In Re: Thomas G. Goodwin, Appeal of: Goodwin, M.
1124 WDA 2015
| Pa. Super. Ct. | Sep 28, 2016Background
- Decedent (Thomas G. Goodwin) executed a revocable living trust and pour‑over will (2006); Marie Goodwin (Respondent/Trustee) was successor trustee and executrix. All personal and household effects were directed into the Trust.
- Petitioners (Decedent’s children) alleged Respondent mismanaged trust and estate assets, failed to inventory/account for personal property, did not transfer a specifically devised parcel (166 Chestnut Ln, Normalville) to them, allowed tax delinquencies, and moved funds from Decedent’s accounts.
- Petitioners filed a Petition for Rule to Show Cause and declaratory relief (May 2014). After hearings (Oct. & Dec. 2014) the Orphans’ Court ordered Respondent to convey the Normalville property to Petitioners, reimburse liens paid by Petitioners, and pay Petitioners’ attorney’s fees; it found breaches of fiduciary duty and imposed a surcharge.
- Respondent appealed, arguing (inter alia) that trust assets — not residue/personal property — should pay expenses, that abatement rules permitted using the Normalville property to pay expenses, that she had discretion as trustee and did not breach duties, and that she was entitled to trustee attorney’s fees.
- The Superior Court affirmed: it adopted the Orphans’ Court’s factual findings, concluded Respondent breached fiduciary duties, upheld immediate conveyance of the Normalville property, allowed surcharge (liens and attorneys’ fees) against Respondent, and denied Respondent’s claim for attorney’s fees from the trust/estate.
Issues
| Issue | Plaintiff's Argument (Petitioners) | Defendant's Argument (Goodwin) | Held |
|---|---|---|---|
| Whether estate personal property must be used to pay administration expenses before trust assets | Petitioners argued settlor’s intent and instruments required using residue/personal property to pay expenses when trust assets were insufficient; Respondent failed to inventory assets | Goodwin argued Trust/Will language makes trust assets primary for expenses and that she had discretion; claimed personal property largely de minimis or already distributed | Court held settlor’s documents and special directives required using residue/personal property for expenses before diverting specifically devised trust assets; Goodwin failed to inventory and misapplied assets |
| Whether Normalville property should be conveyed immediately or abate to pay expenses | Petitioners: Normalville parcel was a specific devise to them and must be transferred; deed scrivener error (middle initial) was harmless | Goodwin: Deed was defective (wrong middle initial), property remained estate asset and could abate under abatement statute (20 Pa.C.S. §3541) to pay expenses; trust assets insufficient | Court held devise was specific; scrivener’s error was a harmless mistake and property was a trust asset specifically devised to Petitioners — conveyance ordered immediately; abatement statute did not override clear testamentary directions to use residue first |
| Whether Respondent breached fiduciary duties (administration, loyalty, impartiality) | Petitioners: trustee failed to inventory/account, self‑dealt (transferred items, moved ~$22,000), neglected tax obligations, and delayed transfer to beneficiaries | Goodwin: claimed broad discretionary authority and acted in good faith; distributed some items to beneficiaries; asserted deed defect and tax minimization efforts | Court held Respondent breached duties by mismanaging assets, failing to account, self‑dealing, and refusing to transfer property — breach caused loss and justified surcharge |
| Whether attorney’s fees and liens can be surcharged against Respondent and whether Respondent can recover her own fees from the trust | Petitioners: entitled to reasonable attorneys’ fees and liens as surcharge for trustee’s breach; fees caused by Respondent’s wrongs get priority | Goodwin: Trust permits trustee to employ counsel and recover fees; she seeks reimbursement | Court held beneficiary fees incurred due to trustee’s breach are recoverable and can be charged against Respondent (surcharge); Respondent not entitled to reimbursement from the trust for fees arising from her wrongdoing; beneficiary fees get priority and remainder may be a personal judgment against Respondent |
Key Cases Cited
- In re Trust of Hirt, 832 A.2d 438 (Pa. Super. 2003) (standard of review for Orphans’ Court findings and deference to factual findings)
- In re Scheidmantel, 868 A.2d 464 (Pa. Super. 2005) (trustee breach remedies and Restatement guidance on surcharge options)
- In re Dentler Family Trust, 873 A.2d 738 (Pa. Super. 2005) (burden shifting once beneficiary proves breach and loss; surcharge principles)
- In re Estate of Warden, 2 A.3d 565 (Pa. Super. 2010) (elements required before imposing surcharge on trustee)
- In re Estate of Blumenthal, 812 A.2d 1279 (Pa. Super. 2002) (will interpretation: clear testamentary language controls distribution)
- In re Estate of Brown, 30 A.3d 1200 (Pa. Super. 2011) (trial court discretion in setting surcharge; appellate review limited absent abuse of discretion)