall refer to CATHERINE A. McKINNEY; and (b)
PATRICIA M. KILKENNY will be referred to as the Beneficiary.
1.02. Disclaimer. The Trustee shall have the right to disclaim, in whole or in part, prior
to its acceptance by the Trustee, any interests in property for any reason, including but not limited
to a concern that such property could cause potential liability under any federal, state, or local
environmental law .
ARTICLE II
PURPOSES OF TRUST
2.01. Beneficiary. This Trust is established for the benefit of PATRICIA M.
KILKENNY as well as to preserve assets for distribution to the remaindermen hereunder. This
Trust may serve as a primary or main source of income, support or maintenance for PATRICIA
M. KILKENNY.
2.02. Supplemental Assistance Limitation of Benefits. With respect to the
Beneficiary, PATRICIA M. KILKENNY, the express purpose of this Trust is to provide for
PATRICIA M. KILKENNY's necessities, and extra or supplemental needs, over and above the
benefits P A TRIeIA M. KILKENNY otherwise receives or may receive as a result of handicap
or disability from any local, state, or federal government or from private agencies, any of which
provide services or benefits to disabled or otherwise challenged persons. Anything to the contrary
herein notwithstanding, no trust income or principal shall be paid to or expended for the benefit of
PATRICIA M. KILKENNY so long as there are sufficient monies available to her for care,
comfort, and welfare from federal, state, and local government agencies and departments. The
Trustee shall consider such governmental funds in determining whether there are funds available
to the Beneficiary from sources other than the Trust estate and shall use Trust assets only to
supplement and never to substitute for such funds. In no event may Trust income or principal be
paid to or for the benefit of a governmental agency or department, and the Trust estate shall at all
times be free of the claims of such governmental bodies.
2.03. Advocacy. The Trustee shall periodically contact the Settlor, CATHERINE A.
McKINNEY, any applicable local associations for citizens with disabling conditions, other
relatives, guardian if applicable, and the staff of any group home or other residential facility where
PATRICIA M. KILKENNY resides regarding items and directives of this Trust for her and her
well being.
ARTICLE III.
TRUST ESTATE
3.01. Transfer to Trust. Settlor does hereby assign, transfer and deliver to the Trustee
and its successors and assigns the property described in Schedule" A" attached hereto and made a
part hereof: or as Schedule" A" may be amended. As further evidence of such assignment, the
Settlor has executed or will execute or cause to be executed such other instruments as may be
required for the purposes of completing the assignment or transfer of title to such property to the
Trustee. The Trustee accepts such transfer and assignment to itself as Trustee, and undertakes to
hold, manage, invest and reinvest the assets of this Trust, and to distribute the income and
principal of the Trust in accordance with the provisions of this Agreement.
3.02. Additional Transfers to Trust. The Settlor, and any other person, with the
consent of the Trustee, shall have the right at any time to make additions to the corpus of this
Trust or any shares thereof hereby established. All such additions shall be held, controlled, and
distributed by the Trustee in accordance with the terms and conditions of this Agreement.
ARTICLE IV.
LIFE INSURANCE POLICIES
[THIS ARTICLE IS INTENTIONALLY LEFT BLANK.]
ARTICLE V.
DISTRIBUTIONS FROM TRUST
5.01. Distributions Durine Continuation of Trust. Subject to the termination of this
Trust, the trust estate shall be held for the benefit of the Beneficiary, PATRICIA M.
KILKENNY, for her lifetime, together with any other assets received by the Trustee, for the
following uses and purposes:
2
(A) This Trust is established for the purpose of improving the quality of life of the
Beneficiary, PATRICIA M. KILKENNY, for and during all the term of her natural life. As the
result of the natural physical and mental deteriorations of her age and infirmities, the Beneficiary,
PATRICIA M. KILKENNY, suffers, or may suffer, from substantial mental and physical
disabilities and requires, or may require additional medical care. She may be entitled to benefit
from various governmental programs which provide for her basic or supplemental care. It is the
purpose of this Trust to provide the Beneficiary, PATRICIA M. KILKENNY, with a higher
quality of life beyond that which would be provided by these public entitlement programs and to
provide her with a proper funeral and burial.
