Court Opinion

ID: 9555976
Source: CourtListenerOpinion
Date Created: 2023-08-15 18:12:00.138206+00
Date Added: 2024-06-11T15:34:56.881946
License: Public Domain

J-A16042-23

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT OP 65.37

    SUZANNE HALLOWELL, AMBER                   :   IN THE SUPERIOR COURT OF
    HALLOWELL, AND SEAN HALLOWELL              :        PENNSYLVANIA
                                               :
                                               :
                v.                             :
                                               :
                                               :
    WAYNE HALLOWELL                            :
                                               :   No. 1157 MDA 2022
                       Appellant               :

                 Appeal from the Decree Entered July 18, 2022
    In the Court of Common Pleas of Berks County Orphans’ Court at No(s):
                                    87791

BEFORE: PANELLA, P.J., BENDER, P.J.E., and McCAFFERY, J.

MEMORANDUM BY McCAFFERY, J.:                   FILED: AUGUST 15, 2023

       Wayne Hallowell (Appellant) appeals from the decree entered in the

Berks County Court of Common Pleas Orphans’ Court, which, upon petition by

trust beneficiaries Suzanne Hallowell, Amber Hallowell, and Sean Hallowell

(collectively Appellees),1 removed Appellant as trustee of the Erwin W. Burk

Family Revocable Trust and the Erwin W. Burk Revocable Trust (collectively

the Trusts), determined that both Amber and Sean were entitled to further

distributions, and imposed a surcharge for Appellees’ attorney fees.          On

appeal, he contends the orphans’ court abused its discretion when:       (1) it

relied on a preliminary draft accounting, rather than the final accounting, in

making factual findings; (2) it determined that beneficiary Amber was entitled
____________________________________________

1Appellee Suzanne Hallowell is Appellant’s estranged wife, and Amber and
Sean are their adult children.
J-A16042-23

to further distributions from the Trust; (3) it determined that beneficiary Sean

was entitled to further distributions from the Trust; and (4) it applied a

surcharge for Appellees’ legal fees. For the reasons below, we affirm in part

and reverse in part.

       This appeal involves the administration of two trusts created by grantor,

Erwin W. Burk (Grantor).2           The first trust ─ the Erwin W. Burk Family

Revocable Trust ─ was executed in July of 1994 (the 1994 Trust). Grantor’s

wife, Ada Z. Burk, was listed as the second grantor. The second trust ─ the

Erwin W. Burk Revocable Trust ─ was executed in July of 2001 (the 2001

Trust).   Both Grantor and his wife are now deceased.3         Appellant is the

nephew, by marriage, of Grantor. See N.T. at 122. At some point before his

death, Grantor adopted Appellant so he “could give [him] gifts and stuff for

taxes.” Id.

       Both the 1994 Trust and the 2001 Trust list Grantor, Appellant, and

attorney Phelps T. Riley as trustees. Attorney Riley was later removed as a

co-trustee and disbarred. See N.T. at 123. Appellant then “brought in” his

accountant, Bill Maslo, as a co-trustee, until 2014. Id. From June 9, 2014,

____________________________________________

2 Both the parties and the trial court treat the Trusts as one entity.   As the
court noted in its decree, Appellant “has completely commingled funds from
the two separate trusts [for years,] provided a single accounting for both, and
stipulated through counsel that the relevant provisions of the two trust
documents are the same.” Decree, 7/18/21, at 1.

3 Grantor passed away “somewhere around” 2001 or 2002.        N.T., 6/15/22, at
123.

                                           -2-
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to present, Appellant has been the sole trustee of both Trusts.           See id.;

Decree, 7/18/22, at 1.        It is undisputed that after Appellant became sole

Trustee, he commingled the funds of both Trusts in one account. N.T. at 29-

30.

       The distribution provisions of the Trusts are separated into seven Trust

Periods. All parties agree that the Trusts are currently in Trust Period No. 4.4

See Orphans’ Ct. Op., 10/26/22, at 2.              The Trusts contain the following

relevant provisions:

             11.13 Trust Period No. 4. The Trustee shall hold and
       administer in trust during Trust Period No. 4 the Trust Property
       set aside for [Appellant] pursuant to section 11.11 as follows:

             (a) Income: Descendants. The Trustee each year shall pay
       to or use for the benefit of [Appellant, Appellant’s] Spouse, [and
       Appellant’s] Descendants . . . in equal or unequal proportions, and
       in monthly or other convenient installments, so much of the Net
       Trust Income as the Trustee in the Trustee’s sole discretion
       determines to be necessary for their reasonable support,
       maintenance, health and education.

                                       *       *   *

             (d) Principal : Descendants, Spouses. The Trustee in the
       Trustee’s sole discretion shall pay to or use for the benefit of
       [Appellant], [Appellant’s] Spouse, [and Appellant’s] Descendants
       . . . at any time and from time to time so much of the Trust
       Principal as the Trustee determines to be necessary for their
       reasonable support, maintenance, health and education.

             (e) Principal: Descendants: The Trustee in the Trustee’s
       sole discretion shall pay to or use for the benefit of [Appellant]
____________________________________________

4 Trust Period No. 3 ended when Appellant’s mother, Helen Z. Hallowell,
passed away. See N.T. at 22; Exhibit P-2, 2001 Trust (2001 Trust), at § 1.1;
Exhibit P-3, 1994 Trust (1994 Trust), at § 1.1. The record does indicate when
Appellant’s mother died.

