J-A24018-19 2020 PA Super 130
TRUST UNDER WILL OF AUGUSTUS : IN THE SUPERIOR COURT OF T. ASHTON, DECEASED DATED : PENNSYLVANIA JANUARY 20, 1950 : : : APPEAL OF: PNC BANK, N.A. : : : : No. 3609 EDA 2018
Appeal from the Order Entered July 9, 2018 In the Court of Common Pleas of Philadelphia County Orphans' Court at No(s): No. 1039 of 1952
BEFORE: BENDER, P.J.E., DUBOW, J., and COLINS, J.*
OPINION BY DUBOW, J.: FILED JUNE 03, 2020
Appellant, PNC Bank, N.A., appeals from the Order entered on July 9,
2018, in the Orphans’ Court Division of the Court of Common Pleas of
Philadelphia County. At issue is the court’s determination that Appellee,
Elizabeth Ashton Reed, has standing to raise certain Objections to Appellant’s
administration of the Trust under the Will of Augustus Trask Ashton. Upon
review, we reverse in part and affirm in part.
Background
* Retired Senior Judge assigned to the Superior Court. J-A24018-19
Augustus Trask Ashton (“Settlor”) died on October 9, 1951. In his Will,
he designated that the residue of his estate be placed into a trust (“Trust”) for
investment, with its net income available to certain beneficiaries.
The Settlor’s Will identifies three groups of beneficiaries. First, Settlor
provided for the annual distribution of fixed sums to certain individuals and
their issue. Appellee is one such beneficiary, entitled to a payment of $2,400
annually for life.1 Appellee’s right to $2,400 is fixed and does not change
based on the expenses of the Trust, market fluctuations of the assets of the
Trust, or other changes to the value of the assets of the trust.
Second, Settlor provided for continued payment of educational expenses
that two of his relatives incurred.2
Third, Settlor directed that after the Trust distributes the payments
mentioned above, the Trust shall make the balance of the net income of the
Trust available for scholarships for students at the University of Pennsylvania
(“University”), subject to certain limitations and conditions. Settlor further
directed that the Trust should continue to fund these University scholarships
in perpetuity, following the termination of all annuities.
1 Of the eight original annuities, five have terminated pursuant to the terms
of the Will.
2 These payments have now terminated. The beneficiaries, Augustus Trask Ashton, II, and Elizabeth Ashton, have long since completed their education.
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Appellant serves as the sole trustee administering the Trust. The Will
originally appointed as trustee Appellant’s predecessor, the Land Title Bank
and Trust Company (“Land Title”). Thereafter, by codicil, Settlor appointed
Clement W. Bowen and the Land Title as co-trustees. Mr. Bowen passed away
in 1971 and no successor co-trustee replaced him. Neither the Will nor the
codicil required that the co-trustee be replaced.
The Settlor originally funded the Trust with $2,638,798.23 in assets.
Over the years, the assets of the Trust have grown significantly. During the
time period at issue in this appeal—November 18, 1983 to December 14,
2017—the assets appreciated in value from approximately $5,560,000 to
approximately $73,000,000. See Fourth and Interim Account, at 3, RR. 91a.
Petition for Adjudication, Rider to Item 14. Appellant also distributed to the
beneficiaries approximately $29,000,000. Fourth and Interim Account, p.2,
RR 90a.
In January 2018, Appellant filed the Fourth and Interim Account of its
administration, documenting transactions that occurred between November
1983 and December 2017 (“Fourth Account”). Fourth and Interim Account,
1/3/18. In addition, Appellant filed a Petition for Adjudication requesting that
the Orphan’s Court authorize the Trustee to (1) divide Trust assets into two
separate trusts, one dedicated to funding the annuity payments, including the
fixed payment to Appellee, and the other to fund the University scholarships,
and (2) pay Appellant retroactive commissions for its past administration of
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the Trust and enter into a new fee agreement with Appellant that would
increase Appellant’s compensation. Petition for Adjudication, 1/3/18.
