Loading...
HomeMy WebLinkAbout08-23-02 " ,_.~ 4Il INRE: ESTATE OF LOY T. HEMPT, Deceased IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, P A ORPHANS' COURT DIVISION NO. J./-lfJ- ~~J OBJECTIONS TO FIRST AND FINAL ACCOUNT FOR THE ESTATE OF LOY T. BEMPT AND RESIDUARY TRUST UNDER WILL OF LOY T. BEMPT AND NOW, come Petitioners, Robert Hempt Kalbach, Sr., Robert H. Kalbach, Jr. and Richard C. Kalbach by and through their attorneys, METTE, EVANS & WOODSIDE, and hereby file these Objections to the First And Final Account For The Estate ofLoy T. Hempt And Residuary Trust Under Will ofLoy T. Hempt: Petitioners aver that the following statement of facts are true and correct and constitute in part the basis for the objections herein set forth: A. Loy T. Hempt died on March 19, 1977 a resident of Cumberland County, Pennsylvania and his Will dated December 8, 1964 and a Codicil thereto dated December 12, 1969 are probated in the Office of the Register of Wills of Cumberland County at No. 21-77-231 (hereinafter collectively referred to as the Loy T. Hempt Will). - 1 - J ~ , I tit -- iJ.,. B. The Loy T. Hempt Will in Item Fifth establishes a Trust in which a life estate in the income is provided for Loy T. Hempt's widow, Margaret and his niece, Doris Jean Hempt ("Jean") and a remainder interest as hereinafter described is established in favor of Jean's siblings and Petitioner Robert H. Kalbach, Sr. and their issue. c. Item Fifth of the Loy T. Hempt Will provides: "FIFTH: I devise and bequeath all the rest of my estate, of whatever kind and wherever situate, to my trustees hereinafter named, in trust as follows: (1) During such time as either or both of my wife, Margaret, and my niece, Jean Hempt, are living, trustees shall pay to or expend directly for the benefit of either or both of my wife and my niece such parts or all or none of the net income and principal ~ trustees may determine in their sole and absolute discretion, to provide for their care, support and welfare, provided that no principal shall be paid to or used for my wife so long as any principal remains in trust under item FOURTH hereof. (2) Upon the death of the survivor of my wife, Margaret, and my niece, Jean Hempt, or upon my death ifboth my wife and niece predeceases me, trustees shall transfer the remaining principal as follows: (a) Forty per cent (40%) thereof to my nephew, Max Hempt, ifhe is -2- " " "- '<! l' then living, but if he is then dead, to his then living issue, per stirpes. (b) Forty per cent (40%) thereof to my niece, Dorothy Hempt, if she is then living, but if she is then dead, to her then living issue, per stirpes. (c) Twenty per cent (20%) to my nephew, Robert Kalbach, ifhe is then living, but if he is then dead, to his then living issue, per stirpes. (d) If any of the above named beneficiaries under this item FIFTH Paragraph (2) shall not be living at the time above set forth for distribution of the principal of this trust, leaving no issue surviving him, the share 0 f principal to which such beneficiary or his issue would have been entitled, if living, shall be transferred to the other living beneficiaries under this Item FIFTH Paragraph (2), in proportion to their respective interests in my estate." D. The residuary heirs of the Loy T. Hempt Residuary Trust are: -3- .. JIll ... . L. (' Issue of Max Hempt George F. Hempt 1/4 of 40% Gerald L. Hempt 1/4 of 40% Marion H. Semoff 1/4 of 40% Martha D. Bair 1/4 of 40% Issue of Dorothy Hempt Mark W. Robert Mark 1/3 of 40% Forrest H. Mark 1/3 of 40% Steven E. Mark 1/3 of 40% Robert H. Kalbach 20% E. Petitioner, Robert H. Kalbach, Sr., is the cousin of Jean and has a 20% remainder interest in the assets of the trust created under the Will (the "Loy T.Hempt Residuary Trust") for the benefit of Jean upon her death. F. Petitioner, Robert H. Kalbach, Jr., is the son of Petitioner, Robert H. Kalbach, Sr., and with his brother, RichardC. Kalbach, succeeds to the interest of his father in the Loy T. Hempt Residuary Trust in the event that his father predeceases him. G. Petitioner, Richard C. Kalbach, is the son of Petitioner, Robert H. Kalbach, Sr., and with his brother, Robert H. Kalbach, Jr., succeeds to the interest of his father in the Loy T. Hempt Residuary Trust in the event that his father predeceases him. -4- ... .. .. " ....- H. Jean was born on January 24,1927 in Cumberland County, Pennsylvania, and because of a disability has, since 1937, been a resident at The W rods Sch<lK>ls and Residential Treatment Center, Langhorne, Pennsylvania, a privately owned ~titution. I. Jean is unmarried and has no children. J. Jean's parents are both deceased. K. Jean had two siblings - namely, a sister, Dorothy H. Mark, decqased in 1995, and a brother Max C. Hempt, deceased in 1999. L. Jean is mentally retarded and lacks sufficient capacity to make imd communicate responsible decisions concerning her property or person and no ~hange in Jean's disability and physical and mental condition has occurred from 1985 to!the present. M. Jean was adjudicated to be an incapacitated person by Final D~ of this Honorable Court dated March 8, 1985. N. In a Final Decree of the Court of Common Pleas ofCumberlan4 County I dated May 10, 1990, it was ordered that Max C. Hempt and Dorothy H. Mark ~e appointed guardians of the person of Jean, with no bond required. O. The intestate heirs of Jean are: -5- .. . It'... Issue of Max Hempt George F. Hempt Gerald L. Hempt Marion H. Semoff MarthaD. Bair Issue of Dorothy Hempt Mark W. Robert Mark Forrest H. Mark Steven E. Mark Robert H. Kalbach is not an intestate heir of Jean Hempt. P. The Will ofLoy T. Hempt names Max C. Hempt and MargaretlHempt, the widow ofLoy T. Hempt, as Trustees of the Residuary Trust for the benefit of ~ean and provides that on the death of Margaret (who died September 4,1988) she be subceeded as a co-trustee by Dorothy H. Mark. Q. The death of Dorothy H. Mark on June 15,1995 created a vacabcy for the fiduciary positions she held as: (1) a co-trustee (with Max C. Hempt) of the Residuary Trust for the benefit of Jean under the Will ofLoy T. Hempt; and (~ as a co-guardian (with Max C. Hempt) of the estate, and of the person, of Jean. i R. On or about June 3, 1996, Max Hempt and Gerald L. Hempt fil~ a Petition with the Court of Common Pleas of Cumberland County captioned an~ docketed only "IN THE MATTER OF JEAN DORIS HEMPT, AN INCOMPETENT," to have -6- 4 ... . ~ Gerald L. Hempt appointed as a successor co-trustee with Max Hempt under the Loy T. Hempt Residuary Trust, the Trust under the Will of her father, George L. Hen1pt, and as co-guardian of the Estate and person of Jean. A copy is attached hereto as E$bit A. S. Notice of the filing of the Petition for the appointment of a successor trustee for the Loy T. Hempt Residuary Trust was deliberately not g~ven to any of the residuary heirs under the Will ofLoy T. Hempt as interested parttes in the Loy T. Hempt estate as is required by law. T. Paragraph 16 of the 1996 Petition avers with respect to the ap~intment of Gerald L. Hempt as co-trustee with Max Hempt that "such appointment will n(>t adversely affect the interests of any other person or organization", which av~ent is patently false and misleading to this Honorable Court. U. In a Final Decree of the Court of Common Pleas of Cwnber1i County dated September 3, 1996, Judge Sheely ordered that Gerald L. Hempt,lson . I I of Max C. Hempt and nephew of Jean, be appointed as co-trustee with Max C i Hempt of the Loy T. Hempt Residuary Trust and the co-guardian with Max C. Hempt of the estate and of the person of Jean. A copy is attached hereto as Exhibit B. -7- ~ ~ .. ~ .... v. No notice of the September 3,1996 Final Decree was providedlto any of the residuary beneficiaries of the Estate ofLoy T. Hempt and the Loy T. Hembt Residuary Trust. W. The Petition for the appointment of a successor trustee and the 1996 Final Decree were not docketed nor indexed in the Proceedings Docket fpr the Loy T. Hempt Estate. A copy of the Proceedings Docket is attached as Exhibit C. x. Because of the death of Max C. Hempt on May 23,1999, Geralp L. Hempt now is purporting to act as the sole trustee of the Loy T. Hempt Residl$ry Trust, and as the sole guardian of the estate, and of the person, of Jean. Y. On or about May 18, 200 1, George F. Hempt and Gerald L. H$pt filed a Petition with this Court captioned only, "IN RE: ESTATE OF JEAN DORIS tEMPT, AN INCOMPETENT PERSON" to have George F. Hempt appointed as co-t:r4stee with Gerald L. Hempt of the testamentary Trust under the Will ofLoy T. Hempt ana co- guardian with Gerald L. Hempt of Jean's estate and her person. A copy is attathed hereto as Exhibit ''D.'' - 8- .. ... 