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HomeMy WebLinkAbout04-28-04 (2) .. 955130.6.014/28/2004 11:43 AM ESTATE OF LOY T. HEMPT Deceased IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYL VANIA TRUST CREATED UNDER ITEM FIFTH OF THE WILL ORPHANS' COURT DIVISION NO. MOTION FOR DIRECTED VERDICT REGARDING DIVISION OF TRUST 1. Gerald L. Hempt ("Trustee"), trustee of the Residuary Trust under Will of Loy T. Hempt (the "Trust") and accountant with respect to the first and final account for the estate of Loy T. Hempt, hereby files this Motion for Directed Verdict in response to the evidence presented at the hearing conducted by Auditor William A. Duncan, Esq. regarding the Accounting and Petition of the Trustee, the Objections to the Accounting and Petition filed by Robert Hempt Kalbach, Sr., Robert H. Kalbach, Jr. and Richard C. Kalbach (the "Kalbach Objections") and the Objections to the Accounting and Petition filed by W. Robert Mark, Forrest H. Mark and Steven E. Mark (the "Mark Objections") (these objecting parties are collectively referred to as the "Objectants"). 2. The Trustee moves for a directed verdict with respect to the Objectants' objection that Gerald L. Hempt should be removed as Trustee of the Trust for the reasons stated in the Trustee's Motion for Non-Suit. There was no additional testimony after the Objectants' case that adds any further weight to the Objectants' position in that regard. 3. Regarding the division ofthe Trust, Gerald L. Hempt's actions as trustee were in good faith and without any conscious intent to harm the interests of any beneficiary. In making the division, Gerald L. Hempt relied upon the advice of legal counsel and expert appraIsers. .. ~ 4. As was testified to by Robert L. Freedman and by Gerald L. Hempt, the division of the Trust complied with the terms of the statute, 20 Pa. C.S. ~ 7191, with a 40/40120 split of fair market value and income tax basis. There are no requirements in the Trust or law requiring specific assets be given to any specific future beneficiary, and there were good business reasons for not allocating shares of closely-owned family businesses to the Kalbach share. 5. The testimony as to the valuation of the C. A. Hempt Estate at $104 a share was unrebutted. No other value was proposed by the Objectants and no evidence to the contrary was submitted. 6. With respect to the valuation of Valley Land Company, the Objectants agreed with the underlying valuation ofthat land at $4.7 million pursuant to the appraisal and the 45% reduction to reflect the taxes and the transaction costs related to a sale of Valley Land Company's real estate. Since these were the only two factors involved in the valuation, the Trustee's valuation was accepted by Objectants as accurate. So, there is no dispute on record, factual or as a matter oflaw, as to the valuation of the Valley Land Company shares. 7. The trustee's valuation ofthe Hempt Brothers, Inc. at book value was correct. 8. Because the trustee's/accountant's valuations of Trust assets were correct, and because the division of the trust into three separate trusts was authorized by law and in the proportions as dictated by the Trust instrument, the trustee/accountant is entitled to a directed verdict with respect to the Objectant's objections regarding removing Gerald L. Hempt as trustee and reversing the division of the Trust. -2- .. WHEREFORE, the trustee and accountant, Gerald L. Hempt, moves for a directed verdict with respect to the Objectant's objections regarding removing Gerald L. Hempt as \ste~ ~ ~ing the division of the Trust. ~ ~ Dated: '{\~ \ ,2004 Ivo V. Otto, III Attorney ID# Martson, Deardorff, Williams & Otto 11 East High Street Carlisle, PA 17013 Donald B. Kaufinan Attorney ID# 49674 McNees Wallace & Nurick LLC 100 Pine Street P.O. Box 1166 Harrisburg, PAl 71 08 - 3 - . ".- 955132.6.01 4/28/2004 11;44 AM ESTATE OF LOY T. HEMPT Deceased IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYL VANIA ORPHANS' COURT DIVISION TRUST CREATED UNDER ITEM FIFTH OF THE WILL NO. MOTION FOR NON-SUIT REGARDING REMOVAL OF TRUSTEE 1. Pursuant to 20 Pa. C.S. ~ 779, Gerald L. Hempt ("Trustee"), trustee of the Residuary Trust under Will ofLoy T. Hempt (the "Trust") and Accountant with respect to the first and final account for the estate ofLoy T. Hempt, hereby files this Motion for Non-Suit in response to the evidence presented at the hearing conducted by Auditor William A. Duncan, Esq. regarding the Accounting and Petition of the Trustee, the Objections to the Accounting and Petition filed by Robert Hempt Kalbach, Sr., Robert H. Kalbach, Jr. and Richard C. Kalbach (the "Kalbach Objections") and the Objections to the Accounting and Petition filed by W. Robert Mark, Forrest H. Mark and Steven E. Mark (the "Mark Objections") (these objecting parties are referred to collectively as the "Objectants"). 2. There is no evidence that Gerald L. Hempt abused his fiduciary position, and there is no basis to invoke the drastic remedy of removing a trustee. 3. In dividing the Trust the evidence has shown that Gerald L. Hempt relied upon the advice of counsel and expert appraisers and followed exactly what the Trust and 20 Pa. C.S. ~ 7191 required, a 40/40/20 split of the assets. 4. During the hearing, on cross-examination the Objectants did not dispute the Trustee's valuation ofC.A. Hempt Estate, Inc. Objectant's expert eventually agreed with the ;/ Trustee's valuation of Valley Land Company. Objectant's expert disagreed with the Trustee's valuation ofHempt Brothers, Inc. because his calculation gave no weight to buy-sell agreement, which is clear error. So, in a word, the Trustee did it right. But even assuming arguendo that the trustee's valuation of the shares of Hempt Brothers, Inc. is not confirmed by the Auditor, that Valuation was made in reliance upon the advice of a qualified expert and provides no grounds for removing the trustee. 5. The evidence shows the Trustee had good reason to divide the Trust assets as he did. Indeed, it would have been imprudent if the Trustee had allocated closely-owned family business stock to a disgruntled competitor. 6. Nor do Gerald L. Hempt's performance of his fiduciary duties to Jean Doris Hempt, the life tenant, provide a basis for his removal as trustee. The Trust provides that Gerald L. Hempt may as Trustee, in his "sole and absolute discretion," make distributions to Jean Doris Hempt, and that the trustees "mav consider, to such extent as they deem proper, the resources and source of funds available to" Jean. (emphasis added). 7. The evidence is unrebutted that all of the distributions made to Jean Hempt were to pay for her legitimate expenses, including the Woods School, her individual taxes and miscellaneous expenses. 8. Gerald L. Hempt's view of the Trust as Jean Doris Hempt's primary source of support, and his decisions regarding distributions for her support, were a proper exercise of the broad discretion vested in the trustee by the Trust instrument, and a continuation of the practice of the prior trustee's since the inception of the Trust. There is no evidence that - 2 - ./ Gerald L. Hempt abused his discretion or violated his fiduciary duties in making distributions for the benefit of Jean Doris Hempt. WHEREFORE, the trustee and accountant, Gerald L. Hempt, moves for a non- suit with respect to the Objectants' Objections regarding removing Gerald L. Hempt as trustee and reversing the division of the Trust. Respectfully submitted, ~~ Ivo V. Otto, III Attorney ill # Martson, Deardorff, Williams & Otto 11 East High Street Carlisle, PAl 7013 Dated '-\ ~ \0'"\ I \ , 2004 Donald B. Kaufman Attorney ill # 49674 McNees Wallace & Nurick LLC 100 Pine Street P.O. Box 1166 Harrisburg, P A 17108 - 3 -