In April 2018, Appellee filed Objections to the Fourth Account and the
Petition for Adjudication. Appellee alleged that, inter alia, (1) Appellant
engaged in numerous transactions and disbursements that were wasteful,
constituted self-dealing, and were otherwise improper, (2) any change to the
commissions and fees payable to Appellant were improper, and (3) the
proposed division of the Trust was improper. Appellee also sought the
appointment of her daughter as a co-trustee to the Trust. See Objections,
4/2/18, at ¶¶ 53-72.3
In response, Appellant filed Preliminary Objections, arguing that
Appellee has no legally cognizable interest in the outcome of her Objections
and, therefore, no standing to litigate them. See Preliminary Objections,
4/23/18, at 4-6, 10.
The Orphans’ Court overruled those Preliminary Objections at issue in
this appeal. Orphans’ Ct. Order, 7/9/18.4 Noting Appellee’s vested interest
3 Appellee also filed a Petition to Modify the Trust, requesting that the Orphans’
Court modify the language of the Trust to increase her fixed annuity from $2,400 to approximately $65,800. The Orphans’ Court has not ruled on Appellee’s request and thus, the petition is not before us. RR. 803a.
4 Appellee raised several other claims, asserting (1) reporting failures by Appellant, (2) improper administration of the University scholarships, and (3) that Appellant had improperly accepted into the Trust the Settlor’s membership interest in the Philadelphia Stock Exchange. The Orphans’ Court sustained Appellant’s preliminary objections to these claims. See Order. Appellee has not challenged these rulings.
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in ongoing payments from the Trust, the Orphans’ Court reasoned that her
standing was “ordinary and automatic” because “vested trust beneficiaries
inescapably have standing with respect to administration of a trust.” Orphans’
Ct. Op., 2/25/19, at 8.
Appellant requested that the Orphans’ Court amend its interlocutory
Order, pursuant to 42 Pa.C.S. § 702(b) and Pa.R.A.P. 1311, to permit an
immediate appeal. The Orphans’ Court denied Appellant’s request. Orphans’
Ct. Order, 8/14/18. Appellant filed a Petition for Review and the Superior
Court granted leave to proceed. Order, No. 108 EDM 2018 (Pa. Super. filed
12/20/18).
Appellant raises the following issues for our review:
1. Whether Appellee has standing to challenge the transactions and disbursements set forth in the Fourth Account;
2. Whether Appellee has standing to request the appointment of a co-trustee;
3. Whether Appellee has standing to challenge Appellant’s request for a retroactive and prospective fee and commission increase;
4. Whether Appellee has standing to challenge Appellant’s request to divide the Trust into two trusts so that one trust would fund the annuity payments of Appellee and other beneficiaries and the other trust would fund the University scholarships.
Appellant’s Br. at 3, 25, 37, 40, 43. 5
5 Pa.R.A.P.2116(a) provides that Appellant shall state in the Statement of Questions Involved the questions that the Appellant is raising on appeal and the Superior Court may not consider an issue “unless it is stated in the statement of questions involved or is fairly suggested thereby.” In the Statement of Questions Involved, Appellant and the Attorney General only
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General Principles Regarding Standing
The threshold issue of standing presents a purely legal question. Thus,
“our standard of review is de novo[,] and our scope of review is plenary.” In
re Milton Hershey Sch., 911 A.2d 1258, 1261 (Pa. 2006) (citation omitted).
To obtain judicial resolution of a dispute, a party must demonstrate that
he has standing to bring the action. Fumo v. City of Philadelphia, 972 A.2d
487, 496 (Pa. 2009); Pittsburgh Palisades Park, LLC v. Commonwealth,
888 A.2d 655, 659 (Pa. 2005). The core concept of standing is that a litigant
may only challenge in court the action of another party when the litigant can
establish that the other party’s actions harmed the litigant. In re: Milton
Hershey School, supra at 1261. The Pennsylvania Supreme Court has
reasoned that “a person who is not adversely impacted by the matter that he
or she is litigating does not enjoy standing to initiate the court’s dispute
resolution machinery.” Markam v. Wolf, 136 A.3d 134, 140 (Pa. 2016). Thus,
the threshold issue is whether the challenged conduct caused harm to the
litigant.