(B) Settlor's intent in creating this Trust is that the Trustee use the Trust created herein to
promote the happiness, welfare and benefit of the Beneficiary, PATRICIA M. KILKENNY,
through income and principal distributions, without in any way reducing the services or financial
assistance and basic maintenance, support, medical or dental care which the Beneficiary may
receive without charge from any local, state or federal government agency or department thereot:
and without using any portion of the Trust income or principal to reimburse any local, state or
federal government agency or department thereof for basic maintenance, support, medical or
dental care received by the Beneficiary.
(C) The Trustee shall distribute to the Beneficiary, PATRICIA M. KILKENNY, or
expend and apply for her benefit, so much of or all of the income and principal of this Trust, as
the Trustee, in its sole and absolute discretion, determines to be advisable for the Beneficiary's
special needs for necessities, happiness and comfort to achieve the purpose of the Trust herein set
forth, or as much of the income as the Beneficiary may, in writing, request. The "special needs"
which the Trustee may provide to the Beneficiary, PATRICIA M. KILKENNY, include, but are
not limited to, spending money, additional food, clothing, gifts on her birthday and major
holidays, small appliances that would provide the Beneficiary with entertainment or amusement,
computer equipment, camping excursions, vacations, athletic contests, movies, trips, money to
purchase appropriate gifts for relatives and friends, any recreational items that would be of use to
her and other monetary requirements to enhance her self-esteem or situation. "Special needs"
shall also include medical and dental expenses, annual independent check-ups, rehabilitation and
physical therapy equipment, programs of training, education, treatment, physical therapy and
rehabilitation, private residential care, eye glasses, transportation (including vehicle purchase),
maintenance, and insurance (including payment of premiums of insurance on the life of the
beneficiary) and other requisites for maintaining the good health, safety, and welfare of the
Beneficiary when, in the discretion of the Trustee, such requisites are not being provided by any
public agency, office, or department of any state or of the United States. Nothing herein shall
preclude the Trustee from purchasing those services and items which promote the Beneficiary's
happiness, comfort and welfare. The Trustee shall also have authority in its absolute and sole
discretion to make gifts to any community residence in which the Beneficiary may be residing.
3
(D) Any net income not expended for or applied to the needs of the Beneficiary,
PATRICIA M. KILKENNY, shall be accumulated and added to the Trust principal.
(E) The Trustee shall have no obligation to expend Trust assets for the Beneficiary's
special needs. This Trust is created expressly for the Beneficiary's necessities, extra and
supplemental care, maintenance, support and education in addition to, and over and above the
benefits she otherwise receives or may receive as a result of handicap or disability, from any local,
state or federal government, or from any other private agency, any of which provides service or
benefits to persons with disabilities. It is Settlor's express purpose that this Trust be used only to
supplement other benefits that the Beneficiary may receive.
(F) Because the Beneficiary may be dependent on the support and aid of others, the
Trustee shall, in the exercise of his best judgement and fiduciary duty, seek support and
maintenance for her, or request the guardian of the Beneficiary to seek support and maintenance
for her, from all available public resources, including, but not limited to, Social Security
Administration benefits, the Supplemental Security Income Program. (SSI), any such supplemental
income program. offered by or through the Commonwealth of Pennsylvania, the Old Age
Survivors and Disability Insurance or successor programs, U.S. Civil Service Commission
benefits, Medicaid, and Federal Social Security Disability Insurance (SSDI), and any other
comparable programs, state, federal, or local. The Trustee shall take into consideration applicable
resource and income limitations of any public assistance programs for which the Beneficiary is
eligible when determining whether or not to make any discretionary distributions. In carrying out
the provisions of this Article, the Trustee may disregard the future needs of the remaindermen of
this Trust if those needs are in conflict with the needs of the beneficiary. Ifnecessary, the Trustee
may seek appropriate authority to collect, expend, and account for separately all such
governmental assistance benefits, but shall not commingle them with these Trust assets. In
addition, in making distributions for the special needs of the Beneficiary, the Trustee shall take
into consideration the applicable resource limitations of the public assistance programs for which
he is or may become eligible.
