In re Estate of Bechtel
92 A.3d 833
| Pa. Super. Ct. | 2014Background
- Mary L. Bechtel executed a 1996 power of attorney naming her son Donald as attorney-in-fact; Donald managed her finances until her death in 2009.
- In 2006 Mary conveyed a 95% interest in the family homestead to herself and 5% to Donald as joint tenants and signed an agreement that Donald would sell the homestead after her death and distribute proceeds per her will.
- After Mary died in 2009, Donald and Michael were appointed co-executors; the homestead was sold in 2011 and proceeds were deposited in the estate account.
- Larry, a residuary beneficiary, filed (1) a civil action against Donald for breach of the sale agreement, (2) a petition to remove Donald and Michael as co-executors, and (3) objections to Donald’s executor/accounting; matters were consolidated and tried in orphans’ court.
- The orphans’ court sustained objections to Donald’s accounting, found 36 checks (1999–2009) lacked payee identification, and surcharged Donald $17,230.40 for breach of fiduciary duty; it denied removal of the co-executors.
- Donald and Michael filed post-trial motions seeking modification of the surcharge and awarding counsel fees/costs; the orphans’ court amended the surcharge downward slightly and dismissed the fee motion as untimely. Appeal followed.
Issues
| Issue | Plaintiff's Argument (Larry) | Defendant's Argument (Donald/Michael) | Held |
|---|---|---|---|
| Whether Donald may be surcharged for unaccounted checks (breach of fiduciary duty) | Surcharge appropriate because Donald failed to keep full and accurate records and could not account for 36 checks | Donald: statute requiring recordkeeping (20 Pa.C.S. §5601(e)(4)) did not apply to four 1999 checks pre‑Dec 12, 1999; evidence (gift history, some payees identified) rebutted presumption of improper disbursements; Strickler requires evaluation of proof | Court of Appeals reversed surcharge order and remanded for application of Strickler standard and proper evidentiary analysis (statute not retroactive to pre‑Dec 12, 1999 use) |
| Whether orphans’ court properly relied on amended statutory duty (20 Pa.C.S. §5601(e)(4)) for pre‑effective‑date activity | Statute authorizes fiduciary recordkeeping duty and supports surcharge | Donald: statute’s effective date limits its scope; common‑law fiduciary accounting principles (Strickler) govern pre‑amendment acts and require evaluating witness/accountant proof | Appellate court held §5601(e)(4) did not apply to power‑of‑attorney uses before Dec. 12, 1999; court must apply Strickler and assess testimony/evidence rather than impose automatic surcharge |
| Whether the orphans’ court abused its discretion by surcharging for all post‑Dec‑1999 unaccounted checks without analyzing credibility and available explanations | Court found pervasive recordkeeping failures warranting surcharge | Donald: only 32 of ~850 items were questioned; records destroyed inadvertently; testimony and other evidence suggested legitimate gifts/expenses; judge failed to apply Strickler or evaluate testimony | Reversed and remanded for orphans’ court to apply proper evidentiary standard and analyze whether each disputed disbursement was justified |
| Whether Donald and Michael’s post‑trial motion for counsel fees/costs was timely and whether the orphans’ court had jurisdiction to hear it | Fees justified if Larry’s filings were vexatious; motion filed within 30 days of final order so timely | Orphans’ court dismissed as untimely under 20‑day exceptions rule | Appellate court held the motion was filed within 30 days of the final order and per Freidenbloom the court retained jurisdiction for 30 days; reversal of dismissal and remand to consider fee request |
Key Cases Cited
- In re Strickler’s Estate, 354 Pa. 276, 47 A.2d 134 (establishes fiduciary’s burden to justify disbursements; unsupported accountant testimony is generally insufficient)
- In re Miller’s Estate, 345 Pa. 91, 26 A.2d 320 (defines surcharge as remedy for fiduciary’s lack of due care to compensate beneficiaries)
- Freidenbloom v. Weyant, 814 A.2d 1253 (Pa. Super. Ct.) (court retains jurisdiction to consider fee petitions filed within 30 days after entry of final order)