included the first two questions listed above, but they briefed all four questions. Interestingly, Appellee included all four questions in its Counter- Statement of Questions Involved. Therefore, it appears that the failure to include all four questions, and thus, the four decisions of the Orphans’ Court, was a clerical error. Since the failure to list all four questions appears to be a clerical error and the parties briefed all four issues, the failure of Appellant to include all four questions does not hamper our review and we will review all four decisions of the Orphans’ Court.
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Once the litigant establishes that the challenged conduct caused harm
to the litigant, the litigant must then establish that the harm is “substantial,
direct, and immediate.” In re: Milton Hershey School, supra, at 1261-62
(citation omitted; emphasis added). The keystone to the “substantial, direct
and immediate” test is that the litigant “must be negatively impacted in some
real and direct fashion.” Pittsburgh Palisades, LLC v. Commonwealth of
Pennsylvania, 888 A.2d at 660 (citations omitted).
The Supreme Court has set forth elements that a litigant must meet in
order to establish that the challenged conduct creates a “substantial, direct
and immediate” harm to the litigant so that the litigant has a legally sufficient
interest in the outcome of the litigation. A party establishes that a “direct”
harm if he establishes “causation of the harm to his interest by the matter of
which he complains.” William Penn Parking Garage, Inc. v. City of
Pittsburgh, 464 Pa. 168, 346 A.2d 269, 282 (1975). In other words, a party
must establish that the challenged conduct directly causes harm to him. See
Markam v. Wolf, 136 A.3d at 140.
Similarly, a litigant establishes that the challenged conduct causes or
will cause an “immediate” harm to the litigant if the causal connection between
the challenged acts and the harm to the litigant is not remote or speculative.
Id. Finally, a litigant has suffered a “substantial” harm from the challenged
conduct if the litigant can establish that the challenged conduct caused a
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discernible adverse effect to the litigant as opposed to the general public.
Milton Hershey School, 911 A.2d at 1262.
Applying these principles, the Pennsylvania Supreme Court in
Pittsburgh Palisades determined that petitioners lacked standing to
challenge a provision of the Gaming Act because the Gaming Commission had
not yet awarded a gaming license to the petitioners and thus, the Gaming Act
did not harm petitioners in a manner that was “substantial, direct and
immediate.” 888 A.2d at 660-61. The Court reasoned that the provision of the
Gaming Act that the petitioners challenged applied only to individuals or
entities who had secured a gaming license and since petitioners did not hold
a license, the petitioners could not establish that the Gaming Act directly
harmed the petitioner and any potential harm was speculative and remote.
Id.
In contrast, our Supreme Court in S. Whitehall Twp. Police Serv. v.
South Whitehall Township, 555 A.2d 793 (Pa. 1989), found that the police
union had standing to challenge a new policing policy because the new policy
had a “substantial, direct and immediate” impact on the employment
conditions of the members of the police union. In particular, the police chief
implemented a policy requiring the police officers to issue a certain number of
traffic tickets, parking citations, and traffic warnings each month and police
officers had been sanctioned for failing to do so. The Court found that since
the failure to follow the policy resulted in employment sanctions against the
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police officers, the policy directly harmed the police officers. Id. at 796. The
Court also concluded that the harm the police officers suffered was substantial
because the adverse impact of the policy on the police officers was greater
than the impact on the public. Finally, our Supreme Court concluded that the
harm was immediate because the policy was, in essence, a quota policy, which
is harmful to a police officer’s discretionary functions. Id., at 796-97.
Applying these principles, we find that Appellee lacks standing to
challenge the Fourth Account and the proposed fee arrangement between
Appellant and the University as well as to request that the court appoint her
daughter as a co-trustee. We also, find, however, that Appellee has standing
to challenge the request to divide the Trust.