                                           -3-
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     and [Appellant’s] Descendants at any time and from time to time
     so much of the Trust Principal as the Trustee determines to be
     necessary, and in their best interests, to enable them to marry, to
     enter into a trade or business, to purchase a home or for similar
     purposes.

                                 *    *    *

           11.25 Trustee Discretion. (a) The Trustee, in making any
     decisions pursuant to this section 11 to pay Net Trust Income
     and/or Trust Principal to any Beneficiary, shall consider:

                (1) the priorities and qualifications set forth in
     section 13.1, et seq.,

                 (2) the income and principal from all sources known
     to the Trustee of the Beneficiary and the Beneficiary’s Spouse,

                 (3) the income and principal from all sources known
     to the Trustee of the Family Members who have a legal obligation
     to support the Beneficiary,

                  (4) the desirability of augmenting the separate
     estates of the Beneficiary and the Beneficiary’s Spouse,

                 (5) the Federal and state income tax consequences to
     the beneficiary of any proposed distribution,

                (6) all other circumstances and factors which the
     Trustee considers pertinent.

             (b) The Trustee’s decisions to make those discretionary
     payments, and the Trustee’s making of those discretionary
     payments, shall be absolutely binding upon all Beneficiaries and
     shall not be subject to judicial review, and the Trustee shall be
     fully released and discharged from all further accountability and
     liability for those determinations and payments.

                                 *    *    *

           13.5 Trust Period No. 4. (a) The Grantor’s first priority
     during Trust Period No. 4 is that each Descendant of
     [Appellant]:

                (1) receive the finest possible undergraduate
     and graduate educations on a full-time basis at all times on
     or before his or her 25th birthday, and

                                     -4-
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                (2) be supported according to his or her reasonable
     needs at all times while enrolled in undergraduate or graduate
     programs on a full-time basis,

     to the extent, and only to the extent that his or her Parents are
     unable to satisfy the Grantor’s desires from the Parent’s assets
     and income.

           (b) The Grantor’s second priority during Trust Period No. 4
     is that [Appellant, Appellant’s] Spouse, and each Descendant of
     [Appellant] . . . in order of generation, be supported according to
     that person’s reasonable needs.

                                  *    *      *

            14.4 Discretionary Powers. (a) the Grantor has granted to
     the Trustee in sections 5 and 11 the power to make discretionary
     distributions of the net Trust Income and/or Trust Principal to
     certain Family Members.

            (b) If any Trustee determines at any time to make any such
     distribution to the Trustee, in the Trustee’s capacity as a permitted
     Beneficiary, or to any Parent, Spouse or Descendent of the
     Trustee, the Trustee may not make the distribution, unless
     another Trustee who is not a Parent, Spouse or Descendant
     of that Trustee authorizes the proposed distribution by that
     Trustee.

                                  *    *      *

           16.4 Accounting: Quarterly. Each quarter after Grantor . .
     . ceases to be a Trustee, the Trustee shall furnish quarterly to
     each person then entitled to receive Net Trust Income a statement
     showing:

          (a) the Trust’s receipts and disbursements during the
     preceding quarter,

           (b) each asset of the Trust . . ., and

           (c) each liability of the Trust.

           16.5 Accounting: Annual. Each year after Grantor . . .
     ceases to be a Trustee, the Trustee shall furnish to each person
     then entitled to receive Net Trust Income a statement showing the
     Trust Property then held by the Trustee and the Trust’s receipts
     and disbursements during the preceding annual period.

                                      -5-
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1994 Trust at §§ 11.13(a), (d), (e), 11.25(a)-(b), 13.5(a)-(b), 14.4(a)-(b),

16.4(a)-(c), 16.5 (emphases added). See also 2001 Trust.5

       While Appellant and Suzanne were married and living together, all

distributions from the Trusts were deposited into a joint checking account of

which Suzanne had access, and from which the parties’ bills were paid. See

N.T. at 31, 177-78.         After Suzanne filed for divorce in 2019, Appellant

commingled the Trust funds with his personal funds in an escrow account held

by his attorney, Ken Picardi. See id. at 85, 136.

       On July 8, 2021, Appellees filed a petition seeking removal of Appellant

as Trustee. They averred Appellant: (1) failed to provide a required quarterly

accounting of the Trusts; (2) failed to provide Appellees with a copy of the

Trust documents; (3) made distributions to himself and Appellees without the

required third-party authorization; (4) refused to pay for Amber’s dental

school expense and “intentionally misled” her to believe he had no obligation

to do so; and (5) “denied disbursements” to Sean for his “care and

treatment[.]”     Appellees’ Petition for Removal of Trustee & Other Relief,

7/8/21, at 2-4. Appellees requested that the orphans’ court, inter alia, remove

Appellant as trustee, require him to provide a full accounting of the Trusts,

surcharge him for “all monies he took from the Trusts;” and “pay [Appellees’]

____________________________________________

5 While some of the language in the 2001 Trust differs from that in the 1994

Trust, it is substantially the same for the purposes of the issues in this appeal.
Therefore, for ease of disposition, we will refer only to the language in the
1994 Trust.

