September 7, 2012
IN RE: ESTATE OF JOHN J. STRAHSMEIER, DECEASED APPEAL OF: CO-EXECUTRICES, ROSE M. REGAN AND LOIS A. PHILLIPS
Appeal from the Order Entered July 25, 2011 In the Court of Common Pleas of Allegheny County, Orphans' Court Division at No(s): No. 02-08-6114
The opinion of the court was delivered by: Ott, J.
BEFORE: DONOHUE, LAZARUS and OTT, JJ.
OPINION BY OTT, J.:
Rose M. Regan and Lois A. Phillips, two of the three co-executors of the Estate of John J. Strahsmeier ("Estate") appeal from the order of court entered on July 25, 2011 in the Court of Common Pleas of Allegheny County, Orphans' Court Division, which denied their motions for reconsideration and stay and dismissed their exceptions to the July 1, 2011 order. After careful consideration of the submissions by the parties, official record, and relevant law, we affirm.*fn1
We summarize the long and tortuous factual and procedural history of this matter as follows:
Decedent died on September 13, 2008, survived by his three children, John T. Strahsmeier, Regan and Phillips (collectively "children").*fn2 Decedent executed his Will on June 6, 2003. On February 13, 2006, Decedent established a money market checking account*fn3 at First National Bank of Pennsylvania ("First National"). Decedent was the sole owner of this account. On October 17, 2006, Decedent revised ownership, listing Regan as "ITF" (hereinafter "ITF Account").*fn4 At various times, other accounts owned by Decedent were opened and revised at First National.*fn5
In May 2007, Decedent prepared binders (hereinafter "the binder") containing detailed descriptions and information as to his funeral, burial, assets, debts, accounts, and estate management.*fn6 The binders were given to Regan, Phillips, Strahsmeier, and C. Donald Gates, Jr., Esquire.*fn7 All binders were updated regularly by Decedent.
The binder directs that upon his death, Strahsmeier, Regan, and Phillips were to take the monies from the accounts they shared with Decedent and deposit them into an estate account. The Estate Account would, after payment of debts, be divided equally among the children.*fn8 The ITF Account containing the majority of the assets of the Estate was to become the Estate Account.
Following Decedent's death, Regan and Phillips sought intestate probate averring they did not know if a valid Will was in existence.*fn9 Letters of administration were issued to Regan and Phillips as co-administrators of the Estate on September 24, 2008. On October 3, 2008 Regan and Phillips, as co-administrators, filed a petition to show cause why Strahsmeier and his wife should not be directed to deliver Decedent's assets to the court.*fn10
On October 6, 2008, Strahsmeier presented to the court a petition to enter a photocopy of the Decedent's June 6, 2003 Will. Regan and Phillips immediately filed a caveat with the Register of Wills.
On October 16, 2008, Treasury Bill *H20 matured and $40,000 was electronically deposited into the ITF Account. Shortly thereafter, Regan withdrew the contents of that account, totaling $140,200.26.
When on January 14, 2009, Strahsmeier presented for filing the original June 6, 2003 Will and the March 20, 2007 Codicil,*fn11 Regan and
Phillips withdrew the caveat. Pursuant to the June 6, 2003 Will,
Strahsmeier, Phillips, and Regan were appointed co-executors of the Estate. On June 23, 2009, Philips filed an Inheritance Tax Form on behalf of the Estate. The tax form listed the ITF Account ($108,477.75) and Treasury Bill *H20 ($40,000) as assets of the Estate.
On May 12, 2010, the orphans' court directed Regan and Phillips*fn12 to file an Account for the Estate. Strahsmeier was required to cooperate fully in providing information they might need. Regan and Phillips filed, on June 15, 2010, a First and Final Account and Inventory. Strahsmeier filed objections as well as supplemental objections to both the Account and Inventory on July 27, 2010. Among the objections to the Inventory were those stating that the ITF Account ($108,477.75) and Treasury Bill *H20 ($40,000) were not listed as assets of the Estate. A prolonged and contentious period of discovery followed.
On December 3, 2010, Regan and Phillips filed an amended Inventory. An amended Account was filed on December 20, 2010. After further procedural posturing and filings, a hearing was finally held on May 12, 2011. The Honorable Lawrence J. O'Toole filed his memorandum opinion and order on July 1, 2011. Regan and Phillips filed timely exceptions to the order.*fn13
On July 25, 2011, Judge O'Toole issued his second memorandum opinion and order, which dismissed the exceptions. This timely appeal followed on August 9, 2011.