Appellee Lacks Standing to Challenge the Fourth Account
The Orphans’ Court, when concluding that Appellee has standing to
challenge the Fourth Account, does not focus on whether Appellant’s alleged
mismanagement caused Appellee harm that was “substantial, direct and
immediate.” Rather, without providing any legal authority, the Orphans’ Court
creates an exception to this well-enshrined principle and confers standing on
Appellee solely on the basis of her status as a “current vested trust
beneficiar[y].” Orphans’ Ct. Op., 2/25/19, at 8. The Orphans’ Court erred.
The proper analysis in this case may start with her status as a vested
trust beneficiary, but it does not end there. It is first necessary to determine
the rights that the Trust provides to Appellee. Then, the analysis turns to
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whether the challenged conduct of Appellant has a “substantial, direct and
immediate” adverse impact on the rights that the Trust provides to Appellee.
Merely focusing on the name of the interest that a beneficiary to a trust holds,
without considering whether the challenged conduct harms that interest,, is
insufficient.
In this case, the relevant facts are undisputed. The Trust Agreement
gives Appellee the right to receive the fixed amount of $2,400 annually and
the Trust paid Appellee $2,400 every year. The challenged conduct involves
mismanagement of transactions and disbursements that Appellant made
during the time period of the Fourth Account. See Objections, 4/2/18, at ¶¶
54-65. Thus, the issue is whether the alleged mismanagement harmed
Appellee’s right to receive $2,400 annually and will potentially harm her in the
future.
Using these undisputed facts, we conclude that Appellee failed to
establish that the challenged acts harmed her or will harm her in a manner
that was or will be “substantial, immediate and direct.” First, the challenged
conduct, which allegedly reduced the value of the assets of the trust, did not
directly harm Appellee because the Trust paid her $2,400 annually. Appellee’s
rights under the Trust are fixed at the right to receive $2,400 each year, and
even if we accept the allegations about the challenged conduct as true—and
the inference that if Appellant had not engaged in mismanagement, the trust
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corpus would be higher—the challenged conduct did not directly harm
Appellee because Appellant paid Appellee her fixed annuity each year.
Appellee cannot establish that the alleged mismanagement caused her
an “immediate” harm because her assertion that the alleged mismanagement
will cause her harm in the future is, at best, speculative and remote. During
the time period that the Fourth Account covers, when the alleged
mismanagement occurred, the value of the assets increased from
approximately $5,560,000 to approximately $73,000,000. See Fourth and
Interim Account, at 3, RR. 91a. Petition for Adjudication, Rider to Item 14.
Appellant also distributed to the beneficiaries approximately $29,000,000.
Fourth and Interim Account, at 2, RR 90a. Thus, Appellee’s claim that the
alleged mismanagement during this time period will harm the Trust’s ability
to pay her $2,400 annually in the future is at best, speculative and remote;
even if Appellant engaged in mismanagement, there are still sufficient assets
for the Trust to continue to pay Appellee $2,400 annually. 6 Additionally, the
Trust must pay Appellee before making funds available for the University
scholarships.
Finally, Appellee has the burden of establishing that the
mismanagement caused her a “substantial’ harm, i.e., that the alleged
mismanagement has a discernible adverse effect on Appellee’s right to receive
6 We note that the $2,400 payment is .0033% of the value of the assets of
the Trust.
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$2,400 annually, as opposed to an adverse effect on the public at large. Since
Appellee cannot establish that the alleged mismanagement caused her any
loss whatsoever or will cause any loss to her right to receive $2,400 in the
future, she cannot establish the threshold element of this test—that the
alleged misconduct had a discernible adverse effect on Appellee. Thus,
Appellee cannot establish that the alleged mismanagement caused her a
“substantial” harm.
We note that, in her Brief, Appellee cites the general test for establishing
that the mismanagement caused her “substantial, direct and immediate”
harm, but never applies the test to the facts of this case. Appellee’s Br. at 17.
