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[U] In re Estate of McFadden

Superior Court of Pennsylvania

December 31, 2013

RE: IN THE MATTER OF ESTATE OF GEORGE McFADDEN, DECEASED APPEAL OF: RANDOLPH HARRISON, ROBERT C. HARRISON, CO-TRUSTEES AND BENEFICIARIES, AND RANDOLPH HARRISON JR., BENEFICIARY OF THE TRUST UNDER WILL OF GEORGE McFADDEN f/b/o THE DESCENDANTS OF EMILY B. STAEMPFLI

NON-PRECEDENTIAL DECISION

Appeal from the Decree Entered August 14, 2012, In the Court of Common Pleas of Delaware County, Orphans' Court at No.: 0028-1931

BEFORE: SHOGAN, WECHT and COLVILLE [*] , JJ.

MEMORANDUM

SHOGAN, J.

In the instant appeal, Appellants challenge the orphans' court's August 14, 2012 decree that declared the residuary trust ("the Trust") contained in the will ("the 1930 Will") of George McFadden ("Decedent") terminated on February 21, 2012, twenty-one years after the death of Decedent's last surviving child, Emily Staempfli. After review, we affirm.

The orphans' court thoroughly set forth the facts of this case in its opinion, and we will not restate them in full herein, save as follows:

[Decedent] died on January 5, 1931. The Decedent left a will dated January 6, 1930, which was probated in the Office of the Register of Wills of Delaware County. At the time of his death the Decedent was the senior partner of the firm of Geo. H. McFadden & Bro. The Decedent was survived by all four (4) of his children, being Alexander B. McFadden, George H. McFadden II, Caroline Ewing and Emily Staempfli.
Under the Third Article of his will, the Decedent appointed Girard Trust Company as his corporate trustee. The Decedent also appointed George Stuart Patterson, Edward Browning, his son George McFadden and their several successors as his individual trustees. Also, the Decedent directed that at all times, there would be a corporate trustee and at least two (2) individual trustees.
Under the Fourth Article of his will, the Decedent left his residuary estate in trust. The terms of the trust provide that the net income was to be paid
...monthly, as nearly as possible, in the proportion of two parts of the balance of net income to each of my two sons, and one part thereof to each of my daughters, living at the time of my death, or to the respective issue living at the time of my death of a deceased son or daughter, such issue being entitled to their parent's share of income, for and during the life of each of such children or issue of a deceased child living at the time of my death.

Orphans' Court Opinion, 8/14/12, at 1-2. In its very comprehensive opinion, the orphans' court ultimately concluded that the Trust terminated on February 21, 2012, twenty-one years after the death of Emily Staempfli, Decedent's last surviving child. Id. at 21-22.

Appellants filed an appeal and raise one issue for this Court's consideration:

Did the [orphans'] court err in interpreting [Decedent's] will to provide that a testamentary trust created for his descendants terminated in February 2012, even though the will says that the trust should continue for 21 years after the death of certain of McFadden's grandchildren, both of whom are still alive?

Appellants' Brief at 2.

Despite Appellants' conclusory phrasing of the issue, the question presented to us is which life is the measuring life for purposes of determining when the Trust terminates.

The findings of a judge of the orphans' court division, sitting without a jury, must be accorded the same weight and effect as the verdict of a jury, and will not be reversed by an appellate court in the absence of an abuse of discretion or a lack of evidentiary support. This rule is particularly applicable to findings of fact which are predicated upon the credibility of the witnesses, whom the judge has had the opportunity to hear and observe, and upon the weight given to their testimony. In reviewing the [o]rphans' [c]ourt's findings, our task is to ensure that the record is free from legal error and to determine if the [o]rphans' [c]ourt's findings are supported by competent and adequate evidence and are not predicated upon capricious disbelief of competent and credible evidence.

In re Scheidmantel, 868 A.2d 464, 478-479 (Pa.Super. 2005) (citation omitted). Moreover, it is well settled that when interpreting the terms of a trust,

the polestar in every trust is the settlor's intent and that intent must prevail. The rules for determining a settlor's intent are the same for a trust as for a will. The settlor's intent must be ascertained from a consideration of (a) all the language contained in the four corners of the instrument and (b) the distribution scheme and (c) the circumstances surrounding the testator or settlor at the time the will was made or the trust was created and (d) the existing facts.