On appeal, Regan and Phillips contend the orphans' court erred as a matter of law in: 1) concluding Strahsmeier produced clear and convincing evidence to overcome the presumption the bank account was a Totten trust;*fn14 2) concluding the account was a convenience account rather than a Totten trust; and 3) concluding the Treasury Bill (*H20) which matured on October 16, 2008, in the principal amount of $40,000, was the property of the Estate and not Regan.
Our standard of review of an orphans' court's decision is deferential. When reviewing a decree entered by the Orphans' Court, this Court must determine whether the record is free from legal error and the court's factual findings are supported by the evidence. Because the Orphans' Court sits as the fact-finder, it determines the credibility of the witnesses and, on review, we will not reverse its credibility determinations absent an abuse of that discretion.
However, we are not constrained to give the same deference to any resulting legal conclusions. Where the rules of law on which the court relied are palpably wrong or clearly inapplicable, we will reverse the court's decree.
In re Smith, 890 A.2d 1082, 1086 (Pa. Super. 2006) (citations and internal quotation marks omitted).
An abuse of discretion is not merely an error of judgment; if, in reaching a conclusion, the court overrides or misapplies the law, or the judgment exercised is shown by the record to be ... manifestly unreasonable or the product of partiality, prejudice, bias or ill will, discretion has been abused.
In re Estate of Cella, 12 A.3d 374, 378 (Pa. Super. 2010) (internal citations and quotations omitted).
We first address the issue of the Treasury Bill. The trial court, in its Findings of Fact,*fn15 determined the funds from Treasury Bill *H20 were an asset of the Estate. "We are bound by the lower court's findings of fact if they are supported in the record, but we must examine any legal conclusions drawn from those facts." Id. (quoting Commonwealth v. Pickron, 634 A.2d 1093, 1096 (Pa. 1993)).
"Legal title to all personal estate of a decedent shall pass at his death to his personal representative, if any, as of the date of his death." 20 Pa.C.S. § 301(a). It is not in dispute that Treasury Bill *H20 was registered and owned by Decedent alone. The Estate was the successor owner of the matured Treasury Bill. Because the U.S. Treasury Department was not notified in a timely manner of Decedent's death, when Treasury Bill *H20 reached maturity it was deposited to the account of record, the ITF Account. Even though the proceeds were deposited in the ITF Account which contained Regan's name, it did not change the nature of the money. The ITF Account was the only known conduit from the U.S. Treasury Department to the Decedent. The orphans' court correctly found the $40,000 belonged to the Estate. Because Regan has no right to the monies, they must be returned to the Estate as directed by the orphans' court. This issue fails.
We examine the final two issues together.*fn16 We must decide whether the orphans' court was correct in determining that Strahsmeier, as co- executor, proved by clear and convincing evidence that Decedent, when he created the ITF Account had an intent contrary to Regan's presumed right of survivorship. We affirm the ruling on these issues, albeit on grounds different from those relied upon by the orphans' court.*fn17
The Multiple Party Accounts Act (MPAA), 20 Pa.C.S. §§ 6301-6306, provides in relevant part:
"Trust account" means an account in the name of one or more parties as trustee for one or more beneficiaries where the relationship is established by the form of the account and the deposit agreement with the financial institution and there is no subject of the trust other than the sum on deposit in the account; it is not essential that payment to the beneficiary be mentioned in the deposit agreement. A trust account does not include a regular trust account under a testamentary trust or a trust agreement which has significance apart from the account, or a fiduciary account arising from a fiduciary relation such as attorney-client.
20 Pa.C.S. § 6301.
(b) Trust account.--At the death of the trustee or the survivor of two or more trustees, any sum remaining on deposit belongs to the person or persons named as beneficiaries, if surviving, or to the survivor or survivors of them if one or more die before the trustee or last surviving trustee, unless there is clear and convincing evidence of a contrary intent; if two or more beneficiaries survive, there is no right of survivorship in event of death of any beneficiary thereafter unless the terms of the account or deposit agreement expressly provide for survivorship between them.
20 Pa.C.S. § 6304(b) (emphasis added).
The parties and the orphans' court relied upon the holdings in In re Novosielski Estate, 992 A.2d 89 (Pa. 2010) and In re Estate of Cella, 12 A.3d 374 (Pa. Super. 2010) which address Section 6304(a). Our Supreme Court has held that the: "conclusion that such clear and convincing evidence exists simply when a court determines that the provisions of a pre-existing will indicate a distribution scheme in conflict with one under a co-existing joint account is not supportable under a plain reading of the MPAA or otherwise." In re Novosielski, 992 A.2d 89, 102 (Pa. 2010). We recognize the precedent established by these cases; however, this case requires interpretation of Section 6304(b) and contains distinguishable and unique facts.
