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MCKEOWN TRUST. (01/03/56)

January 3, 1956

MCKEOWN TRUST.


Appeal, No. 137, March T., 1955, from decree of Orphans'Court of Allegheny County, 1952, No. 3301, in re Estate of Sara Jane McKeown, now Rhodes. Decree reversed.

COUNSEL

Paul Ginsburg, for appellant.

Kenneth G. Jackson, with him Frank J. Gaffney, and Thorp, Reed & Armstrong, for appellee.

Harry F. Stambaugh, for trustee.

Before Stern, C.j., Stearne, Jones, Musmanno and Arnold, JJ.

Author: Jones

[ 384 Pa. Page 80]

OPINION BY MR. JUSTICE JONES

Sara Jane McKeown, unmarried, created an irrevocable inter vivos trust on March 4, 1942, with herself as the primary beneficiary. She constituted the Commonwealth Trust Company of Pittsburgh her trustee and caused her securities to be turned over to it.

The trust agreement provided for the distribution of income as follows: "Out of the income of the Trust Fund, and, to the extent that it is necessary, out of the principal thereof, the Trustee shall pay the sum of One hundred fifty ($150.00) Dollars monthly to the Donor for and during the term of her natural life, or until the Trust Fund is by such payments entirely depleted. The Trustee in its sole discretion may use such additional amounts of the principal as it deems necessary or advisable to meet unusual expenses incurred by the Donor by reason of illness or other misfortune."

The trust agreement further provided that "Upon the death of the Donor, the Trustee shall distribute the remaining corpus of the Trust Fund to her child, or among her children, if she is survived by a child or children ..." with a proviso for a continuation of the trust during the minority of any child of the settlor, if at the time of her death, a surviving child is under the age of twenty-one years. The agreement also provided for remainders over in the corpus to the settlor's sister, brother and mother (subject to a one-thirs to a husband) in the event of her dying without leaving a child to survive her.

[ 384 Pa. Page 81]

For the first full calendar year of the trust (1943) the net income was $2,032.67 and thereafter rose no higher than $2,700 a year until 1947. In the years succeeding 1947 there was an increase in the annual net income until 1950 when it amounted to $5,020.99. For 1952 and 1953, the last calendar years prior to the initiation of the instant litigation by a petition for review, the annual net income was roundly $4,400 for each year. The trustee distributed, from time to time, to the life beneficiary income in excess of $1,800 a years, the aggregate of the required monthly payments to the life tenant.

In 1952, the trustee filed in the court below its first account of its administration of the trust, showing, of course, its distribution of income to the life tenant in excess of $1,800 a year. Subsequent to the creation of the trust, the settlor had married and, at the time the trustee filed its account, was the mother of a child. For the audit of the account, the court appointed a guardian and ...


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