1L z. Notice of the filing of the Petition for the appointment of George F. Hempt as a co-trustee with Gerald L. Hempt was deliberately not given to any of the Kalbach Petitioners as interested parties as is required by law. AA. Advance notice of the filing of the 2001 Petition was given to Forrest H. Mark, W. Robert Mark, Steven E. Mark, George F. Hempt, Gerald L. Hempt, Marion D. Semotf and Martha D. Bair. BB. The only residuary beneficiary to whom notice of the filing of the 2001 Petition was not given was Petitioner, Robert H. Kalbach. CC. The 2001 Petition for the appointment of George F. Hempt as a co-trustee with Gerald L. Hempt was neither docketed nor indexed in the Proceedings Dqcket for the Loy T. Hempt Estate. DD. Paragraph 10 of the 2001 Petition again avers with respect to thb appointment of George F. Hempt as co-trustee of the Loy T. Hempt Residuary I Trust that "... such an appointment will not adversely affect the interest of any other pers(>n or organization.", which averment is patently false and misleading to this HonoraPle Court. EE. Petitioners only became aware of these attempts by Gerald L. Htempt to have this Court act upon the appointment of a trustee for the trust created in the Loy T. Hempt Estate without proper notice because Forrest Mark told Petitioner that Gerald L. -9- . . '- Hempt had filed a Petition to Make Gifts as Guardian of Jean and Petitioners, through their counsel, in looking into the Petition filed by Gerald L. Hempt discovered the above- described 1996 proceedings to have Gerald L. Hempt appointed as a co-trustee and the request for the appointment of George F. Hempt as a co-trustee in the Loy T. Hempt Trust disguised in the Doris Jean Hempt Guardianship docket and petitions. FF. Action on the Petition for George F. Hempt's appointee as a co-trustee has been continued by the agreement of the parties. GO. Upon the death of Max Hempt on May 23, 1999 a vacancy occurred in the office of the personal representative for the Estate ofLoy T. Hempt and no proceedings have occurred to have a successor personal representative appointed to this office. HH. At the time of his death, Loy T. Hempt owned 6,000 shares of the 24,000 issued and outstanding shares of the common stock of CA Hempt Estate, Inc., a Pennsylvania corporation owning substantial commercial real estate in Cumberland County. II. The other 18,000 shares of the common stock of CA Hempt Estate, Inc. are owned as follows: Robert H. Kalbach Trust FBO Martha Hempt Robert Mark 6,000 shares 2,000 shares 667 shares - 10- .. t. L_ Forrest Mark Steve Mark Doris Jean Hempt George F. Hempt Gerald L. Hempt 667 shares 666 shares 2,000 shares 3,000 shares 3,000 shares 11. At the time of his death, Loy T. Hempt owned 89 shares of the 100 shares of common stock of Valley Land Co., a Pennsylvania corporation owning sUb*tantial I I i undeveloped real estate in Cumberland County. I KK.. At the time of his death, Loy T. Hempt owned 2,123 shares Ofre common stock ofHempt Brothers, Inc., constituting a substantial interest in a local business engaged in the construction and quarry business. I LL. Gerald L. Hempt is an officer of Hempt Brothers, Inc. and own$ directly and indirectly a substantial interest in the stock of Hempt Brothers, Inc. MM. According to the entries on pages 42 to 44(c) of the First and Filnal Account for the Estate ofLoy T. Hempt on April 25, 2002, the stock in the aforementioned three closely held corporations in which Gerald L. Hempt and Ibis family hold, and later acquire, substantial interests were alleged to have been distributed in kind to two separate trusts, one each for the benefit of the issue of Max. Hempt and 1he issue of Dorothy Mark, and to the exclusion of Petitioners as follows: - 11 - <II <.. . Hempt Bros.. Inc. CA Hempt Estate Valley Land Shares ~ Shares % Shares ~ M~ Hempt Issue 1328 62.55% 1235 20.58% 70 78.65% Dorothy Mark Issue 795 37.45% 4765 79.42% 19 21.35% Robert H. Kalbach --.J! 0% --.J! 0% --!L 0% 2123 100% 6000 100% 89 100% Objection 1. The document Dwporting to be the First and Final Account of the Estate ofLoy T. Hempt. Deceased. is a nullity and all expenditures for which credit is claimed therein and the division pwported to be made by the Estate ofLoy T. Hempt into three (3) sejlarate trusts as shown on pages 42 through 44( c) of said account are invalid and without authorization because no personal re,presentative of the Estate has been ~jlointed following the death of Max Hempt. A. All of the preceding averments are incorporated by reference as if set forth in full. B. The executors of the Estate ofLoy T. Hempt are named in ITEM THIRTEEN of the Will as Max Hempt and his widow, Margaret Hempt as co-Executors and Dorothy Hempt Mark as a successor co-Executor. C. All of the foregoing are now deceased, Max Hempt having died on May 23, 1999. - 12- .~~ '" tI, D. There is therefore no personal representative appointed for the Estate of Loy T. Hempt. E. The attempt by Gerald L. Hempt to usurp the fiduciary position of the personal representative of the Estate ofLoy T. Hempt and distribute estate assets to his personal advantage is evidence of his manipulation and mismanagement of the assets in the Loy T. Hempt Estate for his personal benefit. Obiection 2. Because Gerald L. Hempt was never properly ~'pointed as Trustee of the Residuary Trust Under the Will of LoX T. Hempt. there exists a vacancy in that position. and all of his actions pwporting to be on behalf of the Residuary Trust are null and void. A. All of the preceding averments are incorporated by reference as if set forth in full. B. Section 7101 of the Probate, Estates and Fiduciaries Code, 20 Pa. C.S.A. ~7101 provides as follows: "~71 0 1 To fill vacancy The Court, after such notice to parties in interest as it shall direct. may appoint a trustee to fill a vacancy in the office of trustee, subject to the provisions, ifany, of the trust instrument." (Emphasis supplied) - 13- - . '- C. The Official Comment to ~7101 set forth in Purdon's Pennsylvania Statutes and Consolidated Statutes Annotated provides in part as follows: ''The requirement for' such notice to parties in interest as it shall direct' is intended to preserve existing case law as illustrated by McCaskey's Est. 293 Pa 497, 307 Pa 172, and Zerbey Est., 346 Pa 2. Consideration must be given to nominees suggested by parties in interest, but nevertheless the court is not bound by the suggestions in all cases." D. The case law above referred to requires that notice be given to parties having an interest in a trust so that they may be apprised of, and participate in the process by suggesting names and is stated by Justice Simpson in McCaskey's Estate, 307 Pa. 172 . (1932) above referenced to in the following quotation: "All the parties in interest, present and proSj)ective, are entitled to suggest the names of those whom they prefer for trustees, and therefrom the court should select, if of opinion they are thoroughly fit, a sufficient number who are not unfriendly to the life tenants, and yet will not permit anything to interfere with their duty to preserve the principal intact for the benefit of the remaindermen." (Emphasis supplied) E. Gerald L. Hempt's appointment as a co-trustee under the Loy T. Hempt Residuary Trust is invalid as a matter of law due to his deliberate failure to give notice to all parties in interest as remaindermen under the Will ofLoy T. Hempt of the Petition to this Honorable Court to be appointed as co-trustee with Max Hempt. - 14- - . '- F. The Loy T. Hempt Residuary Trust has a vacancy in the office of Trustee due to the lack of a valid appointment of a successor trustee. G. The residuary heirs of the Loy T. Hempt Residuary Trust have never acquiesced or consented to any actions of Gerald L. Hempt in his capacity as the Purported Trustee. H. No waiver of the conflict of interest occurred because Gerald Hempt did not disclose his status as a remainder beneficiary of the Loy T. Hempt Residuary Trust. I. No waiver of the conflict of interest occurred because due to the intentional failure to properly caption the Petition (neither the Estate of George L. Hempt nor the Estate ofLoy T. Hempt nor the Loy T. Hempt Residuary Trust appear in the caption) and due to the intentional failure to give notice to the remainder beneficiaries