                                           -6-
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reasonable attorney’s fees[.]” Id. at 5. Appellant filed an answer with new

matter on August 16, 2021, asserting that Appellees “have each enjoyed

significant benefits in the form to distributions from the Trusts during [his]

tenure . . . as Trustee[,]” and only object presently due to his “impending

divorce[.]”   Appellant’s Answer & New Matter to Petition for Removal of

Trustee & Other Relief, 8/16/21, at 3-4. On August 30th, Appellees filed a

motion to compel a full complete accounting of the Trusts.

      On October 19, 2021, the orphans’ court entered a decree prohibiting

Appellant from “disburs[ing], distribut[ing], or otherwise spend[ing] any

funds” in the Trusts or held by Appellant’s agents that have been distributed

from the Trusts, until further notice. Decree, 10/19/21, at 1. The court also

directed Appellant to provide a “full accounting of the Trusts” by November

2nd, and scheduled a hearing on the matter for December 16th. Id. at 1-2.

Appellant subsequently provided Appellees with a partial account for the

period from May 9, 2014, through October 15, 2021, which showed a balance

of $151,955.73 in the Trusts.    See Exhibit P-4, Second & Partial Account,

1/15/21 (Preliminary Accounting), at 2.

      After several continuances resulting from Appellant’s attempt to obtain

discovery from Appellees, the orphans’ court conducted a status conference

on April 27, 2022. That same day, it entered an order directing Appellant to

file an accounting with “relevant supporting documentation . . . for the period

during which he served as sole trustee, beginning May 7, 2014 to present[,]”

and rescheduled the hearing on Appellees’ petition for June 15, 2022. Order,

                                     -7-
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4/27/22. On May 27, 2022, Appellant filed an interim account, which showed

a beginning balance of $802,381.76, and an ending balance of $63,352.22 in

the Trusts. See Interim Account, 5/27/22 (Second Accounting), at 2.

       The orphans’ court conducted a hearing on June 15, 2022. Appellees

first called Appellant as on cross. Appellant acknowledged that he “considered

[himself] the main beneficiary” of the Trusts based on his conversations with

the Grantor. N.T. at 25. Nevertheless, he explained that before Suzanne filed

for divorce, all the distributions from the Trusts were deposited into their joint

bank account.6 Id. at 31-32. Appellant testified that he used trust funds to

pay for Amber’s undergraduate education, which included one year at Penn

State University and three years at Cornell University. See id. at 48. He also

paid for her teaching degree at Reading Area Community College, as well as

some of her expenses at Arcadia University when “she wanted to become a

physician assistant.” Id. Appellant admitted, however, that he refused her

request to pay for dental school. He explained:

       [T]hen she changed her mind again, and I believe she was around
       24, 25, and . . . in my opinion she was becoming a professional
       student. She was just going to college having a good time. And
       I said you got a teaching degree, you have an ag[riculture]
       degree, now you want to become a dentist. You can go out and
       work for a couple years and earn your own money. We helped
       her out. It’s not like we didn’t give her an education. We shuffled
       a lot of money into her, exact amount, I don’t know. Plus, at the
       same time we were paying the health care, we bought her a car.

____________________________________________

6 The parties owned and operated a family farm, which was subsidized by
distributions from the Trusts for years, before they sold the farm sometime
prior to this litigation. See N.T. at 37-40, 42-44, 130, 174-75.

                                           -8-
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Id. at 48. With regard to Sean, Appellant testified that trust distributions paid

for his college education, and while he was in college, he and Suzanne “always

took care of [Sean’s] health care and dental, stuff like that.” Id. at 132-33.

      Appellant conceded, however, that after Suzanne filed for divorce, he

used trust distributions for his sole benefit ─ specifically, to pay for his health

care and attorneys. See N.T. at 33, 38-39. He explained that he had “always

helped” his children, but that after he and Suzanne separated, “[a]s trustee

[he] thought they got enough[.]” Id. at 37. Appellant acknowledged that

when he became sole trustee, the balance in the Trusts was $802,381.76, and

that there is currently “a little over $63,000” remaining in the Trusts. Id. at

73-74. He further noted that the escrow account held by his attorney includes

his personal funds from the sale of the family farm, commingled with the funds

from both the 1994 and 2001 Trusts. Id. at 86-87, 103-04, 108. Appellant

testified that the payments for his personal expenses should have come from

his own money ─ however, he did not know how much of his personal funds

were commingled with the Trust funds. See id. at 100, 108, 148.

      With regard to his responsibilities as trustee, Appellant admitted he: (1)

commingled the funds in both trusts into one account, and then commingled

trust funds with his personal funds; (2) refused Amber’s request to pay for

dental school before she turned 25 years old; (3) failed to distribute any trust

funds to Appellees since he and Suzanne began divorce proceedings; (4) made

distributions to himself without the approval of a third-party trustee in

violation of Section 14.4; (5) made distributions to himself after the orphans’

                                       -9-
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court’s October 2021 order prohibiting him from doing so; (6) failed to provide

quarterly or annual accountings of the Trusts to Appellees pursuant to

Sections 16.4 and 16.5;7 and (7) never provided Appellees with a copy of the

Trust documents. See N.T. at 29, 47-48, 53, 55, 60-61, 63-64, 83-85, 103-

04, 116, 120.

