Re: Trust Under Deed of D. Kulig Apl of Budke, C.
175 A.3d 222
| Pa. | 2017Background
- Decedent (David Kulig) executed a revocable inter vivos trust in 2001 naming his then-wife Joanne and their children as beneficiaries; the trust gave him broad lifetime powers (income, principal, termination).
- After Joanne died, Decedent executed a will in December 2010 (which made no provision for his future wife), married Mary Jo Kulig in December 2011, and died in February 2012.
- At death the Trust corpus was ~$3.26M, the probate estate (excluding the Trust) ~$2.11M, and Wife had at least $1.5M in ERISA benefits.
- Wife was a pretermitted spouse under 20 Pa.C.S. § 2507(3). Parties disputed whether the revocable Trust should be included in the “intestate estate” for calculating the pretermitted spouse share (½) or whether Wife could reach the Trust only via the elective-share statute § 2203 (1/3 subject to offsets).
- Orphans’ Court and Superior Court held Section 7710.2 (2006)—which directs that rules of construction for testamentary trusts apply to inter vivos trusts—imported § 2507(3) principles into revocable trusts, so the Trust was part of the estate for pretermitted-share calculation. The Pennsylvania Supreme Court granted review.
Issues
| Issue | Plaintiff's Argument (Children) | Defendant's Argument (Wife) | Held |
|---|---|---|---|
| Whether § 7710.2 brings inter vivos revocable trusts into the § 2507(3) pretermitted-spouse intestate share | § 7710.2 does not change pre-2006 law excluding inter vivos trusts from the intestate estate; trusts are “disposed of otherwise” under § 2101 and only reachable via § 2203 election | § 7710.2 imports the rules of construction for testamentary trusts (including § 2507(3)) into inter vivos trusts, so pretermitted spouses may claim against revocable trusts as part of intestate estate | Court held § 7710.2 ambiguous in context and concluded the legislature did not intend to expand § 2507(3) to include inter vivos trusts; reversed lower courts |
| Whether it was proper to rely on the Joint State Government Commission commentary to § 7710.2 | Commentary cannot be used to override or expand statutory scheme absent ambiguity and clear legislative intent; here text and Code context counsel against the expansion | Commentary and Uniform Law Comment were available to legislature and support importing § 2507(3) protections into inter vivos trusts | Court held commentary may be consulted because § 7710.2 is ambiguous in context, but commentary does not show a clear legislative intent to change the pre-2006 scheme; statutory text controls |
| Whether §§ 2203 (elective share) and 2507 (pretermitted spouse) must be read in pari materia | §§ 2203 and 2507 are complementary protections for spouses and should be harmonized; § 7710.2 should not be read to alter that balance | Wife argued § 2507(3) is a rule of construction and § 7710.2 properly extends that rule to trusts as a functional equivalent of a will | Court held the sections are in pari materia and their differing remedial schemes (½ intestate share vs 1/3 elective share with offsets) reflect distinct legislative choices that § 7710.2 did not plainly supersede |
| Whether importing § 2507(3) to trusts produces absurd or problematic results | Expanding pretermitted-share reach to trusts but not to many other nonprobate devices (or to irrevocable/charitable trusts) would be under- and over-inclusive and create absurd incentives | Wife argued the legislature need not list every consequential rule and § 7710.2’s purpose was to treat revocable trusts like wills | Court agreed with Children that the practical consequences (undermining § 2203, potential exposure of irrevocable/charitable trusts) counseled against finding an implied major change absent clear statutory text |
Key Cases Cited
- In re Pengelly’s Estate, 97 A.2d 844 (Pa. 1953) (describing public policy to protect surviving spouses from disinheritance)
- In re Schwartz’ Estate, 295 A.2d 600 (Pa. 1972) (noting elective-share purpose to prevent indirect disinheritance via inter vivos transfers)
- Matter of Tracy, 346 A.2d 750 (Pa. 1975) (holding construction principles for trust instruments are essentially the same as for wills)
- In re Estate of Behan, 160 A.2d 209 (Pa. 1960) (addressing election against irrevocable charitable trust under prior law)
- Trust Under Agreement of Taylor, 164 A.3d 1147 (Pa. 2017) (statutory interpretation principles and limits on using commentary where text is plain)
- Kulig Trust (In re Trust Under Deed of Kulig), 131 A.3d 494 (Pa. Super. 2015) (Superior Court decision below holding § 7710.2 imported § 2507 protections into revocable trusts)