(G) The Trustee shall regard this Trust as existing for the welfare and benefit of the
Beneficiary, PATRICIA M. KILKENNY. Accordingly, the Trustee shall exercise its discretion
as to disbursements and investments with this standard in mind.
(H) The Trustee shall exercise reasonable diligence. However, the Trustee shall not be
liable for any acts or omissions done or performed in good faith.
(I) The Trustee shall not be required to make an accounting to any public official except
to the extent otherwise required by law. The Trustee shall, however, keep and maintain complete
and open accounts of the Trust principal and income and any expenditures from the Trust.
Anyone having an interest in the Trust shall have a right to inspect the accounts at reasonable
times and with reasonable notice to the Trustee. All discretion conferred on the Trustee shall be
4
absolute and unlimited, and its exercise by the Trustee shall be conclusive and binding on all
persons.
(J) The Trustee shall pay reasonable burial expenses including a suitable and proper grave
marker for the Beneficiary, PATRICIA M. KILKENNY.
5.02. General Power of Apllointment. Settlor, CATHERINE A. McKINNEY, is
hereby granted the general power to appoint some or all of the principal of this Trust to herself:
her estate or any other individual, in such proportions and upon such terms (in trust, outright
gifts, or in any other manner) as she deems advisable. This power shall not be exercisable under
her Will. If Settlor fails, either in whole or in part, to exercise this general power of
appointment herein granted, the unappointed principal shall continue in trust and shall be
administered according to the terms of this Trust.
5.03. Special Power of Appointment. PATRICIA M. KILKENNY shall have the
power at any time, exercisable either (i) by instrument or instruments in writing delivered to the
Trustee during her lifetime, or (ii) by her will, admitted to probate within three hundred and sixty-
five (365) days from her death, specifically referring to this Subparagraph 5.03, to appoint all or
any portion of the principal and any accumulated and accrued income of this Trust. Any
appointment made under this Subparagraph 5.03 may be upon any terms and conditions.
However, no such appointment may be made to her spouse, nor to the estate, the creditors, nor
the creditors of the estate of her spouse, nor for the health, education, support, or maintenance of
any children whom she or her spouse is legally obligated to support or maintain, nor may any
general powers of appointment be created by the exercise of the special power of appointment
created herein.
5.04. Distributions Upon Termination of Trust. The Trust shall terminate upon the
death of the Beneficiary, PATRICIA M. KILKENNY. Upon termination, the then-remaining
trust estate shall be distributed as follows:
(A) Nine-tenths (9/10) of the total trust estate shall be divided into separate and equal
shares with one such share distributed to each of the Beneficiary's children, CATHERINE A.
McKINNEY, JOAN M. GILLIS, JANET M. HE IN, and JOHN E. KILKENNY, JR.. If any
of the Beneficiary's children, CATHERINE A. McKINNEY, JOAN M. GILLIS, JANET M.
HEIN, and JOHN E. KILKENNY, JR., should predecease the termination of this Trust, then
and in such event, the predeceased individual's share shall be distributed to the predeceased
individual's children, per stirpes. If any of the Beneficiary's children, CATHERINE A.
McKINNEY, JOAN M. GILLIS, JANET M. HEIN, and JOHN E. KILKENNY, JR., should
predecease the termination of this Trust without leaving surviving issue, then and in such event,
the predeceased individual's share shall be distributed to the Beneficiary's then-surviving children,
per stirpes.
5
(B) One-tenth (1/10) of the total trust estate shall be distributed to the Beneficiary's
grandchild, KEELAN A. BOOTH, per stirpes. If KEELAN A. BOOTH should predecease the
termination of the trust, then and in such event, his share shall be HELD IN FURTHER
SEP ARA TE TRUST for the benefit of KARA E. R. BOOTH (and any children born or legally
adopted by KEELAN A. BOOTH hereafter), to be used as the Trustee, in its sole discretion,
from time to time deems advisable for the health, education, support and maintenance of KARA
E. R. B001'H (and any children born or legally adopted by KEELAN A. BOOTH hereafter).
ARTICLE VI.