       Amber, who was 36 years old at the time of the hearing, testified that

she had not seen the Trust agreements before she was 25 years old, and was

unaware of the provision providing for her education. See N.T. at 156, 200.

While she was an undergraduate student at Cornell, she asked Appellant if she

“should try to expediate [her] schooling” to finish a semester or two early

because it was a “very expensive school[.]”        Id. at 153.    She claimed

Appellant told her there was “plenty of money” in the Trusts to pay for her

and Sean’s education. Id. However, when she discussed the possibility of

attending dental school during her senior year at Cornell, Amber testified that

Appellant told her she “got enough money and it was his money, he could do

what he wanted.” Id. at 154, 156-57. Amber stated she waited until she was

28 to begin dental school so that she could save money for tuition. Id. at

154-55, 157. She further claimed that if she had been aware of the Trust

provision providing for her education expenses until the age of 25, she “would

have finished [undergraduate] school early” so that she could have completed

____________________________________________

7 In fact, Appellant acknowledged the first full accounting he provided since

he was sole Trustee was in May of 2022. N.T. at 61.

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dental school before her 25th birthday. See id. at 156. Amber provided the

court with a breakdown of the educational expenses she incurred which totaled

$312,634.97. See id. at 150-53; see also P-5, Amber’s Expenses for Dental

School.

      Suzanne testified that she was not seeking any additional funds from

the Trusts via a surcharge.   See N.T. at 172-73.      She confirmed Amber’s

testimony that Amber told Appellant she wanted to go to dental school while

still pursuing her undergraduate degree at Cornell, and that Appellant “said

no, you’ve gotten enough.” Id. at 175. Suzanne further stated that she did

not see a copy of the Trust agreements before 2019. Id. at 179.

      Sean testified that while he was aware of the Trusts growing up, he was

“never provided any sort of specifics[.]” N.T. at 183-84. He knew there was

money for college, and he “went to college for a year or two” ─ he

acknowledged that Appellant provided money for his college expenses. Id. at

184. At the time of the hearing, Sean was 39 years old and unemployed. Id.

at 181-82. He stated he worked on the family’s farm for a while, but since it

was sold he has been “trying to work a part-time job[.]” Id. at 184-85. Sean

testified he was diagnosed with depression that has made it difficult for him

“to hold . . . full-time employment[.]” Id. at 185. Sean stated that Appellant

has not inquired about his “financial needs[.]”   Id. at 180.

      At the conclusion of the hearing, Appellant’s counsel asserted that while

Appellant disputed the allegations of Appellees and any request for a

surcharge, he no longer wanted to serve as Trustee of either of the Trusts.

                                    - 11 -
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See id. at 204, 234.     The court commented that there was “no question

[Appellant] should be removed from trustee[,]” but requested the parties file

briefs concerning the surcharge issue. See id. at 234.

      Both Appellant and Appellees submitted post-trial briefs. On July 18,

2022, the orphans’ court entered a final decree.     The decree outlined the

court’s factual findings, and directed as follows:

      1. [Appellant] is prohibited from any further actions as Trustee of
         the Trust[s] except to accomplish the directives of this Decree.

      2. A surcharge against [Appellant] for legal fees and costs is
         awarded in the amount of $42,790.39 and same shall be paid
         by [Appellant] to [Appellees’ counsel] within ten days of the
         date of this Decree.

      3. A surcharge against [Appellant] for Trust funds that should
         have been distributed to Trust Beneficiary, Amber Hallowell for
         education expenses is awarded in the amount of $312,634.97
         and the same shall be paid by [Appellant] to Amber Hallowell .
         . . within thirty days of the date of this Decree.

      4. A surcharge against [Appellant] for Trust funds that should
         have been distributed to Trust Beneficiary, Sean Hallowell is
         awarded in the amount of $312,000 and the same shall be paid
         by [Appellant] to Sean Hallowell . . . within thirty days of the
         date of this Decree.

      5. If for any reason [Appellant] fails to comply with the foregoing
         paragraphs . . . [Appellant] shall:

         a. Immediately transfer the full amount of the Trust
            [Principal] Balance on Hand as set forth in [P-4] of
            $151,955.73 to [Appellees,] care of their counsel, to be
            used in the following priority:

            i.    Payment of [Appellees’] counsel in full and for
                  any further legal expense in this matter;

            ii.   Payment to Amber Hallowell as set forth in the
                  foregoing paragraph 3;

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              iii.   Payment to Sean Hallowell as set forth in the
                     foregoing paragraph 4; and

              iv.    Any remainder to be held under the terms of the
                     Trust.

          b. Be deemed to have been removed as Trustee with
             [Appellees] substituted as Trustee.

Decree, 7/18/22, at 4-5.

       This timely appeal followed. Appellant later complied with the orphans’

court’s directive to file a Pa.R.A.P. 1925(b) concise statement of errors

complained of on appeal, and the orphans’ court filed a responsive opinion on

October 26, 2022.

       Appellant presents four issues for our review:

       A. Did the [orphans’] court abuse its discretion through its
          decision to rely solely on the preliminary draft accounting and
          its factual finding that all distributions from the Trusts from
          June 9, 2014 to the present were made, at least partially, for
          [Appellant’s] benefit as the basis for issuing the surcharges
          against [him]?

