Trust Beneficiaries’ Objections To Trustees’ Fees Are Denied
In the trust litigation case of In Re Jones Trusts, PICS Case No. 15-1259 (C.P. Montgomery, March 18, 2015) the trust beneficiaries’ objections to the trustees’ past fees were overruled where the beneficiaries either explicitly consented or acquiesced to the fees for more than two decades without seeking an account.
Trustee PNC Bank, N.A. is the trustee for two trusts that were established by Louise E. W. Jones in 1923. The original trustees were the Land Title and Trust Company and Warren Graham. Trust One was created for the benefit of the settlor’s two daughters. Evelyn Cubberly and Marion Graham. Trust Two was created initially to provide income to the settlor. Upon her death, the income was to be distributed in equal shares to her two daughters. Warren Graham, the original individual co-trustee, died on Feb. 9, 1932. Nelson Garden was appointed as successor co-trustee on May 14, 1932. Garden died on July 7, 1969. No substitute co-trustee was sought until June 2013, when Robert Kendall filed a petition. This petition was granted and on Aug. 19, 2013. Kendall was appointed as individual co-trustee on both Jones trusts.
On Oct. 30, 2013, PNC Bank filed separate accounts of its administration of the two trusts covering the period April 12, 1972 through Aug. 19, 2013. Five beneficiaries of the trusts filed objections: Robert Kendall, David Garden, Elizabeth Kendall, Elaine Kendall and Jean Wade. The beneficiaries’ objections focused primarily on trustee fees, both past and future. (READ MORE)
Under the original trust documents, trustees were to share a 4 percent trustee commission based upon the annual income of the trust. Objectors complained that in 1976, PNC sought to raise the commission from 4 percent to 6 percent without seeking judicial approval. They also asserted the 6 percent commission was incorrectly calculated, Moreover, they objected to a change PNC made as to its fees in 1989, when it began charging a commission rate based on its “then in effect fee schedule,” minus certain discounts. Objectors asserted that this was improper because all of the beneficiaries did not consent to the modification, no judicial approval was obtained and the modification could not bind future generations.
PNC filed a motion for partial summary judgment. The narrow issue posed was whether the five objecting beneficiaries consented in writing or by acquiescence to the trustee commission changes of 1976 and 1989.
The court fount the objections of David Garden and Robert Kendall to the past trustee commissions were without merit.
David Garden consented in writing to both the 1976 trustee commission increase to 6 percent and the 1989 revision of its commission payments.
Robert Kendall signed the 1989 letter expressing his approval on the new commission schedule. That letter explicitly informed him that the fee of 6 percent on income was above the fee set forth in the 1923 trust documents. He became a 5 percent income beneficiary of the trust in 1985 upon the death of his mother, Louise Kendall, who had explicitly agreed in writing to the 1976 fee increase. The acquiescence of his mother to the 1976 commission increase attached to Robert.
Due to more than 20 years of acquiescence to the 1989 change in trustee commission, the court found the objections of Elaine and Elizabeth Kendall were also meritless.
Finally, the court found the objections of Jean Wade were without merit. Wade’s interest in the trusts dated to 2001 when her mother, Joyce Wade, died. Joyce had explicitly consented to the 1989 commission change. Jean Wade’s grandmother, Marian Graham, had approved the 1976 fee increase to 6 percent in writing. At no point during the 12 years when Jean acquired her interest in the trusts did she seek an accounting. Jean’s objections to the past trustee fees were therefore barred by laches due to the acquiescence of herself, her mother and grandmother.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, 38 PLW 774 (August 18, 2015)
Filed Under: Trustee Fees; Objections; Trust Litigation
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