of the involved Estates and Trusts. - 15 - L . .. t. Obiection 3. The Trustees of the Loy T. Hempt Residwuy Trust have breached their fiducimy duty to the remainder beneficiaries of the Trust in making distributions of income ($870.040.01) and principal ($20.653.991) to Jean Hempt or her estate. A. All of the preceding averments are incorporated by reference as if set forth in full. B. The Trust established for the benefit of Jean under the Will ofLoy T. Hempt directs the Trustee, in his absolute and sole discretion, to expend net income and principal for the beneficiary's care, support and welfare as cited above. c. The Trustee is given specific authority in the Will ofLoy T. Hempt to consider the resources and sources of funds available to the beneficiary when determining whether to distribute income or principal to a beneficiary. D. At all times since the establishment of the Trust, the Trustee has failed to exercise his discretion and has chosen to distribute all of the income to Jean to the detriment of the Loy T. Hempt residuary heirs and the enrichment of Jean's intestate heirs, to the exclusion of Petitioners. IThis assumes that the 2002 reimbursement of the December 2000 distribution was properly handled by the Trustee. This distribution will be the subject of a different objection. - 16- .. .. " E. Jean Doris Hempt's personal estate in cash and cash equivalents is valued in excess of$I,630,000 and in addition includes shares of closely held businesses to which no value has been assigned. F. Jean's personal assets are generating income sufficient to meet her needs as averred by the 200 1 Petition filed by George F. Hempt and Gerald L. Hempt. G. Gerald L. Hempt, in his stated capacity as Guardian of the Estate of Jean Hempt, filed on May 18,2001, two separate petitions with this Court seeking the following relief: (a) That Gerald Hempt's brother, George F. Hempt, be appointed as successor co-guardian of Jean Hempt (the ''Petition for Appointment of Successor ..."); and (b) That the Court approve the distribution of one-time gifts to seven (7) named individuals from the Jean Hempt estate in the amount of $675,000.00, together with annual gifts of $ 10,000.00 apiece thereafter (the "Petition for Permission to Make Gifts ..."). (The subjects of these petitions are referred to collectively herein as the "Proceedings. ") - 17 - "' .. I' H. Also alleged in the Petition For Permission To Make Gifts ... filed by Gerald L. Hempt are the following matters: · The value of Jean Hempt's liquid estate (cash and cash equivalents) as of April 30, 2001 approximates One Million Six Hundred Thirty Thousand ($1,630,000) Dollars (~11). · Jean Hempt's estate also includes shares of a closely held family business, although the number of shares and the value of the shares are not identified (~11). · The estimated annual income from Jean Hempt's Estate is One Hundred Five Thousand ($105,000) Dollars (~11). · The estimated annual cost of care for Jean Hempt is approximately Fifty-Five Thousand Six Hundred Thirty ($55,630) Dollars (~13). · Jean Hempt "has assets well in excess of those needed to live (sic) for her to live in her customary manner." (~14). I. Despite the value of Jean Hempt's own estate, and despite an annual income of almost double Jean Hempt's living expenses, Gerald L. Hempt, in his capacity as the Purported Trustee and all prior Trustees of the Loy T. Hempt Residuary Trust, have apparently distributed and continue to distribute One Hundred Twenty-Five Thousand ($125,000) Dollars annually from the Loy T. Hempt Residuary Trust to the Jean Hempt Estate (~11, 17). - 18- "- J. The distributions of principal and income have been made to the Jean Hempt Estate without consideration or regard for her actual needs, thereby inflating the value of the Jean Hempt Estate and deflating the value of the Loy T. Hempt Residuary Trust. K. These improper distributions of money from the Loy T. Hempt Residuary Trust deprives Robert Hempt Kalbach, Sr. of his twenty (20%) percent remainder share of the Loy T. Hempt Residuary Trust and enriches the Pmported Trustee, his siblings and others. L. No reasonable basis has ever existed to distribute arbitrarily income from the Loy T. Hempt Residuary Trust to Jean. M. No reasonable basis has ever existed to distribute arbitrarily principal from the Loy T. Hempt Residuary Trust to Jean. N. The Pmported Trustee has exercised and abused his discretion to the disadvantage of the residuary heirs. - 19- .. Objection 4. The decision of the Pur;ported Trustee to divide the residue of the Loy T. Hempt estate (the Loy T. Hempt Residumy Trust) into three SCllarate trusts contrarY to the provisions of the Loy T. Hempt Will and to allocate the estate assets in a non-fractional share basis is contnuy to law and is a breach of his tiduci8lY duty. A. All of the preceding averments are incorporated by reference as if set forth in full. B. The Purported Trustee's status as a residuary heir creates a contlict of interest due to his disingenuous actions and lack of full disclosure to date. C. The Purported Trustee has a personal interest in closely held family businesses in which the Loy T. Hempt Residuary Trust holds an ownership interest. D. The lack of disclosure and accountings creates the appearance of impropriety and manipulation because the distributions are done in a manner which creates a financial advantage to the Purported Trustee and a financial disadvantage to the other residuary heirs. E. The Purported Trustee asserts that he is not required to distribute the stock in family businesses on a pro-rata basis and that he has the discretion to distribute other assets in lieu of such stock to the other residuary heirs of the Loy - 20- . '. T. Hempt Residuary Trust pursuant to 20 PA. C.S.A. ~7191(a) as amended by Act 39 of 1999, 1999 P.L. 422. F. The Purported Trustee concedes in his Petition that the only reason for such a non-pro rata and unequal distribution is to create an ownership advantage in several family held businesses by the Pwported Trustee in favor of the Purported Trustee. G. The clear desire of the Purported Trustee to manipulate the distributions to his advantage creates a conflict of interest. H. Petitioners herein own and operate paving and excavating businesses in competition with similar business enterprises the stock of which is owned by the Purported Trustee personally and in the various trusts and guardianship account for the benefit of Jean. I. The Pwported Trustee of these trusts has refused to engage in business relationships with the business enterprises operated by Petitioners herein. J. The trustee has exhibited open hostility toward the Petitioners herein, which has affected the exercise of his judgment and decisions in managing the Estate of Loy T. Hempt and the Residuary Trust. - 21 - . K. Loy T. Hempt was aware of the potential conflict resulting in a fractional distribution of the stock in his estate and specifically chose to devise his estate on a fractional basis even though no authority existed at the time his Will was drafted for anything other than a pro-rata fractional share distribution in kind. L. Loy T. Hempt specifically chose to devise his estate on a fractional basis knowing that his decision would not be altered following his death. M. The purpose of Section 7191 was to aid in the qualification of trusts as qualified shareholders for Subchapter S purposes as well as for generation skipping tax purposes, not to permit a trustee to arbitrarily gain a controlling interest in closely held corporations or businesses to the detriment of other beneficiaries. N. The clear desire of the Purported Trustee to manipulate the distribution and division of the Loy T. Hempt Residuary Trust into three separate trusts to his personal advantage creates a conflict of interest which was neither intended by the Decedent nor waived by the residuary heirs. O. No evidence exists of any alleged hostility except for the Purported Trustee's own intentional and hostile action of splitting the residuary trust on a non pro-rata basis to his own personal advantage. - 22- . Obiection 5. The Pluported Trustee's citation of. and reliance on. &7191 of the Probate. Estates and Fiducimy Code as amended in 1992 and 1999 as authorization for divisions of the Residumy Trustee into three se.parate trusts on a non pro rata basis without the consent of all interested parties is misplaced because the 1992 and 1999 amendments to &7191 are not made retroactive