POWERS OF TRUSTEE
6.01. General Powers. In addition to such other powers and duties as may have been
granted elsewhere in this Trust, but subject to any limitations contained elsewhere in this Trust,
the Trustee shall have the following powers and duties:
(A) In the management, care and disposition of this Trust, the Trustee shall have the
power to do all things and to execute such deeds, mortgages, instruments, and documents as may
be deemed necessary and proper, including the following powers, all of which may be exercised
without order of or report to any court:
(1 ) To sell, exchange, or otherwise dispose of any property, real, personal
or mixed, at any time held or acquired hereunder, at public or private sale, for cash
or on terms, without advertisement, including the right to lease for any term
notwithstanding the period of the Trust, and to grant options, including an option
for a period beyond the duration of the Trust; and to execute such deeds or other
instrum...ents as are necessary.
(2) To invest and reinvest all or any part of the Trust Estate in any
common or preferred stocks, shares of investment trusts and investment
companies, bonds, debentures, mortgages, deeds of trust, mortgage participations,
notes, real estate, or other property the Trustee, in the Trustee's discretion, selects;
provided that the Trustee may not invest in any stock or securities issued by the
corporate Trustee or issued by a parent or affiliate company of such Trustee; in the
manner that, under the circumstances then prevailing (specifically including, but
not limited to, the general economic conditions and the anticipated needs of the
Trust and its beneficiaries), persons of skill, prudence, and diligence, acting in a
similar capacity and familiar with those matters would use in the conduct of an
enterprise of similar character and similar aims, to attain the Settlor's goals WIder
this trust agreement.
(3) To retain for investment any property deposited with the Trustee
hereunder; except that the Trustee may not retain for investment any stock or
6
~
securities in the corporate Trustee or in a parent or affiliate company of such
Trustee.
(4) To vote in person or by proxy any corporate stock or other security
and to agree to or take any other action in regard to any reorganization, merger,
consolidation, liquidation, bankruptcy or other procedure or proceedings affecting
any stock, bond, note or other security held by this Trust.
(5) To use lawyers, real estate brokers, accountants and other agents, if
such employment is deemed necessary or desirable, and to pay reasonable
compensation for their services.
(6) To compromise, settle or adjust any claim or demand by or against the
Trust and to agree to any rescission or modification of any contract or agreement
affecting the Trust.
(7) To renew any indebtedness, as well as to borrow money, and to secure
the same by mortgaging, pledging or conveying any property of the Trust,
including the power to borrow from the Trustee (in the Trustee's individual
capacity) at a reasonable rate of interest.
(8) To retain any business interest transferred to the trustee, as
shareholder, security holder, creditor, partner or otherwise, for any period of time
whatsoever, even though the interest may constitute all or a large portion of the
trust principal; to comply with the provisions of any agreement restricting transfer
of the interest; to participate in the conduct of the related business or rely upon
others to do so, and to take or delegate to others discretionary power to take any
action with respect to its management and affairs which an individual could take as
outright owner of the business or the business interest, including the voting of
stock (by separate trust or otherwise regardless of whether that separate trust will
extend for a term within or beyond the term of the trust) and the determination of
all questions of policy; to execute and amend partnership agreements; to
participate in any incorporation, reorganization, merger, consolidation, sale of
assets, recapitalization, liquidation or dissolution of the business, or any change in
its nature, or in any buy-sell, stock restriction, or stock redemption agreements; to
invest in additional stock or securities of, or make secured, unsecured, or
subordinated loans to, the business with trust funds; to take all appropriate actions
to prevent identify, or respond to actual or threatened violations of any
environmental law or regulation thereunder; to elect or employ with compensation,
as directors, officers, employees, or agents of the business, any persons, including
a trustee of any trust held under this instrument, or any director, officer, employee,
or agent of a corporate trustee of any trust held under this instrument, without
7
adversely affecting the compensation to which that trustee would otherwise be
entitled; to rely upon reports of certified public accountants as to the operations
and financial condition of the business, without independent investigation; to deal
with and act for the business in any capacity (including in the case of a corporate
trustee any banking or trust capacity and the loaning of money out of the trustee's
own funds) and to be compensated therefor; and to sell or liquidate the business or
any interest in the business.