       B. Did the [orphans’] court abuse its discretion in holding that the
          Trusts required further distributions to Amber Hallowell?

       C. Did the [orphans’] court abuse its discretion in holding that the
          Trusts required further distributions to Sean Hallowell?

       D. Did the [orphans’] court abuse its discretion in applying a
          surcharge against [Appellant] for [Appellees’] legal fees and
          costs in the amount of $42,790.39?

Appellant’s Brief at 5 (some capitalization omitted).8

____________________________________________

8 In his Pa.R.A.P. 1925(b) statement, Appellant also challenged the orphans’

court’s determination that he breached his fiduciary duties as Trustee. See
Appellant’s Statement of Errors Complained of on Appellant Pursuant to Rule
1925(b), 9/14/22, at 1. He has not, however, raised that claim in his brief
before this Court. Thus, it is abandoned on appeal.

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      Our review of a ruling of the orphans’ court is deferential.         In re

Scheidmantel, 868 A.2d 464, 478 (Pa. Super. 2005).

      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.

Id. at 478-79 (citation omitted). Indeed, we are not bound by factual findings

“if there has been an abuse of discretion, a capricious disregard of evidence,

or a lack of evidentiary support on the record.” Id. at 479 (citation omitted).

      In his first issue, Appellant argues the trial court abused its discretion

when it relied solely on the October 2021 Preliminary Accounting, rather than

the May 2022 Second Accounting, to support its factual finding that all of the

Trust distributions since 2014 were made, at least partially, for Appellant’s

benefit. See Appellant’s Brief at 21. He further complains that this finding

was the basis of the court’s decision to impose the surcharges.          See id.

Appellant insists the Preliminary Accounting was “incomplete and preliminary”

and that Appellees were aware he was attempting to obtain records from them

in order to prepare a more complete accounting.           Id. at 22.    Appellant

maintains that he objected to the entry of the Preliminary Accounting at trial

                                     - 14 -
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─ asserting it was “superseded” by the Second Accounting ─ but the orphans’

court overruled his objection. Id.

      Appellant further argues that the primary discrepancy in the Preliminary

and Second Accountings is the manner in which the funds deposited in the

attorney escrow account were recorded.        See Appellant’s Brief at 23.   He

insists that the Second Accounting “clearly differentiates between distributions

from the Trusts and [Appellant’s] personal funds.”       Id.   Thus, Appellant

contends that many of the orphans’ court’s factual findings ─ which conclude

that Appellant used Trust funds for his sole benefit ─ are not supported by the

record. See id. at 24-28.

      The orphans’ court rejected this argument as follows:

            [Appellant] contends that [the orphans’] court erred in
      declining to strike the inaccurate, preliminary accounting from the
      record, refusing to permit [Appellant] to explain the updated,
      more accurate accounting, and apparently relied on the
      preliminary accounting in making findings. This issue is without
      merit.

            [The orphans’] court noted the discrepancy between the two
      accountings, which showed [Appellant] does not understand his
      duties to provide accurate accounting and the difficulties
      encountered when funds are commingled. It is just one of the
      reasons for the removal of [Appellant as] Trustee, to which [he]
      agreed on the record to be removed. [Appellant’s] counsel could
      have addressed the discrepancies between the two accountings in
      her examination of [Appellant. The orphans’] court ruled only that
      [Appellees’] counsel could question [Appellant] about the earlier
      accounting.

Orphans’ Ct. Op. at 11.

      Our review reveals no abuse of discretion by the orphans’ court.

Appellant takes particular umbrage with the court’s factual finding that “[a]ll

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distributions from the Trust[s] from June 9, 2014, to present were made, at

least partially, for [Appellant’s] benefit.”       See Decree, 7/18/22, at 2;

Appellant’s Brief at 21, 26. He emphasizes that Trust disbursements paid for

both Amber and Sean’s education expenses, which did not benefit him at all,

and most of the disbursements were deposited into his joint checking account

with Suzanne to benefit the “farming operations[,]” of which he likewise claims

he received no benefit.        Appellant’s Brief at 27-28.   Appellant, however,

ignores two crucial details:       (1) the Trust disbursements for Amber’s and

Sean’s education were made prior to June of 2014;9 and (2) the upkeep of

the farm provided a benefit to him. As the orphans’ court explained:

       Prior to the divorce, [Appellant] made distributions to keep the
       farm afloat and to pay other living expenses. These distributions
       benefited him partially because they relieved him of the financial
       responsibility to pay the expenses, and he worked on the farm. .
       ..

Orphans’ Ct. Op. at 11.           We note that while Appellant claims “[i]t is

uncontested [he] does not participate in the farming operations and does not

receive any benefit from the same[,]” he provides no record citation for this

bald statement. See Appellant’s Brief at 28. Rather, Appellant referred to

himself as a “farm boy” and testified that he worked on the family farm in

some capacity until 2021. See N.T. at 62, 130. He also received money from

the sale of the farm.         See id. at 87, 100.    Thus, the orphans’ court’s
____________________________________________

9 At the time of the June 2021 hearing, Amber was 36 years old and Sean was

39 years old. Thus, Amber would have turned 25 in 2010, and Sean in 2007.

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determination that Appellant benefitted, at least partially, from all trust

disbursements while he was the sole trustee is supported by the record.

