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SCHAUTZ TRUST. (05/28/59)

May 28, 1959

SCHAUTZ TRUST.


Appeals, Nos. 161 and 162, Jan. T., 1959, from adjudication of Orphans' Court of Lackawanna County, No. 1247 of 1957, in re Phenie L. Schautz Trust. Decree affirmed.

COUNSEL

C. H. Welles, 3rd, for appellants.

J. Julius Levy, with him John W. Bour, and Levy, Mattes, Preate and McNulty, for appellees.

Before Jones, C.j., Bell, Musmanno, Jones, Cohen, Bok and Mcbride, JJ.

Author: Musmanno

[ 395 Pa. Page 606]

OPINION BY MR. JUSTICE MUSMANNO

On July 31, 1937, Mrs. Phenie L. Schautz entered into an inter vivos trust with the Scranton Lackawanna Trust Company (now the First National Bank and Trust Company of Scranton) whereby, after her death, the Trustee was to pay the net income of her estate to her husband for the term of his natural life, and then, upon his death,*fn1 according to the Third Paragraph of the trust agreement, "the Trustee shall pay, transfer and distribute the corpus of the Trust Estate (or the remaining portion thereof, should any of the corpus have been distributed as hereinafter provided) to Walter J. Schautz, Arthur G. Schautz, George J. Schautz, Jr., and Helen M. Boyle, children of the Donor in equal proportions."

The Ninth Paragraph of the Trust Agreement guaranteed to Mrs. Schautz revocation rights as follows: "It is understood and agreed by the parties hereto that

[ 395 Pa. Page 607]

    this trust is made subject to the right which is hereby specifically reserved to the Donor to terminate and revoke the same at any time upon sixty (60) days' notice in writing thereof to the Trustee, and upon such termination or revocation, the Trustee shall assign, transfer and deliver the trust estate, both principal and accumulated income, if any, to the Donor freed and discharged of any trust whatsoever."

Acting under this revocation clause, Mrs. Schautz on April 25, 1955, revoked the Third Paragraph of the Trust Agreement by stating: "1. That the Third Paragraph of said Trust Agreement as previously amended*fn2 has been revoked in its entirety and that said Trust Agreement is now amended to read as follows:"

Whereupon there was substituted a new paragraph which, by the process of omission, excluded Arthur G. Schautz and Walter L. Schautz, and made George J. Schautz, Jr., and Helen M. Boyle, the sole beneficiaries of the corpus of the estate.

After setting forth the new Third Paragraph, the instrument declared: "That all other terms and conditions of said Trust Agreement to remain unchanged and are hereby ratified and ...


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