IMO the Estate of Evelyn Chambers

• Court: Court of Chancery of Delaware
• Decided: June 12, 2020
• Docket: ROW Folio 168119
• Status: Published

Opinion

COURT OF CHANCERY OF THE

STATE OF DELAWARE SELENA E. MOLINA MASTER IN CHANCERY LEONARD L. WILLIAMS JUSTICE CENTER 500 NORTH KING STREET, SUITE 11400 WILMINGTON, DE 19801-3734

Final Report: June 12, 2020 Draft Report: May 29, 2020 Date Submitted: February 12, 2020

Victoria D. Chambers, pro se James D. Chambers, pro se 3 Paxton Lane 511 North Union Street, Apt. 3I Bear, DE 19701 Wilmington, DE 19805

Sheldon S. Chambers, pro se 1332 Goldeneye Drive New Castle, DE 19720

Re: IMO the Estate of Evelynn Chambers Register of Wills Folio No. 168119

Dear Parties:

Pending before me are exceptions to an estate accounting. The

exceptants contend that the personal representative, their brother, failed to

provide sufficient information in the first accounting, misstated the nature and

value of the estate as well as the debts of the estate, and misused estate assets

in his administration. The personal representative denies any deficiencies or

improprieties and seeks approval of the final accounting, as is. Register of Wills Folio No. 168119 June 12, 2020 Page 2

In this post-trial final report, I find no overarching mismanagement of

the estate, nor impermissible use of estate property by the personal

representative. But I do find that the personal representative erred in failing to

properly utilize a pension designated for funeral expenses and the estate

suffered as a result. Thus, I recommend that the personal representative be

surcharged for the misapplied pension but that the remaining exceptions be

overruled. This is my final report1

I. BACKGROUND 2

Evelyn Chambers (“Decedent”) died on November 13, 2017. 3 She is

survived by three children, Sheldon Scott Chambers, Victoria D. Chambers,

and James D. Chambers, Jr. 4 Following Decedent’s death, Sheldon Scott

Chambers (the “Personal Representative”), initiated probate proceedings in the

New Castle County Register of Wills under a will dated August 30, 2000.5

1 This report makes the same sustantive findings and recommendations as my May 29, 2020 draft report to which no exceptions were filed. 2 The facts in this report reflect my findings based on the record developed at trial held on February 12, 2020. I grant the evidence the weight and credibility I find it deserves. Citations to the trial transcript are in the form “Tr. #.” Trial exhibits are cited as “PR Ex. #.” 3 Docket Item (“D.I.”) 1. 4 Id. 5 D.I. 2. Register of Wills Folio No. 168119 June 12, 2020 Page 3

Letters were issued to the Personal Representative on December 8, 2017,6 and

he filed an inventory of the estate on December 26, 2017 and a first accounting

on March 29, 2019 (the “First Accounting”).7 A proposed final accounting

was filed on May 9, 2019 (the “Final Accounting”).8

On or about May 7, 2019, Victoria D. Chambers and James D.

Chambers, Jr. (the “Exceptants”), filed exceptions to the First Accounting pro

se. 9 The Exceptants took issue with (1) the format the Personal Representative

used to list expenditures and the representative receipts provided; (2) failure

to include information related to Decedent’s home in the accounting; (3)

failure to use the State Employee Pension Plan benefit toward Decedent’s

funeral expenses; and (4) the attorneys’ fees and expenses incurred by the

Personal Representative and charged to the estate. 10 The exceptions apply

6 D.I. 1. I presided over a related civil action challenging the validity of the will admitted to probate, among other things. See In Re Evelyn Chambers, C.A. No. 2018-0630-SEM (Del. Ch.). The claims were dismissed as time-barred and for failure to state claim on April 11, 2019 and September 12, 2019, respectively. See id. at D.I. 25, 45. 7 D.I. 6, 19-28. 8 See D.I. 34. 9 See D.I. 35. 10 Id. The Exceptants raised a number of additional concerns at trial including (1) alleged entitlement to payment from the estate for caregiving services provided to Decedent and (2) general allegations of improper motivations behind the Personal Representative’s actions and his failure to consult with the Exceptants during his administration. See, e.g., Tr. 20:5-20, 24:7-12. This decision, however, focuses on the exceptions that were timely identified; those raised for the first time at trial should be overruled as untimely. See 12 Del. C. § 2302(d) (setting forth a three (3) month deadline for exceptions). Register of Wills Folio No. 168119 June 12, 2020 Page 4

equally to the Final Accounting, which is substantially similar to the First

Accounting. The Personal Representative responded to the exceptions on June

24, 2019, denying any wrongdoing and attesting that the First Accounting was

accurate, the Personal Representative performed his duties appropriately, and

the Final Accounting should be approved. 11 Trial on the exceptions was held

on February 12, 2020. 12

II. ANALYSIS

The Personal Representative serves in a fiduciary capacity and is

“responsible for compiling the inventory of Decedent’s estate, managing the 13 Decedent’s assets, and paying Decedent’s debts.” The Personal

Representative “has a duty of loyalty requiring [him] to act, at all times, in the

best interests of the estate”14 and is required to file accountings with the Court

with copies provided to all estate beneficiaries.