       Moreover, our review of the record reveals the orphans’ court did not

rely solely on the Preliminary Accounting for its factual findings. Appellant

claims the Second Accounting demonstrates that the personal bills ─ including

legal bills ─ he paid from the attorney escrow account after Suzanne filed for

divorce, were paid with commingled personal funds as opposed to Trust

disbursements. See Appellant’s Brief at 25-26. However, despite the fact

that Appellant’s counsel argued to the court that the Second Accounting

clearly designated Trust funds from personal funds,10 Appellant provided no

testimony as to this distinction.        In fact, when asked “how much of [his]

personal funds is in the trust account right now[,]” he replied: “I don’t know.

I have to ask Ken Picardi [ ] that. He’s handling that.” N.T. at 108. Appellant

later acknowledged that he did not know if the funds described in the Second

Accounting were Trust funds or personal funds.           Id. at 148. Moreover,

although Attorney Picardi may have been able to clear up any confusion,

Appellant did not call him to testify.11 Appellant also candidly admitted he did

not know how much of the Trust funds he had taken for his own benefit since

his separation from Suzanne. Id. at 38. Accordingly, Appellant’s first issue

warrants no relief.
____________________________________________

10 See N.T. at 222-23.

11 Appellant appears to assert that his own Second Accounting is sufficient,

without any accompanying testimony, to support his claim. We disagree.

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      Next, Appellant contends the orphans’ court abused its discretion in

directing further Trust distributions to Amber. Appellant’s Brief at 29.        He

emphasizes that “the Trusts unambiguously gave [the Trustee, i.e. Appellant,]

discretion . . . regarding whether to make distributions.” Id. at 31. See 1994

Trust at § 11.25(a)-(b). Moreover, the Trusts provide that Trustee’s decisions

regarding discretionary payments are “absolutely binding.” Appellant’s Brief

at 35, citing 1994 Trust at § 11.25(b). Appellant maintains that he paid for

Amber’s undergraduate and post-graduate schooling, but later “used his

discretion to decline paying for . . . dental school because he believed she was

becoming a ‘professional student’ rather than planning to attend school to

further a particular career.”   Appellant’s Brief at 35.     Although the Trusts

designated education expenses as a priority, Appellant notes that it was but

one factor he was required to consider as Trustee when exercising his

discretion ─ paying for his children’s education was not “a mandatory

direction.”   Id. at 38.   He further explains that if he had paid more than

$300,000 for Amber’s dental school, he would have been “significantly and

inequitably favoring Amber over any other beneficiary.” Id. at 37. Lastly,

Appellant argues that even if the court properly determined he was required

to pay for Amber’s dental school, there was no finding that his failure to do so

“caused a loss to the Trust[,]” a prerequisite to justify a surcharge. Id. at 38.

      Our review is guided by the following:

             The settled law in Pennsylvania is that the pole star in every
      trust . . . is the settlor’s . . . intent and that intent must prevail.

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      The settlor’s intent may be divined by considering the trust
      document as a whole. . . .

In re Est. of Warden, 2 A.3d 565, 572 (Pa. Super. 2010) (citations &

quotation marks omitted). Moreover:

             The primary duty of a trustee is the preservation of the
      assets of the trust and the safety of the trust principal. The
      standard of care imposed upon a trustee is that which a man of
      ordinary prudence would practice in the care of his own estate.
      Surcharge is the remedy when a trustee fails to exercise common
      prudence, skill and caution in the performance of its fiduciary
      duty, resulting in a want of due care. See In re Miller's Estate,
      26 A.2d 320, 321 ([Pa.] 1942) (defining “surcharge” as “the
      penalty for failure to exercise common prudence, common skill
      and common caution in the performance of the fiduciary’s duty ...
      imposed to compensate beneficiaries for loss caused by the
      fiduciary’s want of due care”).

Id. at 573 (some citations & quotation marks omitted).        However, before

ordering a surcharge, an orphans’ court must find:       “(1) that the trustee

breached a fiduciary duty and (2) that the trustee’s breach caused a loss to

the trust.” Id.

      The orphans’ court’s use of the term “surcharge” in its decree to describe

the payment due to Amber is a misnomer. While it is clear the court found

Appellant breached his fiduciary duties, Appellant correctly states that there

was no testimony that this breach caused a loss to the trust. See Appellant’s

Brief at 38; In re Est. of Warden, 2 A.3d at 573. Rather, the orphans’ court

determined that Appellant abused his discretion, as Trustee, when he denied

Amber’s request to pay her dental school expenses. The court explained:

      [Appellant] never considered the Grantor’s preferences in
      exercising his discretion and focused his decision on what he
      wanted. [Appellant] admitted this during his testimony. Even

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J-A16042-23

      though his daughter was under the age of twenty-five, he felt that
      she had enough of an education and should get employment.
      Amber asked for the money while she was an undergraduate
      student, and [Appellant] refused. He also had informed her that
      at that time there was enough money for both children’s higher
      education, so there was no reason to refuse her request. Sean
      did not finish college, so even more funds were available for
      Amber’s education.

Orphans’ Ct. Op. at 12. Accordingly, the court determined that Amber was

entitled to a distribution from the Trust for her dental school expenses.

      Our review reveals no abuse of discretion in the orphans’ court ruling.