Rather, Appellee merely argues that the Orphans’ Court properly determined
that Appellee has standing as a result of Appellee’s status as a “current vested
income beneficiary” of the Trust, and relies on In re: Francis McGillick
Foundation, 642 A.2d 467 (Pa. 1994), to support this proposition. Appellee’s
Br., at 18-19. This case does not support Appellee’s position that she has
standing.
In In re: Francis McGillick Foundation, supra, the Supreme Court
addressed whether an “incidental” beneficiary of a trust, the Roman Catholic
Diocese of Pittsburgh (“Diocese”), had standing. 642 A. 2d at 467. The
Supreme Court first defined the rights that the trust provided to the Diocese
and found that the trust gave the Diocese the right to award scholarships that
the trust funded and the prerogative to establish a vocational school. Id. The
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Supreme Court then applied the “direct, immediate and substantial” test and
concluded that the Diocese had standing. Id., at 469-70.
In this case, Appellee is not an incidental beneficiary, but rather a named
beneficiary.7 Additionally, the Supreme Court’s analysis to determine standing
is the same as our analysis here. We define the rights that a trust provides a
litigant and then determine whether the challenged conduct harms that right
in a direct, immediate and substantial manner. As discussed above, Appellee
has failed to meet that burden.
Additionally, Appellee erroneously relies upon the argument that a
beneficiary has standing because a beneficiary has an equitable interest in the
trust res. Appellee’s Br., at 18. Once again, an equitable interest in the trust
res does not translate into automatic standing regarding every action the
trustee takes. Rather, the beneficiary may only challenge those actions of a
trustee that adversely impact the beneficiary’s rights to the trust in a
“substantial, direct and immediate” manner.
7 The Supreme Court has addressed whether a party has standing when the
party is not a named beneficiary, but an incidental beneficiary and has a “special relationship” to the trust so that it has standing to enforce the provisions of the trust. In re: Milton Hershey School, supra; In re: Francis Edward McGillick Foundation, supra. In this case, Appellee is a named, and not an incidental, beneficiary and thus, there is no legal basis to address whether Appellee has a “special relationship” to the Trust. Additionally, the standing analysis is still the same. Once the court concludes that a party has a “special relationship,” the court applies the “direct, immediate and substantial” test. Since Appellee cannot establish that she suffered or will suffer a “direct, immediate or substantial” harm, there is no legal basis to examine whether Appellee has a “special relationship.”
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In sum, there is no legal authority to support the conclusion of the
Orphans’ Court that a beneficiary with a vested interest in a trust
automatically has standing to challenge the actions of a trustee. Rather, the
beneficiary must establish that the challenged conduct of the trustee adversely
impacted the beneficiary’s rights in a Trust in a manner that was “substantial,
direct and immediate” in order to establish standing to challenge the actions
of the trustee. In this case, Appellee failed to establish that the trustee’s
alleged mismanagement during the time period of the Fourth Account harmed
Appellee’s right to receive $2,400 annually in a manner that is substantial,
direct and immediate. Thus, Appellee lacks standing to challenge the Fourth
Account.
Appellee Lacks Standing to Seek the Appointment of Her Daughter as a Successor Co-Trustee for the Trust.
The Will originally appointed Appellant’s predecessor as Trustee.
Thereafter, the Settlor executed a codicil and appointed Clement W. Bowen as
a co-trustee. Mr. Bowen passed away in 1971. Both the Will and codicil are
silent about the need to replace a co-Trustee. Thus, Appellant has been the
sole trustee since 1971 and has paid Appellee her annuity each year.
Appellee, however, requested that the Orphans’ Court appoint her
daughter as co-trustee. Appellant objected on the basis of standing and the
Orphans’ Court found that Appellee, in fact, has standing to request that the
Orphans’ Court appoint her daughter to be the co-trustee.
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The Orphans’ Court, in addressing this issue, applied the “substantial,
direct and immediate” test and concluded that Appellee has standing.
Orphan’s Court Opinion, at 10-11. Orphans’ Court infers that because Appellee
has alleged that Appellant engaged in mismanagement in the past, Appellant
will engage in mismanagement in the future and Appellee must have standing
to petition the court to appoint her daughter as co-trustee “due to the
continued breaches that will likely occur if a co-trustee is not appointed.”