With any estate accounting filed, heirs and beneficiaries are provided an

opportunity to object to all or part of the accounting through exceptions.

“[T]he Delaware Constitution provides that when exceptions are heard by the

11 D.I. 36. 12 See D.I. 39. 13 Dixon v. Joyner, 2014 WL 3495904, at *3 (Del. Ch. July 14, 2014). 14 In re Estate of Rose, 2019 WL 2996887, at *3 (Del. Ch. July 9, 2019). Register of Wills Folio No. 168119 June 12, 2020 Page 5

Court, ‘the account shall be adjusted and settled according to the right of the

matter and the law of the land.’” 15 Under Court of Chancery Rule 198, “the

personal representative bears the initial burden of demonstrating that the

account was properly prepared.”16 “That burden shifts, however, where the

exceptant seeks a surcharge. In those instances, the exceptant ‘must

demonstrate affirmatively that a surcharge is warranted.’” 17

A. The First Accounting and Final Accounting Are Sufficiently Itemized.

The Exceptants contend that the Personal Representative failed to

properly itemize the estate expenses in, and did not attach sufficient receipts

to, the First Accounting. I disagree. The First Accounting and Final

Accounting both list the expenses by category (e.g., administrative expenses)

and then break down, within each category, the expenses by payee and total

amount. Although the Personal Representative could have been more detailed

by listing expenses bill-by-bill, there is no requirement that he do so, insofar

15 In re Estate of Rich, 2013 WL 5966273, at *1 (Del. Ch. Oct. 29, 2013) (quoting Del. Const., Art. IV, § 32, ¶ 2, cls. 3 & 4). 16 Id. 17 In re Estate of Marvel, 2018 WL 4762379, at *2 (Del. Ch. Oct. 1, 2018) (quoting In re Estate of Stepnowski, 2000 WL 713769, at *1 n.1 (Del. Ch. May 2, 2000)). Register of Wills Folio No. 168119 June 12, 2020 Page 6

as the format he chose accurately and fully represented the expenses of the

estate. It did.

Sufficient supporting documentation was also attached to the First

Accounting and incorporated into the Final Accounting. Again, although

attaching each and every invoice or bill may have been wiser, the Personal

Representative provided sufficient support for the expenses with his

representative samples; particularly for the recurring, non-fluctuating charges.

The Personal Representative is held only to a standard of “ordinary care,

prudence, skill and diligence” is his duties and he has met that standard in the

First Accounting and Final Accounting.18 Thus, the itemization exceptions

should be overruled.

B. Decedent’s Home Passed Outside the Estate.

The Exceptants contend that the Personal Representative erred or acted

improperly by failing to list Decedent’s home as an asset of the estate and

account for its sale and related mortgage pay off. The Exceptants’ concerns,

however, rest on a fundamental misunderstanding: Decedent’s home was not

part of the estate. The home passed, under Decedent’s will, to the Personal

18 See Del. Trust Co. v. McCune, 80 A.2d 507, 511 (Del. Ch. May 3, 1951) (citing In re Estate of Spicer, 120 A. 90, 92 (Del. Orph. 1923)). Register of Wills Folio No. 168119 June 12, 2020 Page 7

Representative. 19 It passed outside of the estate and, as such, the Personal

Representative did not need to account for it. Nor did the Personal

Representative need to account for the mortgage, which he presumably

assumed, because it is no longer listed as a debt of the estate.20

C. The State Employee Pension Plan Should Have Been Used To Pay The Funeral Expenses.

The Exceptants contend that the Personal Representative improperly

charged funeral expenses to the estate while at the same time retaining a burial

benefit from the State of Delaware meant to cover such expenses. Decedent

had a State Employee Pension Plan that designed $7,000.00 to be used for

funeral expenses.21 Rather than apply the benefits as they were designated,

the Personal Representative accepted the benefit as if he were the personal

19 See D.I. 2 ¶ III. At trial, the Exceptants raised concerns about how Decedent came to acquire the home and they lobbed allegations of impropriety at the Personal Representative. See, e.g., Tr. 18:11-19; 29:19-23. Even if true, however, the Decedent’s will unequivocally bequeaths the home to the Personal Representative and this Court will not rewrite that even if, in historical context, it seems unwise, inequitable, or mistaken. See Miller v. Equitable Tr. Co., 32 A.2d 431, 434 (Del. 1943) (addressing the rules of interpreting a will and explaining this Court is “bound thereby and the power is lacking for us to make a new will for the testator, or by some semblance disguised under the theory of construction invoke an idea that might to our minds be a more equitable scheme of disposition”). 20 The exceptions also contained concerns about mortgage payments but it is unclear what, exactly, the Exceptants contested and they did not press this issue at trial. As such, any concerns were either waived or should fail in light of the proof submitted by the Personal Representative that he properly administered the estate. 21 See PR Ex. 1. Register of Wills Folio No. 168119 June 12, 2020 Page 8

beneficiary and charged the funeral expenses, in full, to the estate. 22 He should

not have done so. The Personal Representative owed a duty to respect and

execute Decedent’s wishes, including her plan for the State Employee Pension

benefit. The Personal Representative failed to do so in accepting the benefit

personally, rather than using it for its intended purpose. A surcharge is the

appropriate remedy.