to ~'ply to a trust under a 1964 Will of a decedent who died in 1977. A. All of the preceding averments are incorporated by reference as if set forth in full. B. Section 7191 provided at the time of the death ofLoy T. Hempt as follows: "~7191. Separate trusts. The court, for cause shown and with the consent of all parties in interest may divide a trust into two or more separate trusts. (Emphasis supplied). C. Section 1926 of the Statutory Construction Act of 1972, 1 Pa. C.S.A. ~ 1926 provides as follows: "~1926 Presumption against retroactive effect No statute shall be construed to be retroactive unless clearly and manifestly so intended by the General Assembly." D. Subsection (3) of Section 1922 of the Statutory Construction Act of 1972, 1 Pa C.S.A. ~1922(3) provides as follows: - 23- "~1922 Presumptions in ascertaining legislative intent In ascertaining this intentions of the General Assembly in the enactment of a statute the following presumptions, among others, may be used: (3) That the General Assembly does not intend to violate the Constitution of the United States or of this Commonwealth " ---------------------------------- E. Pennsylvania law at the time ofLoy Hempt's death was that the whole principal of a Trust must be kept intact absent a consensual division "since it cannot be said that a share of income from the entire estate is not more valuable than the income from a proportionate share of the principal." See Official Comment ~7191 at 20 Pa .C.S.A. ~7191. F. At the time that Loy T. Hempt's Will was drafted, and at the time of his death, Pennsylvania statutory and case law provided that residuary distributees had a right to demand a pro-rata distribution in kind of personal property and securities if the sale thereof was not required to pay debts. See Minichello Estate, 368 Pa 639, 84 A.2d 511 (1951); Vernon's Estate. 225 Pa 368, 74 A. 236 (1909); 20 Pa C.S.A. ~3534. - 24- Obiection 6. The ~'plication of Section 7191(a) as amended to a trust created prior to its amendment in 1999 would be a violation of the constitutional protections afforded Petitioners and an illegal taking of their property. A. All of the preceding averments are incorporated by reference as if set forth in full. B. Article I, Section 1 of the Pennsylvania Constitution, entitled "Inherent rights of mankind" defmes as "inherent and indefeasible" the right of , 'possessing and protecting property." C. The right of a testator to dispose of his property as he sees fit is a property right entitled to the full protection of the law, including protection from the deprivation thereof without due process of law by retroactive legislation in violation of Article 1, Section 9 of the Pennsylvania Constitution. See Borsch Estate, 362 Pa 581, 67 A.2d 119 (1949) cited favorably in Estate of Bernardi v. Bernardi. (O.C. Div., Cumb.), 22 Fid. Rep. 282 (2001). D. Objection 5 sets forth the property rights of Petitioners under Pennsylvania law which vested in Petitioners upon the death ofLoy T. Hempt (1) to have the Loy T. Hempt Trust maintained intact and (2) to receive a pro-rata distribution of each of the trust assets upon the life tenant's death. - 25- E. The 1999 Amendment to Section 7191 of the Pennsylvania Probate, Estates and Fiduciaries Code cited by the Purported Trustee cannot constitutionally authorize the division of the Loy Hempt Trust on a non pro-rata basis without the consent of the remainder interests because such an application of the 1999 amendment (a) would constitute the deprivation of a pre-existing property interest in the remaindermen without due process of law, contrary to Section 1 of the Fourteenth Amendment to the Constitution of the United States and Article I, Section 9 of the Pennsylvania Constitution and (b) would be contrary to, and in violation of, Article I, Section 17 of the Pennsylvania Constitution which provides that no ex post facto law nor any law impairing the obligations of contracts shall be passed. See Reznor Estate. 419 Pa. 188, 213 A.2d 791 (1963). Obiection 7. The valuation of CA HemJlt Estate. Inc. used in the division is arbitrarily low and does not properly reflect actual fair market value. A. All of the preceding averments are incoIpOrated by reference as if set forth in full. - 26- B. A valuation report prepared by CA Hempt Estate, Inc. for a shareholders meeting reflects the December 31, 2000 value of the corporation at $5,074,626 which converts, if accurate, to a per share value of$211.44. C. The Loy T. Hempt Residuary Trost holds 6,000 shares for an actual fair market value of $1 ,268,640. D. The per share value used in the First and Final Account was $104. E. The First and Final Account does not explain or justify the reduced per share valuation but it appears to be based on a 51 % discount for lack of marketability and minority interest. F. No basis exists for the use of discounts for lack of marketability and minority interest when making distributions for estate and trust administration purposes. G. Lack of marketability and minority interest discounts are fictional tax concepts and not a concept to be used in dividing a minority interest among beneficiaries in trust and estate administration. H. The use of the discounted valuation permits the Purported Trustee to make a distribution of 51 % extra to the beneficiaries of Dorothy Mark and Max Hempt and a 51 % lesser distribution to Robert Hempt Kalbach's family. - 27- I. The use of discounted valuations are fundamentally unfair where the impact of the discount is arbitrarily assigned to one branch of beneficiaries to the betterment of the other two branches of beneficiaries. J. Use of the actual fair market value means that the Dorothy Mark family is receiving $511,952 more than is represented in the First and Final Account. K. Use of the actual fair market value means that the Max C. Hempt family is receiving $132,688 more than is represented in the First and Final Account. L. The use of the discounted valuation in the First and Final Account without full and fair disclosure is evidence of the Purported Trustee's abuse of discretion, disingenuous actions, lack of full disclosure, impropriety and manipulation and self dealing to the detriment of other beneficiaries. M. A copy of the December 31, 2000 valuation report for CA Hempt Estate, Inc. is attached as Exhibit E. - 28- Obiection 8. The valuation ofHempt Brothers. Inc. is arbitrarily low and does not properly reflect actual fair market value. A. All of the preceding averments are incorporated by reference as if set forth in full. B. No copy of an alleged buy-sell agreement has been supplied to the beneficiaries of the Loy T. Hempt Residuary Trust or the Court. C. No evidence to support the alleged valuation has been made available to the Court or the residuary beneficiaries of the Loy T. Hempt Residuary Trust. D. The Purported Trustee has a direct personal interest in the manipulation of the distribution of the Hempt Brothers, Inc. stock to the detriment of the other remainder beneficiaries. Obiection 9. The valuation of Valley Land Co. is arbitrarily low and does not properly reflect actual fair market value. A. in full. All of the preceding averments are incorporated by reference as if set forth - 29- B. The use of Common Level Ratios by the Purported Trustee to determine the value of Valley Land Co. stock is improper. C. Under the clear statutory language the Common Level Ratio is not a proper basis for the determination of fair market value. D. The Common Level Ratio was established in the State Tax Equalization Board Law for the purpose of ''providing for equalization of assessed valuations of real property . . . for use in determining the amount and allocation of Commonwealth subsidies to school districts ~ . ." Act 267 of 1982. E. The calculation of the Common Level Ratio is based on arbitrary restrictions and limitations that disregard all sales by tax exempt organizations, sheriff's sales and all sales between family members. F. The methodology then requires that all included sales be converted into a mean based on sale price compared to assessed value with a ratio of one to 100 percent and a mean is then computed. G. High and low limits are computed by multiplying and dividing the mean by four and all sales exceeding either limit are rejected. H. The resulting arithmetic mean is the ratio certified as the Common Level Ratio for the county for the year July 1 - June 30. - 30- . I. The legislative intent of the Common Level Ratio