ORPHANS’ COURT IMPOSED A SURCHARGE ON EXECUTRIX OF ESTATE
Orphans’ court properly imposed a surcharge on appellant former executrix for her failure to administer decedent’s estate with reasonableness and prudence where estate attorney embezzled estate funds.
Decedent’s former daughter-in-law was named an executrix. Decedent left cash in credit union accounts, a gold and silver coin collection and a mobile home. The credit union accounts were transferred into an individual account opened in executrix’s individual name. The will left specific cash bequests to family members and the coin collection was left to a charity. The coin collection was sold, the funds were transferred to the estate attorney’s IOLTA account and attorney embezzled the funds. Attorney also embezzled directly from the estate’s savings account. Executrix alleged attorney told her that charity had requested cash in lieu of the coin collection. Executrix “sold” the mobile home to her daughter in lieu of daughter’s receipt of a bequest under the will. The commonwealth, acting as parens patriae on behalf charity beneficiarys, filed a petition to void gifts allegedly made pursuant to the will. Appellant was removed as executrix and objections were filed as to her account. The orphans’ court sustained seven objections to her account and found conversion of estate assets by the former estate attorney. Lynn Walter appealed.
Appellant argued that she was punished for crimes committed by the attorney on whose legal advice she relied. She contended her good faith reliance on the attorney’s advice gave her a good faith defense to the surcharge the orphans’ court imposed upon her. Commonwealth argued that she did not investigate account transactions even after receiving notification of three overdraft charges on the accounts and that a prudent person in appellant’s fiduciary position with her professional bookkeeping experience would have maintained close oversight of all deposits and withdrawals from estate accounts. The court agreed with the orphans’ court that attorney’s protracted pattern of embezzlement was discoverable with the exercise of due diligence and appellant had a fiduciary duty to protect and preserve the estate. Instead of investigating the overdraft fees, appellant simply relied on attorney’s unsubstantiated assurances which allowed attorney to steal from the estate for years. Additionally, the failure to bequeath the coin collection as specifically directed by the will was unreasonable administration of the estate. She never verified with charity that it had requested cash instead of the coins or investigate whether she had the authority to deviate from the will’s specific bequest.
Appellant’s administration and distribution of estate accounts placed her interests in conflict with the interests of the beneficiaries she was entrusted to serve. She relied on a credit union employee’s mistaken belief that appellant was the sole beneficiary of all credit union accounts even though she knew the will bequested only $50,000 to her. She kept information as to the $205,200 in the bank accounts to herself and the attorney. The record supported that no designation of beneficiary form applied to the accounts in question and there was no basis for appellant’s claim of ownership.
Reference: Digests of Recent Opinions, Pennsylvania Law Weekly, 41 PLW 670, July 17, 2018, In Re: Estate of Walter, PICS Case No. 18-0834 (pa. Super, June 22, 2018) Stevens, P.J.
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