Orphan’s Court Op. at 12. The Orphan’s Court erred.
Since the appointment of a co-trustee will affect the future performance
of the Trust, we must determine whether it is reasonable to infer from the
undisputed facts that the failure to appoint a co-trustee will harm Appellee’s
right to receive $2,400 annually in the future. This analysis focuses primarily
on whether the alleged mismanagement causes an “immediate” harm to
Appellee.
As discussed, supra, Appellant paid Appellee $2,400 annually during the
time period that she claims that Appellant engaged in mismanagement and
while Appellant was the sole trustee. Also, during this time period, the value
of the assets in the Trust appreciated in value from approximately $5,560,000
to approximately $73,000,000. See Fourth and Interim Account, p. 3, RR.
91a. Petition for Adjudication, Rider to Item 14. Appellant also distributed to
the beneficiaries approximately $29,000,000. Fourth and Interim Account, at
2, RR 90a. Thus, given the growth in the assets during the period of
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“mismanagement” and its current value of the assets of approximately
$73,000,000, it is not reasonable to infer from these facts that Appellee’s right
to receive $2,400 annually will be adversely impacted by the alleged
mismanagement. Rather, any such inference is, at best, speculative and
remote. Thus, Appellee cannot establish that the alleged mismanagement will
cause her “immediate” harm to her right to have the Trust pay her $2,400 in
the future and she lacks standing to request that the Orphans’ Court appoint
her daughter to be a co-trustee.
Finally, we note that Appellee fails to present any legal authority to
support her argument that her interest in the Trust will be adversely affected
if Appellee cannot request that the Trust appoint her daughter as co-Trustee.
Rather, Appellee merely argues that she has standing to request that the court
appoint her daughter to be a successor trustee because if the court does not,
“PNC’s authority [will go] unchecked, and [lead] to numerous breaches of
fiduciary duty. . .” Appellee’s Br., at 31. Without allegations from which the
Orphan’s Court can reasonably infer that Appellee’s future right to receive
$2,400 will be harmed, Appellee has failed to establish that her allegations of
mismanagement create an “immediate” harm to her right to receive $2,400
annually from the Trust.8
8 Both Orphan’s Court and Appellee base their legal analysis upon the assumption that Appellee is the only individual able to protect the Trust assets from mismanagement. This ignores the fact that the University as residual beneficiary and the Attorney General as parens patriae would have standing to challenge alleged mismanagement.
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Appellee Lacks Standing to Challenge the Proposed Fee Agreement between the University and Appellant.
In the Fourth Account and Petition for Adjudication, Appellant requests
that Orphans’ Court approve a retroactive increase in Appellant’s fees as well
as a new fee agreement. Appellee objected to the increased fees as
“excessive, unreasonable, unwarranted, improper, imprudent and
inappropriate.” Objections, No. 55.
Orphans’ Court found that Appellee has standing to challenge the fee
petition because Appellee’s “primary interest in the Trust is financial.” Opinion,
at 13. Orphans’ Court concluded that Appellee has a direct interest in
challenging the fee petitions because the additional fees and commissions
could deplete almost all of the assets of the Trust and thus, threaten the
Trust’s ability to pay her $2,400 annually:
The additional fees and commissions proposed by Appellant could cause her harm to her interest by depleting the Trust. The value of the Trust could be reduced to almost nothing, and the fees of Trustee PNC could, at some juncture, threaten the payment of Reed’s annuity. Just because her annuity is not currently threatened does not cause Reed to lose standing to object to increased payments to object to increased payments to the trustee.”
Orphans’ Court Op. at 13.
We find no support for the Orphans’ Court analysis. Applying the
appropriate test, we find that if the Orphans’ Court grants Appellant’s request
for fees, Appellee’s interest to receive $2,400 annually will not be harmed in
a manner that is direct, substantial or immediate. As discussed above,
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Appellee’s interest in the Trust is the right to receive $2,400 annually and, as
of December 14, 2017, the value of the assets in the Trust is approximately
$73,000,000. The fee petition requests a retroactive payment of fees of
approximately $1,095,000 and an increase in fee prospectively, which is
based upon Appellant’s applicable institutional fees, with a 33% discount. RR.