We do not have merely the Will as the expression of Decedent's intent. This record contains the following in support of Decedent's intent that the ITF Account not be the sole property of Regan after his death: 1) the designation at all times of the ITF Account as an "Individual" owned account;
2) the testimony of Decedent's long-time lawyer, C. Donald Gates, Esquire;*fn18 3) the binder prepared by Decedent; 4) the post-death actions of Phillips and Strahsmeier regarding bank accounts they each held with Decedent; and 5) Regan's statements showing her knowledge of Decedent's intent.
The ITF account was opened on February 13, 2006 by Decedent in his name alone. The box entitled "Ownership of Account - Consumer" contains a typed "X" next to "Individual." Strahsmeier Exhibit 9, 5/12/2011. The signature cards for the ITF Account, which are a part of the record show revisions were made on October 17, 2006 and September 8, 2008. Id. Although the specific revisions are not noted, the account holders as of October 17, 2006 are Decedent and "ITF Rose Regan." The ITF Account ownership designation on both revised signature cards remained marked as "Individual" even though there is an option of "Totten Trust (ITF)" in the block.
As indication that the ITF Account's ownership designation as "Individual" was not an oversight, the record also contains the signature cards of three other First National accounts: a checking (*390), a savings (*194), and a certificate of deposit ("CD account"). The CD account and the savings account (*194) were both originally opened and owned solely by Decedent. Both of these accounts were revised on September 8, 2008, five days before Decedent died, to add children as agents pursuant to the POA. The ownership designation on both accounts remained marked as "Individual" after the revisions were made.
Checking account (*390) was opened in 1969.*fn19 On December 22, 1993, Phillips was added to this account and the ownership section was changed to "joint with right of survivorship (not as tenants in common)." On July 28, 2008, Decedent revised the account to add Strahsmeier.*fn20 The account was again revised on September 8, 2008 when Regan was added to the account. The ownership block shows it is a "joint with right of survivorship (not as tenants in common)" account. Clearly, Decedent was aware of the different options and the choice for each account reflected his intention.
Mr. Gates testified to his knowledge of Decedent's intent regarding ownership of the balance of the ITF Account upon his death. The orphans' court found Mr. Gates' testimony to be credible.*fn21 Mr. Gates testified unequivocally that Decedent's estate plan was to have all of his assets "gathered, liquidated and divided into three equal shares." N.T., 3/10/2011 at 9. He also stated, "[Decedent's] whole estate plan was predicated upon an equalized distribution, and if [Decedent] decided that everything that was in that [ITF Account], was going to go to [Regan], it would have skewed the whole estate plan in [Regan's] favor." Id. at 17.
Further, Mr. Gates testified that sometime after Regan's name had been placed on the ITF Account, at his suggestion Decedent confirmed with First National that Regan's son, his grandson, was not named on the ITF Account because it "would be indicative of the fact that [Decedent] intended that to be the Regan money." Id. at 18.
We have reviewed the Decedent's binder, which we note is extraordinary in its detail as to the Decedent's intent. The binder states:
Most important to me is that all of you act civil towards one another Regardless of previous disagreements, also that you refrain from any Law suites [sic] against the estate or one another, being this will cost each Of you time off from your place of employment and legal fees are very expensive in these type of matters.
First National Bank there are three accounts, Savings Account, Checking Account and [ITF Account] each of your names are on one of These accounts whereby I can draw monies from the accounts but you Are not eligible. All are covered under p.o.d. (pay on death)[.]
The day after the funeral open a [sic] estate checking account put my saving [sic] Account and checking in it if possible leave the money market [ITF Account] as is Being the interest rate will earn you substantial money.
Binder, 5/3/2007 at 1 (emphasis in original). This further evidences that the ITF Account would not become the sole property of Regan, as it in fact directs the children to leave the account open to generate further income for "you", meaning all of them. Id.