(9) To register any stock, bond or other security in the name of a nominee,
without the addition of words indicating that such security is held in a fiduciary
capacity, but accurate records shall be maintained showing that the stock, bond or
other security is a trust asset and the Trustee shall be responsible for the acts of the
nomInee.
(10) To set aside as a separate trust, to be held and administered upon the
same terms as those governing the remaining trust property, any interests in
property, for any reason, including but not limited to a concern that such property
could cause potential liability under any federal, state, or local environmental law .
(B) Whenever the Trustee is directed to distribute any trust principal in fee simple to a
person who is then under twenty-one (21) years of age, the Trustee shall be authorized to hold
such property in trust for such person until he becomes twenty-one (21) years of age, and in the
meantime shall use such part of the income and the principal of the Trust as the Trustee may deem
necessary to provide for the proper support and education of such person in the standard of living
to which he has become accustomed. If such person should die before becoming twenty-one (21)
years of age, the property then remaining in trust shall be distributed to the personal
representative ot such person's estate.
(C) In making distributions from the Trust to or for the benefit of any minor or other
person under a legal disability, the Trustee need not require the appointment of a guardian, but
shali be authorized to payor deliver the distribution to the custodian of such person, to payor
deliver the distribution to such person without the intervention of a guardian, to payor deliver the
distribution to the legal guardian of such person if a guardian has already been appointed, or to
use the distribution for the benefit of such person.
(D) In the distribution of the Trust and any division into separate trusts and shares, the
Trustee shall be authorized to make the distribution and division in money or in kind or in both,
regardless of the basis for income tax purposes of any property distributed or divided in kind, and
the distribution and division made and the values established by the Trustee shall be binding and
conclusive on all persons taking hereunder. The Trustee may, in making such distribution or
division allot undivided interests in the same property to several trusts or shares.
8
(E) If at any time the total fair market value of the assets of any trust established or to be
established hereunder is so small that the Trustee's annual fee for administering the trust would be
equal to or less than the minimum annual fee set forth in the Trustee's regularly published fee
schedule then, in effect, the Trustee in its discretion shall be authorized to terminate such trust or
to decide not to establish such trust, and in such event the property then held in or to be
distributed to such trust shall be distributed to the persons who are then or would be entitled to
the principal and/or income of such trust. If the amount of principal and/or income to be received
by such persons is to be determined in the discretion of the Trustee, then the Trustee shall
distribute the property among such of the persons to whom the Trustee is authorized to distribute
principal and/or income, and in such proportions, as the Trustee in its discretion shall determine.
(F) The Trustee shall be authorized to lend or borrow at an adequate rate of interest and
with adequate security and upon such terms and conditions as the Trustee shall deem fair and
equitable.
(G) The Trustee shall be authorized to sell or purchase, at the fair market value as
determined by the Trustee, any Trust property.
(H) The Trustee shall have discretion to determine whether items should be charged or
credited to income or principal or allocated between income and principal as Trustee may deem
equitable and fair under all the circumstances, including the power to amortize or fail to amortize
any part or all of any premium or discount, to treat any part or all of the profit resulting from the
maturity or sale of any asset, whether purchased at a premium or at a discoWlt, as income or
principal or apportion the same between income and principal, to apportion the sales price of any
asset between income and principal, to treat any dividend or other distribution on any investment
as income or principal or to apportion the same between income and principal, to charge any
expense against income or principal or apportion the same, and to provide or fail to provide a
reasonable reserve against depreciation or obsolescence on any asset subject to depreciation or
obsolescence, all as the Trustee may reasonably deem equitable and just under all of the
circumstances.
(1) The Trustee is hereby authorized and empowered to purchase such insurance policies
as it deems appropriate.
6.02. V otine by Trustees. When the authority and power under this Trust is vested in
two (2) or more Trustees or Co-Trustees, the authority and powers are to be held jointly by the
Trustees or Co-Trustees.
9
ARTICLE VII.
SPENDTHRIFT PROVISION
7.01. General Provisions. No beneficiary shall have the power to anticipate, encumber
or transfer his interest in the Trust Estate in any manner other than by the valid exercise of a
Power of Appointment. No part of the Trust Estate shall be liable for or charged with any debts,
contracts, liabilities or torts of a beneficiary or subject to seizure or other process by any creditors
of a beneficiary, including but not limited to creditors who are public or private entities with
claims arising from the provision of medical and/or residential care and services.