Appellant focuses solely on the language in Section 11.25 of the Trusts, which

provides him with the sole discretion to make distributions to the

beneficiaries.   See 1994 Trust at § 11.25(a)-(b) (noting the Trustee’s

decisions are “absolutely binding” and “not . . . subject to review”). While he

recognizes that, in exercising his discretion, he must consider the Grantor’s

priority of education as set forth in Section 13.5, he maintains that the priority

is still only one factor he must consider, along with “all other circumstances

and factors which the Trustee considers pertinent.”       See 1994 Trust at §

11.25(a)(6). Thus, Appellant concludes that under the terms of the Trusts,

the Trustee “has the broadest possible discretion in making distributions[,]”

and he properly exercised that discretion when he declined to pay for Amber’s

dental school. See Appellant’s Brief at 35.

      We note that:

      Generally, [courts] will not interfere with the exercise of a
      discretionary power by a trustee unless “the trustee in exercising
      or failing to exercise the power acts dishonestly, or with an
      improper even though not a dishonest motive, or fails to use his

                                     - 20 -
J-A16042-23

      judgment, or acts beyond the bounds of a reasonable judgment.”
      ...

In re Est. of Feinstein, 527 A.2d 1034, 1037 (Pa. Super. 1987) (citation

omitted). Here, the orphans’ court found, and we agree, that Appellant failed

to exercise reasonable judgment when he refused to pay for Amber’s dental

school. See Orphans’ Ct. Op. at 12.

      The Trust language clearly provides that during Trust Period No. 4, the

Grantor’s “first priority” is to provide “the finest possible undergraduate and

graduate educations” to Appellant’s children “on or before [their] 25th

birthday[.]” 1994 Trust at § 13.5(1) (emphasis added). The only caveat to

the distributions is that the children and their parents (i.e. Appellant and

Suzanne) must be unable to pay for the education from their own “assets and

income.” Id. Appellant makes no claim that, at the time Amber requested

funds for dental school, either she or he and Suzanne had the ability to pay

for the schooling.

      Moreover, while we recognize that the education priority set forth in

Section 13.2(1) is only one factor Appellant was required to consider in

exercising his discretion as Trustee, his testimony makes clear that he did not

base his decision to refuse Amber’s request for Trust distributions upon any

of the other factors set forth in Section 11.25. He simply decided Amber “was

becoming a professional student” and was “taking advantage of” the Trusts.

See N.T. at 48-49.     However, the language of Section 13.5(a) does not

provide any limitation on the number of degrees or areas of study the

beneficiary may pursue before her 25th birthday ─ it requires only that the

                                    - 21 -
J-A16042-23

beneficiary attend undergraduate or graduate school on a full-time basis and

that the beneficiary or her parents are unable to pay the cost themselves.

See 1994 Trust at § 13.5(a)-(b). Here, Amber testified that had she known

of the age limitation in the Trust, she could have completed her schooling by

the age of 25. See N.T. at 155-56. Appellant did not dispute this claim nor

provide any evidence to the contrary. Furthermore, Amber submitted to the

court a thorough breakdown of the expenses she incurred pursuing her

graduate education.    Thus, the orphans’ court did not abuse its discretion

when it determined Amber was entitled to Trust distributions in the amount of

$312,634.97.

      Appellant’s reliance on the catch-all factor ─ permitting the Trustee to

consider “all other circumstances and factors which the Trustee considers

pertinent” ─ to support his refusal to distribute Trust funds for Amber’s dental

education is misplaced.    See Appellant’s Brief at 34-35.       Had Appellant

expressed a reasonable basis for his decision, we agree that it would be

binding. However, as noted supra, a court may interfere with a trustee’s

exercise of discretion if the trustee “fails to use his judgment, or acts beyond

the bounds of a reasonable judgment.” In re Est. of Feinstein, 527 A.2d at

1037 (citation omitted). Appellant testified that he “considered [him]self the

main beneficiary” of the Trusts and his children as “secondary” beneficiaries

─ which contradicted the plain language of the Trusts. See N.T. at 25, 27;

1994 Trust at § 11.13. Moreover, the sole reason he provided for refusing to

pay for Amber’s dental school was his belief she “was becoming a professional

                                     - 22 -
J-A16042-23

student” and “taking advantage of” the Trusts. Id. at 48-49. Considering the

Grantor provided no limits on the number of degrees a beneficiary could

pursue, we agree with the orphans’ court’s determination that Appellant

abused his discretion as Trustee, and that Amber was entitled to a distribution

from the Trusts in the amount of her educational expenses. Thus, Appellant’s

second claim fails.

      Next, Appellant similarly challenges the orphans’ court’s determination

that Sean was entitled to a distribution from the Trusts in the amount of

$312,000.    Appellant repeats his arguments that:      (1) there can be no

surcharge when there is no loss to the Trusts; and (2) he, as Trustee, had

absolute discretion to make distributions to the named beneficiaries. For the

same reasons as stated above, we reject these claims.

      Nevertheless, Appellant also insists that the court’s award to Sean was

“wholly speculative,” and unlike the award to Amber, was unrelated to any

“specific entitlement.” Appellant’s Brief at 42. We agree.