Additionally, Decedent specified that the children were to work together to "COLLECT ALL OUTSTANDING MONIES AND PAY ALL FORTH COMING BILLS FROM THE MONEY MARKET CHECKING ACCT [ITF Account]." Id. at 35 (emphasis in the original). The binder instructs Strahsmeier:
[ITF Account] RECEIVES MONTHLY ALLEG. COUNTY PENSION CHECK. THIS ACCT IS TO BE THE MAJOR ESTATE ACCT ALL MONIES FROM INSURANCES, ANNUITYS [sic], HOME SALE, AUTO SALE, OTHERS, SHALL BE DEPOSITED INTO THIS ACCOUNT. AFTER THE HOUSE IS SOLD AND ALL MONIES ARE DEPOSITED AND ALL DEFERED [sic] TAXES (H-BONDS) AFTER FUNERAL MEAL, ALL HOME UTILITIES GRASS CUTTING ETC. A MEETING SHALL BE SET WITH ED CONLEY CPA TO DISTRIBUTE EQUAL FUNDS LESS AMOUNTS PREVIOUSLY BORROWED [Regan's $20,000] AND TO PAY ALL MY TAXES OWED UP TO THE DAY OF MY DEATH, THE FOLLOWING UTILITIES AND EXPENSES PAID SHALL BE BY THE ESTATE ALSO ALL TAXES SHALL BE ESTATE TAXES EXCEPT THE DEFERED [sic] TAXES FOR THE H- BONDS TO BE PAID BY THE ESTATE. AFTER ALL IS PAID AND DIVIDED IN FAIR SHARES, CLOSE THIS ACCOUNT.
Binder, 5/3/2007 at 38 (emphasis in original). It also states:
SHOULD YOU START TO RUN LOW [in paying utility Bills and school and county taxes out of checking account (*390)] YOU CAN ALWAYS TAKE MONEY FROM THE [ITF Account] AND TRANSFER IT TO THIS ACCT BEING I HAVE MY OWN MONEY IN THE [ITF Account] BEFORE YOU START MOVING THE VARIOUS FUNDS INTO IT AFTER THE HOUSE IS SOLD CLOSE IT.
Id. (emphasis in original).
All of the children were aware of the Decedent's intent for the distribution of his estate. The record shows Strahsmeier and Phillips, following the directives of the binder, deposited all proceeds of assets and accounts*fn22 including the checking account (*390) which was held jointly with right of survivorship (not as tenants in common) into the Estate Account.
Additionally, the record contains the Inheritance Tax form filed by Phillips on June 23, 2009. In the filing, Phillips lists both the ITF Account and the $40,000 Treasury Bill as assets of the Estate. This form was filed after Regan's May 20, 2009 withdrawal of all funds from the ITF Account. Regan had knowledge of Decedent's intent regarding the ITF Account. Mr. Gates testified to witnessing a contentious meeting between the children shortly after Decedent's death. He testified:
So when [Strahsmeier] came in, [Regan and Phillips]
immediately confronted him, like, two tigers attacking a cub, and accused him of stealing this money. Apparently, what they were talking about was just nickels and dimes, and [Strahsmeier] had money, threw it on the table and said, "You figure it out."
[Strahsmeier] was antagonistic towards them. There was a lot of antagonism in the room. [Phillips] and - [Regan] had said that "If you just admit you took the money and put it back, then we'll go ahead and do it just like Dad wanted us to do."
N.T., 3/10/2011 at 20. When asked what this statement was in reference to Mr. Gates testified: "The division of the [ITF Account]. Id. Mr. Gates then clarified that Regan was the declarant of the statement.*fn23
The record also reflects the following exchange between Judge O'Toole and Regan:
THE COURT: . . . [I]f your dad had given you some instruction, whether it's a binder, orally or whatever, would you have followed your dad's instructions?
THE COURT: You would not?
[REGAN]: He left the account in my name, so I did not have to -
THE COURT: I'm not asking you that so much. Pointedly but generally speaking, generally speaking - forget about accounts - if your dad said, hey, Rose, look, I'd like you to do this and this and I'm going to put it in writing, here it is, would you follow his instructions because he was your dad?
[REGAN]: I guess if it would make sense at the time, but things change.
N.T., 5/12/2011 at 143.
The record supports overriding the distribution scheme enunciated in the MPAA because co-executor Strahsmeier proved by clear and convincing evidence that Decedent had an intent contrary to Regan's right of survivorship at the time he revised the ITF Account to include Regan's name. Because Regan had no right to the monies in the ITF Account, they must be returned to the Estate as directed by the orphans' court.
Accordingly, we affirm the orphans' court's dismissal of the exceptions of Regan and Phillips.
Motion to strike the brief of Appellee Strahsmeier and/or request that Strahsmeier be prohibited from engaging in oral argument denied. Order affirmed.