ARTICLE VIII.
CONSTRUCTION OF TRUST
8.01. Choice of Law. This Trust shall be administered and interpreted in accordance
with the laws of the Commonwealth of Pennsylvania.
8.02. Code. Unless otherwise stated, all references in this Trust to section and chapter
numbers are to those of the Internal Revenue Code of 1986, as amended, or corresponding
provisions of any subsequent federal tax laws applicable to this Trust.
8.03. Other Terms. Unless the context otherwise requires, the use of one or more
genders in the text includes all other genders, and the use of either the singular or the plural in the
text includes both the singular and the plural.
8.04. Exoneration of Trustee. No Trustee shall be liable for any loss or depreciation in
value sustained by the Trust as a result of the Trustee retaining any property upon which there is
later discovere3 to by hazardous materials or substances requiring remedial action pursuant to any
federal, state, or local environmental law , unless the Trustee contributed to the loss or
depreciation in value through willful default, willful misconduct, or gross negligence.
8.05. Indemnification of Trustee Upon Distribution. Notwithstanding any contrary
provision in this Trust Agreement, the Trustee may withhold a distribution to a beneficiary until
receiving from the beneficiary an indemnification agreement in which the beneficiary agrees to
indemnify the Trustee against any claims filed against the Trustee as an "owner" or "operator"
under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
from time to time amended, or any regulation thereunder.
8.06. Captions. The underlined captions set forth in this Agreement at the beginning of
the various divisions hereof are for convenience of reference only and shall not be deemed to
define or limit the provisions hereof or to affect in any way their construction and application.
8.07. Situs of Trust. The Trust shall have its legal situs at Cumberland County,
Pennsylvania.
10
ARTICLE IX.
COMPENSATION OF TRUSTEE AND
APPOINTMENT OF SUCCESSOR TRUSTEE
9.01. Compensation. The Trustee shall receive as its compensation for the services
performed hereunder that sum of money which the Trustee normally and customarily charges for
performing similar services during the time which it performs these services.
9.02. Removal of Trustee. The Settlor may remove the Trustee at any time or times,
with or without cause, upon thirty (30) days' written notice given to the current Trustee. Upon
the removal of the Trustee, a successor Trustee shall be appointed in accordance with the terms
set forth in Paragraph 9.03.
9.03. Successor Trustee. The Trustee may resign at any time upon thirty (30) days'
written notice given to the Settlor. Upon the death, resignation, removal or incapacity of the
Trustee, a successor trustee may be appointed by the Settlor. The successor Trustee shall be a
financially sound and competent corporate Trustee. Any successor trustee thus appointed, or,
if the Trustee shall merge with or be consolidated with another corporate fiduciary, then such
corporate fiduciary, shall succeed to all the duties and to all the powers, including discretionary
powers, herein granted to the Trustee.
ARTICLE x.
PERPETUITIES CLAUSE
10.01. General Provisions. Notwithstanding anything to the contrary in this Trust, each
disposition the Settlor has made here, legal or equitable, to the extent it can be referred in its
postponement of becoming a vested interest to a duration measured by some life or lives in being
at the time of the Beneficiary PATRICIA M. KILKENNY's death is definitely to vest in
interest, although not necessarily in possession, not later than twenty-one (21) years after such
lives (and any period of gestation involved); or, to the extent it cannot be referred in any such
postponement to such lives, is to so vest not later than twenty-one (21) years from the time of
PATRICIA M. KILKENNY's death.
ARTICLE XI.
IRREVOCABILITY. OF TRUST
11.01. Irrevocabilitv. Settlor has been advised of the consequences of an irrevocable
trust and hereby declares that this Trust shall be irrevocable and shall not be altered, amended,
revoked, or terminated by Settlor or any other person or persons.
11
IN WITNESS WHEREOF, the Settlor and Trustee have hereunto set their hands and
seals as of the day and year first above written.
.----
~ . ~.