is not to define ''fair market value" but rather to fmd "current value". J. Equalized value is not a measure of fair market value of a particular parcel but rather is a test of the local assessor's overall valuations. Obiection 10. No explanation exists for the December 2000 principal distribution to Jean Hempt Estate which was later reimbursed to the Loy T. Hempt Estate and Residwuy Trust and the reimbursement does not sufficientlv compensate the trust for the lost use of the funds. A. All of the preceding averments are incorporated by reference as if set forth in full. B. The December 2000 principal distribution was in cash per the First and Final Account. C. The reimbursement to the Estate did not occur until January 2002. D. The reimbursement to the Estate was in the form of securities and bonds: 2,240 units 20,000 units 35,000 units 13,739 units Merrill Lynch P A Muni Bond Fund Philadelphia P A Muni Auth Allegheny Co. P A Higher Edu. ML Muni Bond Fund Ltd. Mat B $24,617.00 $20,114.00 $35,471.00 $138,937.00 - 31 - E. The improper principal distribution was in the form of cash in the amount of$2I8,565.4I. The difference was refunded to Jean Hempt Estate. F. The reimbursement to the Loy T. Hempt Estate and Residuary Trust does not properly reflect the income tax impact of the liquidation which occurred to make the principal distribution because the Loy T. Hempt Estate and Residuary Trust would have incurred fiduciary income taxes on the capital gain for items sold or otherwise disposed of to effectuate the cash distribution. G. The reimbursement to the Loy T. Hempt Estate and Residuary Trust does not properly reflect the income loss suffered by the Loy T. Hempt Estate and Residuary Trust during the period of time in which they did not have the assets and no income was being generated. Obiection 11. The Pwported Trustee breached his fiduciary duty by not kee.pine proper records resulting in a First and Final Account based on "estimates" which can neither be verified nor substantiated. A. in full. All of the preceding averments are incOlporated by reference as if set forth - 32- B. The following entries are evidence of a lack of attention to the fiduciary details required of a Trustee: 3/14/95 3/10/81 2/21/90 2/28/86 6/17/91 Check for which payee and reason is not identified Miscellaneous bank charges - Used because the trustee could not balance the checkbook Miscellaneous bank charges - Used because the trustee could not balance the checkbook Estimate of actual. dividends from 1981-1986 due to lack of records which reflect the actual dividends earned in the Loy T. Hempt Estate and Trust (multiple entries) Estimate of actual dividends from 1988-1991 due to lack of records which reflect the actual dividends earned in the Loy T. Hempt Estate and Trust (multiple entries) Objection 12. The Estate failed to timely file tax returns resulting in the imposition of interest and penalties resulting in a lesser amount being available to the beneficiaries and the share of the Executor's family and the Pw:ported Trustee's family should be surcharged for the breach of fiduciary responsibility via the late filing and payment of taxes in the amount of$8.512.49. in full. death taxes. A. All of the preceding averments are incorporated by reference as if set forth B. The Estate had nine months from the date of death to file and pay the - 33- c. No reasons are provided for the late payment of the death taxes and filing of the death tax returns. D. Fiduciary income tax returns are due three months and fifteen days after the end of the fiscal year. E. No reasons are provided for the late filing and payment of fiduciary income taxes. F. The filing of tax returns and payment of taxes are basic duties of a fiduciary and failure to do so on a timely basis is a clear breach of duty to the beneficiaries. Obiection 13. Assumine:. are:uendo. that Gerald L. Hempt is a valid Trustee. he is not permitted to participate in decidine when and if to distribute principal and income to any beneficiary of the Lay T. Hempt Residuary Trust. A. All of the preceding averments are incolpOrated by reference as if set forth in full. B. Item Eleventh of the Last Will and Testament provides: - 34- "ELEVENTH. Whenever in this trust trustees are given a discretionary power to determine whether or to what extent principal or income shall be distributed to or used for the benefit of a beneficiary, trustees may consider, to such extent as they deem proper, the resources and sources of funds available to such beneficiary. No trustee who is also a beneficiary hereunder shall participate in deciding whether or to what extent principal or income shall be distributed to or used for the benefit of a beneficiary or whether any item of charge or credit shall be allocated in whole or in part to principal or income, in those instances where the trustees have the discretion to determine the same, but all such decisions shall be made solely by the other trustee. " C. The intentional inclusion of the language cited above was to avoid a potential conflict of interest. D. The intentional inclusion of the above language is direct evidence that no waiver of the conflict of interest occurred. Obiection 14. Valley Land Company expenses. including but not limited to attorney fees. surveying. landsc~ing and ~'praisals and engineering are not properly chargeable to the Estate ofLoy T. Hempt. A. All of the preceding averments are incorporated by reference as if set forth in full. - 35- B. Valley Land Company is a separate legal entity formed as a corporation. C. The Loy T. Hempt Estate and Trust owns 89 shares of Valley Land Company. D. Eleven shares of Valley Land Company are held by other, undisclosed owners. E. Valley Land Company had liquid assets of$25,711.95 as of the date of death pursuant to the information attached to the Pennsylvania inheritance tax return filed with the Cumberland County Register of Wills. F. Shareholders of a corporation are not personally responsible for the expenses of the corporation, even in a closely held corporation. G. All expenses paid for Valley Land Company are not proper expenses of the Estate of Loy T .Hempt. Obiection 15. The payment of interest on the specific bequest to Mariaret Hempt was due to the breach of the fiduciary duty by the Executors and they should be surcharied for the interest paid. A. All of the preceding averments are incorporated by reference as if set forth in full. - 36- B. The delay from March 31, 1977 (the date of death) to October 29, 1982 (the date when distribution was actually made to Margaret Hempt) represents an unnecessary and unreasonable delay. C. A fiduciary acting in a reasonable manner should have been able to make the distribution in less than five (5) years. D. All of the Pennsylvania inheritance tax had been paid by March 29, 1978. E. Ninety-Seven and Eighty-Five (97.85%) percent of the federal estate tax liability had been paid by September 24, 1980. F. The remaining 2.15% of the federal estate tax was not paid until 1983, which was about a year after the distribution was made to Margaret Hempt. G. No basis for the delay in making the distribution has been shown or identified. H. The paYment of $25,623.20 of interest is a waste of estate assets and the Executors should be surcharged for failure to make timely distributions. I. The bequest of $200,000 was not to Margaret Hempt individually but rather was to a trust for the benefit of Margaret Hempt. - 37- Obiection 16. No basis exists for the distribution of income to Marearet Hempt in the amount of $65.083.76. A. in full. All of the preceding averments are incorporated by reference as if set forth B. c. Margaret Hempt was entitled to the net income from the $200,000 trust. All distributions of income from the Residuary Trust by the Trustee in "their sole and absolute discretion" to provide for the care, support and welfare, provided that no principal shall be paid to or used for my wife so long as principal remains in trust under the Item Fourteenth hereof. D. The Trustee is given the discretion to consider reasons and sources of funds distributed to the beneficiary. E. At no time did the Trustee attempt to determine the actual needs of Margaret Hempt. - 38- Obiection 17. The attorney fees paid from principal and income are excessive and re.present payments which were for the sole benefit of Gerald L. Hempt and were not for the benefit of the Estate ofLoy T. Hempt and the Loy T. Hempt Residuary Trust. A. All of