711a-722a, Rider to Item 14, Petition for Adjudication.
In light of the value of the assets in comparison to Appellee’s right to
receive $2,400 and the amount of the fee petition, the risk that the fees will
deplete the assets of the Trust to the extent that the Trust will not have the
funds to pay Appellee is, at best, speculative and remote. Consequently,
Appellee cannot establish that the harm that she will suffer is “immediate.”
Since Appellee cannot establish one element of the “direct, immediate and
substantial” test, we need not address the other elements.
We further note that the Orphans’ Court bases its analysis upon the
erroneous finding that unless Appellee has standing to challenge the fee
petition, the fee request could result in “the value of the Trust [being] reduced
to almost nothing.” Opinion at 13. First, and most importantly, Orphans’ Court
assumes that unless Appellee has standing, the Orphans’ Court will not
exercise its authority to ensure that the fees paid to Appellant do not deplete
the assets of the Trust. Second, Orphans’ Court assumes that the University
and Attorney General will sit idly by and not petition the court if Appellant
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attempts to deplete the $73,000,000 through its fees. Thus, the harm to
Appellee that Orphan’s Court predicts is wholly unrealistic.
Therefore, Orphans’ Court erred. Appellant cannot establish that the
harm to her right to the $2,400 annuity is “substantial,” let alone “direct and
immediate,” and she lacks standing to challenge the fee petitions.
Appellee Has Standing to Contest the Division of the Trust.
Appellant proposes to divide the trust into two trusts, Trust A and Trust
B. Trust A “will be held for the benefit of the Annuitants and the Trustees of
the University of Pennsylvania.” Trust B “will be held for the benefit of the
Trustees of the University of Pennsylvania and accordingly will be a solely
charitable trust.” Petition for Adjudication, Rider to Statement of Proposed
Distribution, RR 712a. Appellant proposes to fund the Trust that would pay
the annuitants with $5,000,000. Petition for Adjudication, Rider to Item 14,
RR 39a.
As discussed above, Appellee’s interest in the Trust is the right to receive
$2,400 annually. Since the proposed division of the Trust involves transferring
her interest in the Trust to a new trust and the amount of funding will directly
impact Appellee’s right to receive $2,400 in the future, Appellee has a direct
interest in challenging the transfer of her interest to a new trust. Additionally,
she has an “immediate interest” in the request to transfer her interest to a
new trust because her right to receive $2,400 could be harmed if the new
trust is not properly funded. Finally, her interest in the new trust and the
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funding of the new trust is an interest that impacts her alone and not the
general public.
Appellant argues that Appellee’s right to receive $2,400 is protected
because it is petitioning the court to fund the new trust with $5,000,000.
However, the amount of funding goes to the merits of the division of the Trust
and not to Appellee’s standing to challenge the transfer of her right in the
existing Trust to a new trust. Thus, Appellee has standing to challenge the
division of the Trust to the extent the division impacts her right to receive
$2,400 annually from the Trust.9
Conclusion
Appellee lacks standing to challenge the Fourth Account and the request
to increase Appellant’s fees. Similarly, Appellee lacks standing to request that
Orphans’ Court appoint her daughter to be a co-trustee. Appellee, however,
has standing to challenge the division of the Trust to the extent that the
division of the Trust impacts her future right to receive $2,400 from the Trust.
Order reversed in part and affirmed in part. Case remanded.
Jurisdiction relinquished.
President Judge Emeritus Bender joins the opinion.
Judge Colins files a dissenting statement.
9 To the extent that the division of the Trust impacts other beneficiaries, parties or the Commonwealth of Pennsylvania, Appellee lacks standing to challenge their rights.
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Judgment Entered.
Joseph D. Seletyn, Esq. Prothonotary
Date: 6/3/2020
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