~~:~~~~~OEAL)
SETTLOR
COMMONWEALTH OF PENNSYLVANIA
ss:
COUNTY OF 01J1fJ /36--nItAllJ
On this, the if!!!.... day of September, 2002, before me, a Notary Public, the undersigned
officer, personally appeared CATHERINE A. McKINNEY, and the above witness, whose
names are subscribed to the within instrument and who executed the same, and that said persons
acknowledged that they executed the same for the purposes therein contained.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
c3fiJ(JJ/!iJJ
Notary Public
My Commission Expires:
NotarIal Seal
Ten l.., Walker, NotarY Public .~ I-
~'mgynl 8oro, Cumberfand County
My Commlt.ton Expires Jan. 20, 2003
Meml)er~ f'le"nlylvanla Aeeoclatlon ot Notaries
The foregoing T}Vst Agreement was delivered, and is hereby accepted, at Lemoyne,
Pennsylvania, on the ,f"ftlJ day of September, 2002.
-:J
COMMUNITY TRUST COMPANY,
TRUSTEE
ATTEST:
/ .#<'; ~~~
~~4?F--~
By: SUSAN A. RUSSELL, Vice-
President and Trust Officer
12
SCHEDULE "A"
SCHEDULE
REFERRED TO IN THE ANNEXED
TRUST AGREEMENT
DATED SEPTEMBER~ 2002
FROM CATHERINE A. McKINNEY, SETTLOR
TO COMMUNITY TRUST COMPANY, TRUSTEE
~--------------------------------------------------------------------------------------------------
PROPERTY DESCRIPTION:
13
EXHIBIT B
.
BANGS LAW OFFICE
429 SOUTH 18TH STREET
CAMP HILL, P A 17011
E-mail: mikebangs@verizon.net
PHONE: 717-730-7310
FAX: 717-730-7374
MICHAEL L. BANGS, Attorney-at-Law
WENDY K. STRAUB, Paralegal
WILLIAM E. MILLER, JR.
Of Counsel
December 27, 2005
VIA FACSIMILE AND REGULAR MAIL
,}
r"\ ~{' ...... ~
~_____- r" ~
\._'~' ~. '1,'____
\- 't ~
\'
Patricia A. Walter, Trust Officer
COlnmunity Trust Company
3907 Market Street
Ca111p Hill, P A 17011
RE: The Patricia M Kilkenny Family Irrevocable Trust
Dear Ms. Walter:
Please be advised that I represent Catherine A. McKinney, Settlor under the above-referenced trust
as well as Patricia M. Kilkenny, her mother who is the beneficiary of the trust. Under Paragraph 5.02,
Catherine A. McKinney is exercising her general power of appointment for the principal of this trust.
Specifically, she is exercising her general power of appointment over all principal of the trust which I
believe includes the following:
1. Tl1e residence at 605 Fairway Drive, Camp Hill, Pennsylvania; and
2. AIUluities with MetLife, Contract Nos. 550008223 and 550008217.
She intends to appoint all the principal of the trust to her mother, Patricia M. Kilkenny, thus
temlinating the trust.
I aln in the process of preparing a deed to accomplish that task. I have also received
docUlllentation from the annuities to transfer the assets as well.
Please advise Ine if there is someone else who should be receiving these original documents. Also,
you need to advise nle right away if there are any other steps that need to be taken in order to effectuate
the tenllination of the trust with your company.
..
.
EXHIBIT C
..
Fenruary 3, 2006
\: U M f) ,~ [\j 'i
Bangs Law Office
429 South 18th Street
Camp Hill, P A 17011
Attention: Michael L. Bangs
RE: The Patricia M. Kilkenny Family
Irrevocable Trust
Dear Mr. Bangs:
I have received your letter, dated December 27, 2005, concerning Catherine A.
McKinney's request to exercise her Section 5.02 General Power of Appointment for the
principal of the above referenced trust. I would like to take a moment to reiterate what I
have told Catherine McKinney and Patricia Kilkenny concerning the termination of the
trust.
When Mrs. Kilkenny decided to create this Trust she was concerned with the
preservation of her assets in the event she needed long-term nursing care. She wanted to
also avoid capital gains taxes and inheritance taxes at her death. The Trust she created
did iust that. Mrs, McKinney executed the Tnlst documents on September 6~ 2002~
therefore, Mrs. Kilkenny has exceeded the three year period of ineligibility for Medical
Assistance. If this trust is tenninated, all the estate planning for asset protection \\'ill be
eliminated.