the preceding averments are incorporated by reference as if set forth in full. B. Attorney fees have increased significantly and without explanation since January of2oo1. C. The increase in fees coincides with the timing of planning decisions that were made for the sole benefit of the heirs of Max C. Hempt and Gerald L. Hempt personally. D. Attorney fees paid, as referenced in the accounting are: 3/77 to 12/83 1/84 to 12/00 1/01 to 5/02 5/02 reserve $32,609.34 $12,180.82 $69,587.48 $50.000.00 $164,377.64 E. Seventy-three (73%) percent of the fees were incurred since January, 2001. - 39- F. The only basis for the significant increase in fees was the planning incurred to justify the disproportionate and misleading division of the Loy T. Hempt Residuary Trust. G. No evidence exists to support that the fees were for the benefit of the Estate ofLoy T. Hempt or the Loy T. Hempt Residuary Trust. H. Fees which are for the sole benefit of beneficiaries are properly chargeable to the distributive share of that beneficiary. I. It creates an unreasonable burden on the share of other beneficiaries to require that they share in fees which were not incurred for their benefit and in fact were incurred for their detriment. WHEREFORE, Petitioners, Robert Hempt Kalbach, Sr., Robert H. Kalbach, Jr. and Richard C. Kalbach, respectfully request this Court to appoint an auditor to make the necessary factual determinations and thereafter order as follows: 1. Order the Register of Wills to grant letters of administration de bonis non cum testamento annexo for the Estate ofLoy T. Hempt to an independent corporate fiduciary pursuant to ~3159 of the Probate, Estates and Fiduciary Code. - 40- 2. Remove Gerald L. Hempt as Trustee of all Trusts created under the Will ofLoy T. Hempt. 3. Appoint an independent corporate trustee as the sole Trustee of all Trusts created under the Will ofLoy T. Hempt. 4. Order the Purported Trustee to reimburse the Trust as a surcharge an amount equal to the improper distributions of income and principal to Jean Hempt's Estate, income and estate tax penalties and interest and losses suffered by the Trust due to improper distributions. 5. Prohibit the distribution of principal and income from any Trust created under the Will ofLoy T. Hempt for the benefit of Jean Hempt absent clear and convincing evidence of need for her "care, support and welfare." 6. Order the Purported Trustee to reimburse the Trust in an amount to be determined, representing a surcharge for misrepresentation, breach of fiduciary duties, manipulation to the detriment of other beneficiaries and self dealing. 7. Declare the distribution of the residue of the Loy T. Hempt Estate into three separate trusts to be illegal, null and void. 8. In the alternative, order the reallocation of all of the residue among the three newly created separate trusts on a pro-rata basis based on actual fractional shares of each and every asset. - 41 - 9. In the alternative, order the combination of the three separate trusts purported to have been created by the action of Gerald L. Hempt into one trust under the Will ofLoy T. Hempt. 10. Order the Purported Trustee to reimburse the Trust in the amount of $44,818.20, representing a surcharge for the Valley Land Company expenses. 11. Order the Purported Trustee to reimburse Petitioners for the legal fees and expenditures paid by them to correct the wrongful acts of the Trustees and the Purported Trustee in managing the Estate of Loy T. Hempt and the Residuary Trust. 12. Order the Purported Trustee to reimburse the Estate and Trust for all legal fees incurred since January, 2001. 13. In the alternative, order the allocation of all legal fees since January, 2001 against the share of Gerald L. Hempt. - 42- 14. Grant such other relief as the Court in its judgment deems necessary and appropriate. Respectfully submitted, METIE, EVANS & WOODSIDE By: ~~.~ Vicky Trimmer, Esquire Sup. Ct. J.D. No. 49679 Daniel L. Sullivan, Esquire Sup. Ct. J.D. No. 34548 Howell C. Mette, Esquire Sup. Ct. I.D. No. 07217 3401 N. Front Street, PO Box 5950 Harrisburg, P A 17110-0950 (717) 232-5000 DATED: 8.. 2.3-0--- Attorneys for Petitioners VERIFICATION I, ROBERT H. KALBACH, SR., have read the foregoing document and verify that the facts set forth herein are true and correct to the best of my knowledge, information and belief. To the extent that the foregoing document and/or its language is that of counsel, I have relied upon counsel in making this Verification. I understand that any false statements made herein are subject to the penalties of 18 Pa C.S.A. ~4204 relating to unsworn falsification to authorities. DATED: ~ 1'l.J / Ol- ~~ ROBERT H. KALBACH, SR. VERIFICATION I, ROBERT H. KALBACH, JR., have read the foregoing document and verify that the facts set forth herein are true and correct to the best of my knowledge, information and belief. To the extent that the foregoing document and/or its language is that of counsel, I have relied upon counsel in making this Verification. I understand that any false statements made herein are subject to the penalties of 18 Pa. C.S.A. ~4204 relating to unsworn falsification to authorities. DATED: ?/<gj; V- I ,. R~~ VERIFICATION I, RICHARD C. KALBACH, have read the foregoing document and verify that the facts set forth herein are true and correct to the best of my knowledge, information and belief. To the extent that the foregoing document and/or its language is that of counsel, I have relied upon counsel in making this Verification. I understand that any false statements made herein are subject to the penalties of 18 Pa C.S.A. ~4204 relating to unsworn falsification to authorities. DATED: e/23/0Z- I :;Z~dfl/J RICHARD C. KALBACH - :301802 _1 EXHIBIT A IN THE MATTER OF JEAN DORIS HEMPT, AN INCOMPETENT . COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION Nos. 2008 of 1942, 253 of 1977, and 117 of 1985 PETITION FOR APPOINTMENT of SUCCESSOR TRUSTEE and SUCCESSOR GUARDIAN OF ESTATE and of PERSON The Petition of Max C. Hempt and Gerald L. Hempt respectfully represents: 1. Petitioner Max C. Hempt is the brother of, and Petitioner Gerald L. Hempt is the nephew of, Jean Doris Hempt (hereinafter "Jean") whose domicile is Cumberland County, Pennsylvania. 2. Jean was born on January 24, 1927 in Cumberland County, Pennsylvania, and because of a disability, has since 1937 been a resident at The Woods Schools and Residential Treatment Center, Langhorne, Pennsylvania, a privately owned institution. 3. Jean is unmarried and has no children. Her parents are deceased. 4. Jean has two siblings - namely, a sister, Dorothy H. Mark, who died June 15, 1995, and the Petitioner, Max C. Hempt. 5. Jean, because of mental retardation, is unable to manage her property or her person, is liable to become the victim of designing persons, and lacks sufficient capacity to make and communicate responsible decisions concerning her property or person. Attached hereto and incorporated herein by reference as ExlPbit "A", is an affidavit, dated January 28, 1985, of Jean's physician at the time, Stanley Gould, M.D., which sets forth the physical and mental condition of Jean. The original of said affidavit is on file at the Cumberland County Courthouse, Carlisle, Pennsylvania, recorded in Record Book 112, Page 494, Exhibit "A". 6. No change in Jean's disability and physical and mental condition has occurred from 1985 to the present. 7. Jean is the beneficiary under a Testamentary Trust established by her father, George L. Hempt, who died on September 8, 1942, and whose Will is filed with the Cumberland County Register of Wills at No. 2008 of 1942. The Will of George L. Hempt names his brother, Loy T. Hempt (now deceased) as trustee of such Testamentary Trust for the benefit of Jean. By Decree dated April 12, 1977 at No. 253 of 1977, the Cumberland County Court named Max C. Hempt (a brother of Jean) and Dorothy H. Mark (a sister of Jean) as successor trustees of such Testamentary Trust for the benefit of Jean under the Will of George L. Hempt. 8. Jean, also, is a beneficiary of a Testamentary Trust under the Will of her uncle, Loy T. Hempt, now deceased, whose Will is filed with the Cumberland County Register of 2 Wills, at No. 21-77-231. The Will of Loy T. Hempt names Max C. Hempt and Margaret Hempt, the widow of Loy T. Hempt, as trustees of such Testamentary Trust for the benefit of Jean, with provision that at the -death of Margaret Hempt (who died September 4, 1988), she will be succeeded as a co-trustee by Dorothy H. Mark. 9. In a Final Decree of the Cumberland County Court dated March 8, 1985 (Book 112, Page 499), Judge Sheely ordered that Jean is judged an incompetent and that Max C. Hempt and Dorothy H. Mark are appointed guardians of Jean's estate, with no bond required. 