“A surcharge is, essentially, a sanction against a personal representative

requiring the personal representative to fund (or refund) the estate because the

personal representative improperly or poorly handled the estate, engaged in

selfdealing, or improperly depleted estate assets.” 23 Here, because the

Personal Representative retained the benefit, harming the estate, which in turn

incurred greater funeral expenses, he should be surcharged for the full amount

improperly retained: $7,000.00. The Personal Representative should repay the

22 Technically, the Personal Representative arranged for payment of the funeral expenses from a separate insurance policy and then sought reimbursement, in full, from the estate. See Tr. 56-65. Either way, the result is the same: the estate’s coffers will pay for the funeral expenses in full. See infra n.23. 23 In re Estate of Clark, 2019 WL 3022904, at *7 (Del. Ch. July 9, 2019). “[S]urcharges are normally tailored to remedy the specific harm caused, rather than to punish the personal representative.” Id. Register of Wills Folio No. 168119 June 12, 2020 Page 9

estate $7,000.00 and prepare and file an amended accounting to reflect the

repayment and its effect on the estate. 24

D. The Attorneys’ Fees Should Be Approved.

The Exceptants contend that the Personal Representative improperly

charged the estate for his personal attorneys’ fees and expenses. “[F]ees paid

to the attorney for the personal representative are considered an expense of the

estate.”25 “The rational[e] behind this rule is that the personal representative

and his or her attorney is providing a service to the estate and its beneficiaries

by properly and efficiently administering the estate.” 26 But, the Personal

Representative still bears the burden of proving the attorneys’ fees and

expenses were relevant, reasonable, and timely. 27 I find the Personal

Representative has met his burden.

24 The Personal Representative explained at trial that the funeral expenses listed on the Final Accounting represent a future reimbursement to the Personal Representative and his brother (the two beneficiaries of the insurance policy used to pay the expenses upfront) in equal shares. Tr. 6-13. Thus, the only appropriate recipient of the surcharge ordered herein is the estate. 25 In re Pusey, 1997 WL 311503, at *3 (Del. Ch. May 23, 1997). 26 Id.; see also Davis v. Rawlins, 2 Harr. 125, 125-126 (Del. 1836). 27 See In re Rich, 2013 WL 5966273, at *4 (Del. Ch. Oct. 29, 2013) (explaining this Court utilizes a three-factor test to analyze “the appropriateness of [accounting] deductions: relevance, reasonableness, and timeliness”). Register of Wills Folio No. 168119 June 12, 2020 Page 10

The Personal Representative has presented sufficient documentation of

the attorneys’ fees and expenses incurred, which included estate

administration fees and fees incurred in defending a civil action filed by the

Exceptants.28 All of these fees were properly charged to the estate; they were

incurred by the Personal Representative in his fiduciary capacity and provided

a service to the estate. Regarding the civil action, the Personal Representative

was named in that action in his capacity as the personal representative of the

estate and the attorneys’ fees incurred worked a benefit to the estate in

defending against the untimely will contest and permitting administration to

proceed. Further, the Personal Representative arguably “saved” the estate

additional attorneys’ fees and expenses by requesting that his attorney

withdraw before trial in this action; absent withdrawal, the attorneys’ fees and

expenses would have increased. I find that the attorneys’ fees and expenses

incurred by counsel to the Personal Representative were relevant, reasonable,

and timely. 29

28 PR Ex. 2. 29 See In re Rich, 2013 WL 5966273, at *4. Register of Wills Folio No. 168119 June 12, 2020 Page 11

III. CONCLUSION

For the foregoing reasons, I recommend that the exceptions be overruled

in part and sustained in part. Regarding the former, I find the Personal

Representative has met his burden of proving the estate was, generally

speaking, properly administered. On the latter, I find that the Personal

Representative improperly retained a pension benefit that should have flowed

through the estate to defray the cost of funeral expenses. I recommend that the

Personal Representative be surcharged for his retention of that benefit in the

amount of $7,000.00. The surcharge should be paid within sixty (60) days of

this report becoming final.

Once the surcharge is paid, I recommend that the Personal

Representative file a revised accounting reflecting his payment and its effect

on the estate. The amended accounting will be subject to the standard notice

and exception process, although any exceptions that were, or could have been,

raised in response to the First Accounting or Final Accounting may not be

raised in response to the amended accounting. Register of Wills Folio No. 168119 June 12, 2020 Page 12

This is a final report and exceptions may be taken in accordance with

Court of Chancery Rule 144.

Respectfully submitted,

/s/ Selena E. Molina

Master in Chancery