The last time I spoke to Mrs. Kilkenny, she had expressed an interest in selling her
residence; this is a large part of her estate that will no longer be protected. Weare more
than willing to comply with Mrs. McKinney's wishes; however, I thought you should
kno\v the consequences involved by terminating her trust.
When terminating a trust this size, it is our standard practice to file a fonnal account
with the Orphans Court of Cumberland County; however, knowing Mrs. McKinney
wants this done expeditiously we will terminate the trust by a Receipt and Release signed
3907 Market Street Camp Hill, PA 17011 Telephone 717.731.9604 888.442.9604 Fax 717.737.7834 www.communitytrustco.com
.
Michael L. Bangs
Page 2
January 26,2006
by the grantor. Upon receipt of the executed Receipt and Release, we will prepare the
paperwork necessary to reregister the assets held in the above referenced trust.
Also, we will continue to charge fees on this account until we are no longer Trustee;
there will also be a termination fee assessed, per our published fee schedule. The fee will
be the average fee charged over the prior twelve months, annualized. The termination fee
for this account will be $4,273.02. There will also be tax preparation fees charged
against the trust for the tax year ending December 31, 2005 and for 2006 through to the
date of tennination.
if you have any questions concerning this inIon-nation, I can be reached at (717) 731-
9604.
Cordially,
Ii,,/:' ,/ ~-1 /
.' ,_ ".," 1 :,..' ,/., I.l;?<'~.I '., ''i
",--, ~l. (~ .' , !, / r'~: ~tl
,.~ u Co( (;'1., f:::::ff t. A-
Pa icia A. Walter
Trust Officer
cc: Catherine A. McKinney
Patricia M. Kilkenny
.
EXHIBIT D
BANfiS LAW OFFICE
429 SOUTH 18TH STREET
CAMP HILL, PA 17011
E-m.ail: mikebangs@verizon.net
PHONE: 717-730-7310
FAX: 717-730-7374
MICHAEL L. BANGS, Attorney-at-Law
WENDY K. STRAUB, Paralegal
WILLIAM E. MILLER, JR.
Of Counsel
February 16, 2006
Patricia A. Walter, Trust Officer
COlnmunity Trust Company
3907 Market Street
Camp I-lill, PA 17011
r-~--""", Q fJ t: ".;;:1
.~. W .. ..' "LoiY
,~_...~
RE: The Patricia M Kilkenny Family Irrevocable Trust
Dear Ms. Walter:
I run in receipt of your letter of February 3, 2006 and have reviewed this with Catherine McKinney
and Patricia M. Kilkenny. After discussing this matter with them, it is their desire to exercise a general
power of appointment over the following assets:
1. The residence at 605 Fairway Drive, Camp Hill, Pennsylvania.
2. Annuity No. 55008223.
In your letter of February 3, 2006, on Page 2 (which incidentally is dated January 26,2006), you
indicated that you would be preparing the paperwork necessary to reregister these assets. There is no
need to prepare the paperwork because I enclose for you a Deed which will accomplish the transfer of
the residence and the beneficiary change form that I received directly from MetLife. I enclose for your
information a copy of the letter I received from MetLife.
All that needs to occur under the MetLife beneficiary change form is a signature by a designated
person for the trust who is the owner. That needs to be returned to me along with the signed Deed and
then we can go ahead and have these assets transferred directly to Mrs. Kilkenny.
The trust will remain in place with the other annuity.
I would appreciate a quick return of these documents. I hope that I do not have to go through
another 45-day or so delay in receiving a response. I think this is a very simple matter and it is in
accordance with my client's wishes and, more importantly, it is an appropriate request by Catherine A.
McKinney who has a general power of appointment under the trust.
...
Patricia A. Walter, Trust Officer
2
February 16, 2006
Please contact me if you have any questions.
Very truly yours,
Michael L. Bangs
wks
Enclosures
cc: Mrs. Patricia M. Kilkenny
Mrs. Catherine A. McKinney