10. In a Final Decree of the Cumberland County Court dated May 10, 1990, Judge' Sheely ordered that Max C. Hempt and Dorothy H. Mark are appointed guardians of the person of Jean, with no bond required. 11. Because of the death of Dorothy H. Mark on June 15, 1995, there now is a vacancy for the fiduciary positions she held as (1) co-trustee with Max C. Hempt of the Testamentary Trust under the Will of George L. Hempt for the benefit of Jean; (2) co-trustee with Max C. Hempt of the Testamentary Trust under the Will of Loy T. Hempt for the benefit of Jean; (3) co-guardian with Max C. Hempt under the Final Decree of the Cumberland County Court, dated March 8, 1985, naming Dorothy H. Mark as a co-guardian with Max C. Hempt of the Estate of Jean; and (4) co-guardian under the Final Decree of the 3 Cumberland County Court of May 10, 1990 naming Dorothy H. Mark as a co-guardian with Max C. Hempt of the person of Jean. 12. Petitioner Gerald L. Hempt is particularly situated to be a fiduciary for the be!lefit of Jean because he has been. involved for numerous years with overseeing and managing Jean's financial affairs, and from this involvement, Gerald L. Hempt (aside from Petitioner Max C. Hempt) is most knowledgeable about the over-all well-being and welfare of Jean. 13. A major asset held for the benefit of Jean in the subject fiduciary accounts is shares of stock of.Hempt Brothers, Inc., a family owned quarrying and road building business of which both Petitioner Max C. Hempt and Petitioner Gerald L. Hempt are significant shareholders. Because of the prominence of Hempt Brothers, Inc. stock among the assets held for the benefit of Jean, it is desirable and appropriate that a successor to Dorothy H. Mark as a fiduciary for the benefit of Jean be a person significantly knowledgeable about Hempt Brothers, Inc. Petitioner Gerald L. Hempt particularly qualifies in this respect, because beyond being a shareholder of Hempt Brothers, Inc., he is, also, the long-time Secretaryffreasurer of that Company, and has for numerous years been involved with the management of that Company on a daily basis. 4 14. Service of notice on Jean about the filing of this Petition, because of her ~ disability, will serve no purpose. 15. Petitioner Gerald L. Hempt is the owner of substantial property in Cumberland and York Counties, and, therefore, it is respectfully submitted that no bond is necessary for his serving as a fiduciary for the benefit of Jean. 16. Appointment of Petitioner Gerald L. Hempt as a co-trustee with Max C. Hempt of Testamentary Trusts for the benefit of Jean, and as a co-guardian with Max C. Hempt of her estate, and of her person, as herein described, is in the best interests of Jean, and such appointment will not adversely affect the interests of any other person or organization. WHEREFOR, your Petitioners pray that Gerald L. Hempt be appointed as a successor co-trustee and as a successor co-guardian, as herein described, for the benefit of Jean, with no bond being required of him. ~)..(~ Gerafd L. Hempt . 5 COMMONWEAL TH OF PENNSYLVANIA COUNTY OF CUMBERLAND : SS MAX C. HEMPT and GERALD L. HEMPT, being duly sworn according to law, depose and say that the facts set forth in the aforegoing Petition are true and correct to the best of their knowledge, information and belief. Sworn to and subscribed before me this 3 tJ!ctay of ~i ' 1996. llliv fij ~ My Commission Expires: NOTARIAL SEAL DIANE H. ROY. Notary I'ublic Carn, Hill. Cumberland County My CommissiQll Expires Aug. 3.1998 ~!~~.~. .fl C. em . Gerald t:.ff~p?- (~ 6 ~_ ---.1- .~~.-::..~---_. ~..;... . ;/:~~ ~;~~ ~.~~-~:: ~~ POUNDED 1.13 . BY MOWB WOODS HAa (1111 . ,_ ~~""'.,. .,,,-..,..~:..11. ' . >~~..., THE WOODS SCHOOLS '~1t~ . . . 1 . , AND RESIDENTIAL TREATMENT CENTER ..,.: Langhorne, Pennsylvania 19047 . Telephone 215757-3731 '. The undersigned, be~g du1r swo~ according to law, deposes and says that he is a licensed physician ~pecializing in Pediatrics and has examined ,Jean Doris Hempt and is and has been her physician since August, 1982 and deposes and says the following: 1. That I am a Board-Certified Pediatrician, licensed to practice in the State of Pennsylvania~ 2. That Jean Doris Hempt entered The Woods Schools on September 13, 1938 and has resided there continuously since that -date. 3. That Jean Doris Hempt suffers from mild mental retardation. Her full~scale I.Q., as measured by the Wechsler Adult Intelligence Scale, is 60. Additionally, she demonstrates deficits in visual4motor integration. She functions on a concrete level, demonstrating difficulty with abstract thought, practical judgement and memory. She is physically well, although she has hypothroidism and varicosities of both le~s. 4. That Jean Doris Hempt, because of her mental retardation, is unable to manage her own property, is liable to dissipate it and could well become the victim of designing persons. :;:.: :~ .~' ',...,' < : :i:: ~'~.' ::.~_ t. ..-2.1.__,., .,' ./~-:~L! //~-1-): ~t~ . -.. 1'" .~~.~.:..~:..,.~~.:;:;: w.,'!.~ ',' ....:'.:, ' :.....~:.~.'.'_:.: '.:_.~~.:.,~. ~'>. "':.:5 !:. c: ,'" . - EXHIBIT "A" EXHIBIT B IN THE MATTER OF JEAN DORIS HEMPT, AN INCOMPETENT COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION . . Nos. 2008 of 1942, 253. of 1977, and 117 of 1985 a ~~ FINAL DECREE _ - , AND NOW, thisl: day of S;Y-.Y-rr ~~996, upon consideration of the annexed Petition, IT IS ORDERED AND DECREED that Gerald L. Hempt is hereby appointed: (1) a co-trustee (with Max C. Hempt) of the Testamentary Trust for the benefit of Jean Doris Hempt under the Will of George L. Hempt; (2) a co-trustee (with Max C. Hempt) of the Testamentary Trust for the benefit of Jean Doris Hempt under the Will of Loy T. Hempt; and, (3) a co-guardian (with Max C. Hempt) of the estate, and of the person, of Jean Doris Hempt. BY THE COURT, By'huJr-~1R I~ //.1. co r~: ,"'To' , - c" c. M I Q.. :-,-J -- .J (~. ;,..: t...:... ~. , ::i 7 0: U U -L EXHIBIT C TOWNSHIP OF LOWER A.LLEN I ~UARY 16,1977 BOOK : No. i PAGE ,- WILL , 76' 355 . , INV 3~ 414 i i ; TAX, 10,72-4 ! - I t r . . . i i I i , f I . I RESIDENCE I TOWlfSHIP OF EAST PENlfSBOR~ I RUARY 24.1977 BOOK I NO.: PAGE I lA-eTA , 21-77 1\ 230 ORTHA M. WILLIAMS EXECUTOR ~~ AOM'R, JANET R. WILLIAMs I MONTH DAY YEAR I II Camp , Hill ABSTRACT OF PROCEEDINGS ~~~~F Nov.2 1976 BOOK NO. PAGE MAR. 31 1977 Petition for citation MAY 19 1971f LETTERS OF ADMINISTRATION-CTA MAY 19 1977\ BOND SEPT 7 19771 DEDUCTIONS OCT '31 19771 INHERITANCE TAX APPHAISEMENT MAY 10 19791 FEDERAL ESTATE TAX RETURN I I, It ! I 11 H ~ " \1 II ii II ,I " II jj il I 7('OGc:.~''''''~dt.,.;t- ~lL~ p. Ib'7 DUIGNATION NAME OF DECEDENT FILE No. 21-77 231 '1' T~Y 'I' ' MAX nMJlT &,~~ DOROTHY HEMPT MARK EXECUTOR AOM'R, MONTH DAY YEAR WILL76 , 362 I MAR 31 1977 I DEC 1911977 TAX ,10 .72-5! DEC 119119771 i APR 20: 1978 ! MAY i 1~ 197(1 ! MAY ~6 11979 ! I APR ~2 b.978 II I JAN. 127119921l f ! i [I i ! I ~ ! f II I! :1 i ~ ----- , -- ----- --- u _ _____ _______1-__ ---- .-_____ ~ ,I II .. RESIDENOE - '1'VP DATE OF MARCH 19,1977 DEATH ABSTRACT OF PROCEEDINGS LETTERS TESTAMENTARY -f~evche.,j - INVENTORY DEDUCTIONS INHERITANCE TAX APPRAISEMENT FEDERAL ESTATE TAX RETURN AMENDED FEDERAL ESTATE TAX RETURN REMAINDER APPRAISEMENT LETTERS TESTAMENTARY BOOK No, PAGI' WILL 76, 1'368 INV 39842 I I TAxi 1f-72- I I TAX I 101 72-4 WILL t2of08 . I i ! \ ! ,,'- -- -- ... -- EXHIBIT D ~.. ~.2108-00080/5.18.01/JRD/LARl1.~3332.2 JUN 1 4 2001 tIJ INRE: COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION No. 117 ORPHANS' 1985 ESTATE OF JEAN DORIS HEMPT, an Incompetent Person PRELIMINARY DECREE . M AND NOW, this J<; day of , 2001, upon consideration 0 the Petition for Appointment of Successor Successor Co-Guardianship of Estate an( Person, a hearing is scheduled to consider said Petition on the ;J 3~y of ~y- 2001, at / : 3 () -p.m., in Courtroom No. c.). ---cu BY THE COURT: J. .' 