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TRUSTS JONATHAN HOLDEEN (07/05/79)

decided: July 5, 1979.

TRUSTS OF JONATHAN HOLDEEN, SETTLOR. APPEAL OF JANET ADAMS AND RANDAL HOLDEN. APPEAL OF COMMONWEALTH OF PENNSYLVANIA


Nos. 775 and 804 January Term, 1977, Appeals from the Decree of the Court of Common Pleas, Orphans' Court Division, of Philadelphia, at Nos. 2214, 2247, 2248, 2249 and 2250 of 1971.

COUNSEL

Cuthbert H. Latta, Philadelphia, for appellants.

Daniel B. Michie, Jr., Fell, Spalding, Goff & Rubin, Philadelphia, for appellee Unitarian Universalist Ass'n.

John A. Solis-Cohen, Asst. Atty. Gen., Philadelphia, for Commonwealth.

Cuthbert H. Latta, Philadelphia, for appellees Janet Adams, et al.

Eagen, C. J., and O'Brien, Roberts, Nix, Manderino and Larsen, JJ.

Author: Roberts

[ 486 Pa. Page 3]

OPINION OF THE COURT

Jonathan Holdeen believed a system of "cumulative endowments" for government should replace taxation. Under Holdeen's system, governments would "create or receive funds which shall be invested in productive investments and the income of which fund shall be wholly or partly accumulated until the amount of such funds shall be large enough so that the income thereof will pay all governmental expenses."*fn1 Between 1945 and 1955, Holdeen sought to establish five "cumulative endowments" for the Commonwealth of Pennsylvania. Holdeen placed comparatively modest sums in five inter vivos trusts ranging in duration from 500 to 1000 years.*fn2 He directed his daughter Janet Adams and son Randal Holden, trustees, to pay a fraction of trust income to the Unitarian Universalist Association (UUA) and accumulate the rest for the lives of the trusts for future charitable use by the Commonwealth of Pennsylvania. For example, in 1945, Holdeen established "Trust 45-10."*fn3 The deed of trust provides:

"one five hundredths part of the income of said estate, multiplied by the number of years which shall have elapsed since July 5, 1944, shall be deemed 'expendable'

[ 486 Pa. Page 4]

    income. The remainder of the said income shall be accumulated in Pennsylvania and added to the principal until the year 2444 when said principal, including accumulated income, shall be paid to the State of Pennsylvania for educational endowment or other public purposes."

This deed, like each of the deeds establishing Holdeen's "cumulative endowments," further directs the trustees annually to pay "expendable income and all other net income hereunder which is not lawfully subject to accumulation under the terms hereof" to the UUA for specified charitable uses. Holdeen, a lawyer and resident of New York, directed the trustees to administer this and his other "cumulative endowments" in Pennsylvania.*fn4 The trustees accumulated trust income. As a result, the original sums placed in trust, together with accumulated income, by one estimate reached a value greater than twelve million dollars. The trustees petitioned the Orphans' Court Division of the Court of Common Pleas of Philadelphia for a ...


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