Id. at 488 (internal citations and quotation marks omitted).

Additionally, we must review the issue with an understanding of the rule against perpetuities, which states: "No interest is good unless it must vest, if at all, not later than twenty-one years after some life in being at the creation of the interest." Estate of Coates, 652 A.2d 331, 334 (Pa.Super. 1994) (citation omitted).

This court recently discussed the evolution of the Rule in the area of class gifts and the trend in Pennsylvania to ameliorate the harsh results of a literal application of the common law Rule. In Re Estate of Weaver, 392 Pa.Super. 312, 320-21, 572 A.2d 1249, 1253-54 (1990). The early common law Rule began with the founding of Pennsylvania and lasted until 1929. During this period, this Commonwealth followed the early common law Rule. Id. This early application of the Rule required use of the "possibilities test" to determine the validity of all future interests. Id. Under the "possibilities test, " a future interest, such as a remainder in a trust to all great-grandchildren, was void if there was even the slightest possibility that the interest might vest beyond the permissible period of a life or lives in being plus twenty-one years. Id. (citing Levin, Section 6104(d) of the Pennsylvania Rule Against Perpetuities: The Validity and Effect to the Retroactive Application of Property and Probate Law Reform, 25 Vill.L.Rev. 213 (1980)).
From 1929 to 1947, however, a transition occurred, and a new doctrine called "vertical separability" was introduced. Weaver, supra. The vertical separability doctrine eliminated the harsh effect of the "possibilities test" in certain circumstances. Id. Vertical separability provided that valid remainders could be separated from those that were void so that the valid remainders could still be given effect. Id. Vertical separability can be applied as long as the testator's plan of distribution is not defeated. In Re Harrah's Estate, 364 Pa. 451, 462, 72 A.2d 587, 592 (1950).
The final stage, or modern era, of the Rule began in 1947, with the passage of the Intestate, Wills and Estates Act of 1947 ("Estates Act of 1947"). The Estates Act of 1947 replaced the common law Rule's "possibilities test" with the "actualities test." 20 Pa.C.S.A. § 6104; Weaver, supra[, ] 392 Pa.Super. 312, 572 A.2d 1249. Under the "actualities test" approach, Pennsylvania courts ascertained the validity of future interests by looking to the events which actually had occurred during the period of the common law Rule (a life or lives in being plus twenty-one years), and not by events which could possibly occur during this period. 20 Pa.C.S.A. § 6104; Weaver, supra. The Pennsylvania Supreme Court subsequently interpreted the "actualities test" under the Estates Act of 1947 to be applicable to only those testamentary trusts which were created after January 1, 1948. See Estate of Davis, 449 Pa. 505, 297 A.2d 451 (1972); In Re Lovering's Estate, 373 Pa. 360, 96 A.2d 104 (1953); In Re Newlin's Estate, 367 Pa. 527, 80 A.2d 819 (1951). In 1978, however, the legislature amended the statutory rule, by providing for the retroactive application of the statute to "all interests heretofore and hereafter created." 20 Pa.C.S.A. § 6104(d).

Estate of Coates, 652 A.2d at 334.

Here, the pertinent language is contained in the fourth article of the Decedent's will and states as follows:

ARTICLE FOURTH: I give, devise and bequeath all the rest, residue and remainder of my estate, and I also give, devise and bequeath all estates or interests over which I have power of appointment . . . IN TRUST, for the following uses, to wit:
* * *
(3) And IN TRUST, as to all the rest, residue and remainder of my estate, . . . to pay and distribute the net income thereof as follows: . . . And in any event, during the lifetime of my wife, IN TRUST, to receive and apply the balance of the net income of my estate as follows: To pay monthly, as nearly as possible, in the proportion of two parts of the balance of the net income to each of my sons, and one part thereof to each of my daughters, living at the time of my death, or to the respective issue living at the time of my death of a deceased son or daughter, such issue being entitled ...

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