108-00080/5.18.01/JRDIlAR/143332.2 IN RE: ESTATE OF JEAN DORIS HEMPT, an Incompetent Person COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION No. 117 ORPHANS' 1985 FINAL DECREE AND NOW, this day of attached Petition and following a hearing held on is hereby appointed as successor co-trustee and incompetent person. , 2001, in consideration of the , 2001, George F. Hempt successor co-guardian for Jean Doris Hempt, an BY THE COURT: J. . . )i2108-00080/5.18.01/JRDII.ARI143332.2 ..L IN RE: ESTATE OF JEAN DORIS HEMPT, an Incompetent Person COURT OF COMMON PLEAS CUMBERLAND GOUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION No. 117 ORPHANS' 1985 PETITION FOR APPOINTMENT.OF SUCCESSOR CO-TRUSTEE AND SUCCESSOR CO-GUARDIAN OF ESTATE AND PERSON TO THE HONORABLE, JUDGES OF SAID COURT: Your Petitioners, George F. Hemptand Gerald L.Hempt; respectfUlly represent that: - - 1. Jean Doris Hempt was born January 24, 1927 and because of disability has, since September 13, 1938. been a resident at The Woods Schools and Re~idential Treatment Center, Langhorne, Pennsylvania, a private institution. 2 By Final Decree of this Court, dated March 8. 1985. entered to No. 117 Orphans' 1985, Jean Doris Hempt was adj~dged an incompetent and her brother, Max C. Hempt, and her sister, Dorothy H. Mark, were appointed guardians of her estate without bond. 3 By Final Decree of this Court, dated May 10, 1990, entered to No. 117 Orphans' 1985, Max C. Hempt and Dorothy H. Mark were appointed guardians of the person of Jean Doris Hempt with no bond required. 4 By Final Decree of this Court, dated September _~~.__1_~~~, entered _ to No. 117 orphal')s' ....-.,...-...-- ',---,,--'-~-",_.. -.-.-,---,.. 1985,Petitioner Gerald L. Hempt was appointed as(fl) co-trustee [with Max C. Hempt] of the testamentary trust for the benefit of Jean Doris Hempt under the Will of George L. Hempt; (ii) co-trustee [with Max C. -."..._....~".-~... .......,.. - -~...-.._._._,.,.~._---~...,. Hempt] of the testamentary trust created for the benefit of Jean Doris Hempt under the Will of Loy T. Hempt --.....'.-.-..... .'.-.......,----.-..- and (iii) guardian [with Max C. Hempt] of the estate and of the person of Jean Doris Hempt. 5 Max C. Hempt died on May 23, 1999, and there are vacancies in the fiduciary positions held by Max C. Hempt for the benefit of his sister, Jean Doris Hempt. 1 · '1Ob2108-00080/5.18.01/JROIlAR/143332.2 , . . I 6. Petitioner George F. Hempt is particularly qualified to be a fid.uciary for the benefit of his aunt, Jean Doris Hempt, because he has been involved for numerous years with overseeing and managing the financial affairs of Jean Doris Hempt, and George F. Hempt is knowledgeable about the overall well being and welfare of Jean Doris Hempt. 7. A major asset held for the benefit of Jean Doris Hempt are shares of stock of Hempt Bros., Inc., a family owned quarrying and road building business of which both Petitioner George F. Hempt and Petitioner Gerald l. Hempt are significant shareholders. Because of the prominence of Hempt Bros., Inc. stock among the assets held for the benefit of Jean Doris Hempt, it is qesirable and appropriate that a successor to Max C. Hempt, as a fiduciary for the benefit of Jean Doris Hempt, be a person significantly knowledgeable about Hempt Bros., Inc. Petitioner George F. Hempt is qualified in this respect because George F. Hempt is the President of Hempt Bros., Inc. and has for numerous years been involved with the management and operation of Hempt Bros., Inc. on a daily !;>asis. 8. Service of notice on Jean Doris Hempt about the filing of this Petition, because of her disability, will serve no purpose. 9. Petitioner George F. Hempt is the owner of substantial property in Cumberland and York Counties, and, therefore, has respectfully submitted that no bond is necessary for his serving as a fiduciary for the benefit of Jean Doris Hempt. 10. Appointment of Petitioner George F. Hempt as. co-trustee with Gerald l. Hempt of the testamentary trust created by Loy T. Hempt for the benefit of Jean Doris Hempt and as co-guardian with Gerald l. Hempt of her estate and of her person, as herein described, is in the best interest of Jean Doris Hempt, and such appointment will not adversely affect the interest of any other person or organization. WHEREFORE, your Petitioners pray that George F. Hempt be appointed as Successor ccrtrustee and as successor co-guardian, as herein described, for the benefit of Jean Doris Hempt, with no bond being required of him. JOHNS DUFF & WEIDNER BY: 2 rry e Davia W. DeLuce 301 Market Street P.O. Box 109 Lemoyne, PA 17043-0109 (717) 761-4540 . Attorneys for Petitioners I . .",l~1.108-00080/5.18.01/JRDI\.ARl143332.2 :;' .I . I , , COMMONWEALTH OF PENNSYLVANIA COUNTY OF CUMBERLAND ss: George F. Hempt and Gerald L. Hempt, being duly sworn according to law, depose and say that the facts set forth in the foregoing Petition are true and correct to the best of their knowledge, information and belief. t;'d./~ Gerald L. Hempt Sworn and subscribed to before me this I ~~~day of ~'"'\.+-.~, .~^"~~. Notary Public My Commission Expires: , 2001. ,-.... ...... ~ . .:.- ""'-. . .~ i,:" .) ~ .- ....-- .. ~.. \.; ..... NOTARIAL SEAL DIANNE LENIG, Notary Public Lemoyne Borough Cumberland Co. My Commission Expires Dec. 21, 2001 3 EXHIBIT E ,\ .' . C.A HEMPT ESTATE, INC. V ALUA TION Assets Cash Bonds Fixed Assets, net of depreciation . Deferred Lease expense, net Total Assets Liabilities Demand Note Net Asset Value Goino Concern Value Fair Market Value of Assets less Iiablities Per CPA Statements 12/31/00 302,309 63,283 1,498,686 25,444 I I Fair Market Value 302,309 62,873 * 5,359,000 ** 25,444 1,889,722 5,749,626 (675,000) (675,000) 1,214,722 5,074,626 Discount for lack of marketability (30%) and minority interest (30%) for combined discount of 51% Value Per share value (24,000 shares outstanding) Safe/Liouidation Value 5,074,626 (2,588,059) 2,486,567 104 Potential gain on sale of real estate (5,359,000 minus 1,498,686) Less: selling expenses (estimated) Potential loss on sale of bonds (62,873 minus 63,283) Net gain Less: PA tax on gain at 9.99% Gain on sale for Federal tax purposes Federal tax @ 35% Fair Market Value of assets less liabilities Less: selling expenses (estimated) PA tax on gain Federal tax on gain Net asset value after salelliquidation Per share value (24,000 shares outstanding) .. , Sale/ Liquidation Value Per CPA Statements Per 5/1/01 appraisals 3,860,314 (400,000) (410) 3,459,904 (345,644) 3,114,260 1,089,991 5,074,626 (400,000) (345,644) (1,089,991) 3,238,991 135 I l .. I . J< . C.A HEMPT ESTATE, INC. Present Value of $5 per share annual dividend for 99 years Interest Rate 5% 6% lli 8% Present Value $5 per year/99 years $99 $83 $71 $62 Present Value of $135, payable in 99 years Present Value of $135, payable in 99 years $1 $0 $0 $0 Total Value $100 $83 $71 $62 " j. I , ;\ . . fl . CERTIFICATE OF SERVICE AND NOW, this '23~ of August, 2002, I certify that I am this day serving a copy of the foregoing docwnent upon the person and in the manner indicated below, which service satisfies the requirements of the Pennsylvania Rules of Civil Procedure, by depositing a copy of same in the United States Mail, Harrisburg, Pennsylvania, with first-class postage prepaid, as follows: Jerry R. Duffie, Esquire David W. DeLuce, Esquire 301 Market Street PO Box 109 Lemoyne, P A 17043-0109 Attorneys for Gerald L. Hempt Marion H. Semoff 410 Candlewyck Road Camp Hill, PA 17011 Martha D. Bair 225 North Ridge Drive Perrysburg, OH 43555 W. Robert Mark 3249th Street Atlantic Beach, FL 32233 Forrest H. Mark 2833 Sinks Canyon Road Lander, NY 82520 Steven E. Mark 3516 Arbor Lane Minnetonka, MN 55305 Jean Doris Hempt c/o Gerald L. Hempt, Guardian of Estate and Person of Jean Doris Hempt PO Box 278 Camp Hill, P A 17001-0278 George F. Hempt 763 Limekiln Road New Cwnber1and, P A 17070 Gerald L. 'Hempt 101 Spanglers Mill Road New Cwnberland, P A 17070 .. ,\ .. Richard W. Stevenson, Esquire McNees, Wallace & Nurick, LLC Pine Street, PO Box 1166 Harrisburg, P A 17108 Attorneys for Gerald L. Hempt By: DATED: J- /t.., /0"'2- 1I .. . . l\ . Ivo V. Otto, ill, Esquire Martson, Deardorff, Williams & Otto 10 East High Street Carlisle, P A 17013 Attorneys for Gerald L. Hempt Respectfully submitted, METTE, EVANS & WOODSIDE ~~~ Vic~ Trimmer, Esquire Sup. Ct. LD. No. 49679 Daniel L. Sullivan, Esquire Sup. Ct. I.D. No. 34548 Howell C. Mette, Esquire Sup. Ct. I.D. No. 07217 3401 N. Front Street, PO Box 5950 Harrisburg, P A 17110-0950 (717) 232-5000 Attorneys for Petitioners CI.l :i ...:l Pot ~< !1Pot o .. o~ ~~ o !j !~ 1-40 ~,.\ '.........4 . E-t ~ 8 r ~ \ ~ " ~ ..~ ~~ Z 1-4 E-t ~ := .. '02 AOS23 t\11 :;;W .~ .... CI.l. ..... >- ;.~ \~ ri '8 ,t,). ia .~ i~ .. I>. !Xl I I CD ~." ."'" ..." . . ~. ... .- Iii II' ~ :.