IN RE: DONALD L. MCKINNEY, DECEASED APPEAL OF: JANE D. MCKINNEY IN RE: JANE MCKINNEY DESCENDANTS' TRUST APPEAL OF: JANE D. MCKINNEY
Appeal from the Decree of January 5, 2012 In the Court of Common Pleas of Crawford County Orphans' Court at No(s): No. O.C. 1972-329
Appeal from the Decree of January 5, 2012 In the Court of Common Pleas of Crawford County Orphans' Court at No(s): No. O.C. 2010-223
BEFORE: MUSMANNO, J., WECHT, J., and COLVILLE, J. [*]
We are called upon here to assess the interplay between the contemporary world of corporate banking and Pennsylvania's law of trusts.
In this case, the settlors established trusts that lacked portability clauses. Nonetheless, Pennsylvania's Probate, Estates, and Fiduciaries Code ["PEF Code"] was amended in 2006 to add a "no-fault" provision allowing a trustee to be changed due to "substantial change of circumstances." 20 Pa.C.S.A. § 766(b)(4). Here, the question arises whether a family's movement over time from northwestern Pennsylvania to the Tidewater region of Virginia, coupled with the fact that the original trustee institution has gone through approximately six corporate mergers leading to entirely different bank officers involved in administering the trusts, represents a change of circumstances substantial enough to come within the no-fault statutory provisions.
Following careful review, we conclude that the beneficiaries were within their rights to petition for removal of the trustee. Accordingly, we reverse the judgment of the trial court and remand with the instruction that the petition for the removal of PNC Bank as trustee be granted, pending approval of Appellant's proposed successor trustee. In light of our ruling, we also reverse the trial court's judgment authorizing the reimbursement of PNC's legal fees associated with contesting the removal.
The trial court outlined the history of these trusts, chronicling the movement of Appellant's family and the merger of numerous banks that resulted in the current trustee:
Before the Court are two petitions, both seeking the removal of PNC Bank, National Association, Trustee (hereinafter "PNC") as trustee of two separate trusts referred to throughout this Memorandum as the "Testamentary Trust" and the "Descendants' Trust." The trust assets are considerable.
The Testamentary Trust appears in the Will of the late Donald L. McKinney, executed in the early part of 1964. This Testamentary Trust came into existence upon the death of Donald L. McKinney in 1971. The Pennsylvania Bank and Trust Company ["Bank and Trust"] became the trustee under the terms of the Will. The late Donald L. McKinney's daughter, Jane D. McKinney (hereinafter "Petitioner")[, ] was the named primary beneficiary entitled to the income generated from the trust for her life. The secondary or residuary beneficiaries are her children. She has four adult children, Jane D. Cullipher, Catherine Morrison, David Fletcher Currier III, and Edward McKinney Currier.
The Jane McKinney Descendants' Trust, i.e. the Descendants' Trust, was created by Petitioner's mother, Katherine Dillen McKinney Brawner (hereinafter "Katherine McKinney"), by trust instrument dated October 17, 1989. Katherine McKinney was the wife of Donald L. McKinney. The Descendants' Trust names Pennbank as the Trustee. Pennbank was a successor bank to [Bank and Trust]. Thus, as of October 17, 1989, Pennbank administered both the Descendants' Trust and the Testamentary Trust, both of which name Petitioner as the primary beneficiary, with the secondary or residuary beneficiaries being Petitioner's children.
Petitioner seeks the removal of PNC Bank, the trustee of both trusts. Petitioner requests that the Court approve the appointment of SunTrust Delaware Trust Company (hereinafter "SunTrust Delaware") as the successor trustee. Petitioner alleges that there has been a substantial change in circumstances that warrants a change of trustees and that PNC Bank has failed to properly service the needs of the beneficiaries. She opposes the payment of PNC Bank's attorneys fees from the trusts in defending against these removal petitions. She notes that there were two other trusts in which PNC Bank was trustee, both of which contained portability clauses, and that PNC did not object to the appointment of SunTrust Delaware as the successor trustee of those trusts. Petitioner contends that the appointment of SunTrust Delaware will enhance access by the beneficiaries to the trustee since all of the beneficiaries reside in Virginia, and will aid in the comprehensive financial planning and estate management needs of the primary and secondary beneficiaries. Petitioner asserts that having one financial institution rather than two, PNC and SunTrust Delaware, would make it easier to plan the financial needs of the beneficiaries.
PNC filed an answer to both petitions, contending that there has not been a substantial change in circumstances to warrant removal and vigorously objects to claims that it has not properly serviced these trusts. PNC also challenges the suitability of SunTrust Delaware to serve as the successor trustee and claims the right to have its attorneys fees paid in defending against the petitions.
In support of the substantial change in circumstances argument, Petitioner points to the several different trustees that have administered the trusts over the last 40 years by way of mergers and acquisitions. The original named trustee of the Testamentary Trust, [Bank and Trust], later became Pennbank. Pennbank served as trustee of both the Testamentary Trust and the Descendants' Trust for a period before merging with and becoming [Integra National Bank North.] On May 24, 1995, Integra Bank North merged with other Integra Banks and became Integra Bank. A year later, Integra Bank converted to a national banking association and changed its name to National City Bank of Pennsylvania. National City Bank of Pennsylvania then merged with other National City banks across the country becoming National City Bank. Through National City Corporation's merger with PNC Bank Financial Services Group, Inc., National City Bank became a wholly owned subsidiary of PNC Bank Financial Services Group, Inc. The trust operation[s] of PNC Bank and National City Bank remained separate until the bank operations merged on November 6, 2009[, ] at which point PNC Bank became the trustee of the two trusts.
Petitioner has not resided in Pennsylvania since 1964, when she moved to New York to marry. She has resided primarily in the Hampton Roads area of Virginia, which is also the area in which her four children reside. Although her children have not joined in these petitions, they support Petitioner. Petitioner contends that her financial planning needs and those of her children have changed substantially over the years and that these changes merit the appointment of a successor trustee.
Trial Court Opinion ["T.C.O."], 1/9/12, at 1-4 (citations to exhibits omitted).
The trial court denied Appellant's petition, and awarded PNC attorneys' fees. Appellant filed a notice of appeal. The trial court ordered Appellant to file a concise statement of errors complained of on appeal pursuant to Pa.R.A.P. 1925(b). Appellant timely complied. The trial court entered an order directing our attention to its January 9, 2012 memorandum and order in lieu of a Pa.R.A.P. 1925(a) opinion.
Appellant presents the following issues for our review:
1) Whether the trial court erred and abused its discretion by failing to find that petitioner proved by clear and convincing evidence that PNC Bank should be removed as trustee of the two trusts and SunTrust appointed as successor trustee under 20 Pa.C.S.A. § 7766? a. The trial Court erred and abused its discretion in failing to find that the interests of the beneficiaries ...