In re Testamentary Trust of Conti

41 Pa. D. & C.5th 134
CourtPennsylvania Court of Common Pleas, Philadelphia County
DecidedSeptember 17, 2014
DocketO.C. No. 464 ST of 1982
StatusPublished
Cited by1 cases

This text of 41 Pa. D. & C.5th 134 (In re Testamentary Trust of Conti) is published on Counsel Stack Legal Research, covering Pennsylvania Court of Common Pleas, Philadelphia County primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In re Testamentary Trust of Conti, 41 Pa. D. & C.5th 134 (Pa. Super. Ct. 2014).

Opinion

HERRON, J.,

The account filed by trustee Wells Fargo Bank and a related petition filed by beneficiaries of a testamentary trust established by decedent John Conti raise the issue of whether this court should approve a nonjudicial settlement agreement under 20 Pa.C.S.A. §7710.1 that would amend the trust to provide for the removal or resignation of a corporate trustee without cause or court approval. Under §7710.1, the parties are free to enter into a nonjudicial settlement agreements. The intent of this section is to give all beneficiaries and trustees flexibility in the administration of certain trust matters. Seeking court approval of such a nonjudicial agreement would encumber this option. Because there is no need to extend court approval to the proposed nonjudicial settlement agreement, this court declines to do so. Moreover, for the reasons set forth below, court approval of the proposed nonjudicial agreement would lead to unnecessary conflicts with other sections of the PEF code. In contrast, the more limited request for court approval of the resignation of Wells Fargo Bank as trustee and the appointment of the Philadelphia Trust Company as successor trustee is approved under 20 Pa.C.S.A. §7765(a) and 20 Pa.C.S.A. §7764(c).

Background

John D. Conti died testate October 26, 1980. By Will and codicils dated February 6, 1960, John Conti provided that the residue of his estate should be divided into two separate trusts for the benefit of his wife, Marion Conti, as a marital trust and a residuary trust. The net income of the marital trust was to be paid to Marion for life. Marion was given the right to appoint the corpus of the marital share by her will; if she failed to make such an appointment, the corpus of the marital trust was to be added to the residuary [137]*137trust. Marion died on January 12,1981 without exercising her power of appointment. As a consequence, the corpus of the marital trust was added to the residuary trust. Under Article Fifth of John Conti’s will, the net income from the Residuary trust after Marion’s death was to be distributed in equal shares to his then living issue per stirpes. This residuary share is to be held in trust until twenty-one years after the death of the last survivor of decedent’s wife, children and grandchildren who were living at the time of decedent’s death.

In article eleventh of his Will, Mr. Conti provided for the appointment of a single corporate trustee, either by writing of his executor or, by default, to the Broad Street Trust Company. Following Mr. Conti’s death, the assets of his estate were awarded to Central Penn National Bank which was appointed trustee of the Residuary Trust by Adjudication dated June 6, 1985.11 Through various mergers, the accountant Wells Fargo Bank, N.A., succeeded Central Penn National Bank and has been serving as the sole Trustee of the Residuary Trust. On September 4, 2013, Wells Fargo Bank filed an account of its administration of the Trust, covering the period October 1, 2009 through August 26,2013.

Within weeks of the filing of the account, certain “sui juris income and remainder beneficiaries of the Residuary Trust” (“beneficiaries”) filed a petition to modify the trust [138]*138document to include provisions for the removal, resignation and appointment of a trustee because John Conti’s will did not provide for these contingencies. In seeking this broad relief to modify the trust, the beneficiaries rely on 20 Pa.C.S. §7710.1 which provides for nonjudicial settlement agreements as well as In re McKinney, 2013 Pa. Super. 123, 67 A.3d 824 (2013).2 More specifically, they propose the following amendments of the trust document:

(1) From time to time and without cause, and without permission of any court, the income beneficiaries who are then sui juris may remove any corporate trustee acting hereunder by a writing delivered to such corporate trustee stating the effective date of the removal; provided that if there are then five or fewer sui juris income beneficiaries, all sui juris beneficiaries must consent in writing to the removal, and if there are then more than five such beneficiaries, a majority of sui juris beneficiaries must consent in writing to the removal.
(2) If the sui juris income beneficiaries exercise their power to remove a corporate trustee under subparagraph (i) above, the sui juris income beneficiaries who consented to the removal shall thereupon appoint in writing a substitute corporate trustee, which substitute corporate trustee shall be located in the United States.
(3) Without permission of any court, the corporate trustee may resign by a writing lodged with the permanent records of the trust and notice to the beneficiaries, whereupon a substitute corporate trustee shall be appointed by the beneficiaries in the manner [139]*139provided in subparagraphs (i) and (ii) above as if they had removed the corporate trustee.3

A few weeks later, the trustee Wells Fargo Bank, N.A. filed a similar, but more limited, petition that merely sought court approval of its resignation pursuant to 20 Pa.C.S.A. §7765(a) as trustee of the Residuary Trust under the Will of John Conti. In addition, Wells Fargo sought court approval of the Philadelphia Trust Company as the new, substitute trustee under 20 Pa.C.S.A. §7764(c) based either on the unanimous agreement of the qualified beneficiaries of the trust or by court approval.4

The beneficiaries also filed objections to the account and petition for adjudication filed by Wells Fargo. More specifically, they objected, inter alia, to the requested termination fee for Wells Fargo, certain legal fees incurred by Weber, Gallagher et al, and the Pennsylvania Inheritance Tax Returns.5

After a period of discovery, the parties informed the court by letter dated June 30, 2014 that they had reached a settlement and release agreement regarding the administration of the trust and the second account that had been filed September 4, 2013. Based on this settlement, the beneficiaries withdrew their objections to the second account. Under the settlement and release agreement, the parties have agreed that the request for Wells Fargo’s attorneys’ fees and costs paid from the trust will be limited as set forth in the Agreement and that the termination fee is waived. A copy of the settlement and release agreement is attached, and its terms are incorporated in this adjudication. The beneficiaries acknowledge that they have each had [140]*140an opportunity to examine the second account, which has been updated through March 31, 2014 and the sub account for the trust (which has not been formally filed) and they approve the discharge of trustee Wells Fargo for the administration of the trust without the delay of filing either of these accounts with the court. The parties agree that the second account is ready for adjudication, along with the two unopposed, and pending petitions: (1) Wells Fargo Bank’s petition to approve its resignation as trustee and the appointment of The Philadelphia Trust Company, as substitute trustee and; (b) the beneficiaries’ petition to modify the trust to provide for the removal and resignation of the corporate trustee without cause or court approval.

Legal Analysis: Beneficiaries Petition to Amend the Trust

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41 Pa. D. & C.5th 134, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-testamentary-trust-of-conti-pactcomplphilad-2014.