      The orphans’ court provided the following reasons in support of its

distribution award to Sean:

      Sean’s health insurance, if it had been paid by the [T]rusts, would
      probably amount to more than $100,000. Pursuant to Section
      11.13(e) of the [T]rust[s], the descendants are also entitled to
      have the [T]rusts provide money for marriage, entry into a trade
      or business, or to purchase a home. Sean has no home and needs
      land for his livestock. The additional money may allow Sean to
      keep his livestock and provide a trade for him.

Orphans’ Ct. Op. at 13.

                                    - 23 -
J-A16042-23

       The language of the Trust documents directs the Trustee to provide

income and/or principal disbursements to Appellant’s descendants as the

“Trustee   determines   to   be   necessary   for   their   reasonable   support,

maintenance, health and education.”      See 1994 Trust at § 11.13(a), (d).

Section 11.13(e) also directs the Trustee to provide principal disbursements

to Appellant’s descendants “to enable them to marry, to enter into a trade or

business, to purchase a home or for similar purposes.” Id. at § 11.13(e).

Lastly, Section 13.5, which sets forth the Grantor’s priorities during Trust

Period No. 4, provides that following the priority of the descendants’

educational expenses, the “second priority is that [Appellant, Appellant’s]

Spouse, and each Descendant of [Appellant] . . . in order of generation, be

supported according to that person’s reasonable needs.”         Id. at § 13.5(b)

(emphasis added).

       Sean testified that he is unemployed, suffers from depression, has no

health insurance, lives with his mother and his sister, and does not have

sufficient income to pay for an apartment or his vehicle. See N.T. at 181-83,

185.    While there was no testimony that he asked Appellant for any

distribution from the Trusts which Appellant refused, we note that Sean did

not receive a copy of the Trust documents until after the lawsuit was filed, and

did not know “any . . . specifics[.]” Id. at 184. Further, the record is clear

that Appellant did not inquire whether Sean needed any disbursements from

the Trusts. Id. at 53-55. Nevertheless, the orphans’ court’s award is simply

not supported by the record.

                                     - 24 -
J-A16042-23

       While the court speculates that Sean’s health insurance “would probably

amount to more than $100,000[,]” there was no testimonial or evidentiary

support for that finding. See Orphans’ Ct. Op. at 13. Moreover, contrary to

the court’s comments in its opinion, Sean did not request a Trust distribution

to enable him to marry, enter into a trade, or purchase a home. See 1994

Trust at § 11.13(e). Furthermore, the court ignores the second priority in

Section 13.25(b), which requires the Trustee to support the reasonable needs

of the beneficiaries “in order of generation[.]” Id. at § 13.25(b) (emphasis

added). Therefore, Appellant’s “reasonable needs” would be prioritized over

Sean’s “reasonable needs.” Appellees simply failed to provide any evidence

detailing what Sean’s reasonable needs were when Appellant purportedly

breached his fiduciary duty as Trustee. Rather, they insist that the “terms of

the [T]rust instruments [should] have led Appellant to disburse some amount

─ anything ─ to Sean for his maintenance and well-being[,]” and the court

“fairly assigned a value to [his] loss as a common sense member of the

community would.” Appellees’ Brief at 38-40. We conclude, however, that

the court’s award is entirely speculative.         Accordingly, because the court’s

award to Sean lacks evidentiary support in the record, we are constrained to

reverse that part of the decree.12 See Scheidmantel, 868 A.2d at 478.

____________________________________________

12 The orphans’ court was, rightfully, critical of Appellant’s utter failure to fulfill

any of his fiduciary duties as Trustee. Moreover, we recognize the court was
sympathetic to Sean’s “mental health issues” and lack of “steady income or
health insurance.” See Orphans’ Ct. Op. at 10. It appears the court intended
(Footnote Continued Next Page)

                                          - 25 -
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       In his final claim, Appellant challenges the orphans’ court’s decision to

impose a surcharge of $42,790.39 for Appellees’ legal fees and costs.

Appellant’s Brief at 44. He argues that the general rule in litigation ─ referred

to as the “American Rule” ─ is that each party pays their own counsel fees,

and that an award of counsel fees to another party is “viewed as exceptional.”

See id. (citation omitted).        Moreover, he insists that the record does not

support a finding that he engaged in “dilatory, obdurate or vexatious conduct

during the course of the litigation” to warrant an award of counsel fees

pursuant to Section § 2503(7) of the Judicial Code. See 42 Pa.C.S. § 2503(7)

(permitting the award of a reasonable counsel fee “as a sanction against

another participant for dilatory, obdurate or vexatious conduct during the

pendency of a matter”). Appellant maintains that “the [orphans’] court did

not enunciate any legal basis . . . for including [Appellees’] legal fees and costs

in the surcharge action.” Appellant’s Brief at 46. Further, the fact that he

used Trust funds to pay his own counsel fees is not “an established exception

to the American Rule.” Id. at 47.

       The orphans’ court provided the following explanation for the attorney

fees surcharge:

____________________________________________

to provide Sean with the same benefit that it awarded to Amber. However,
as the court also observed “there may no longer be enough funds remaining
in the [T]rust[s] to satisfy the judgment.” Id. at 14. We simply cannot affirm
a $312,000 distribution award absent any testimony or evidence to support
the dollar amount.

                                          - 26 -
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      In the case sub judice, a surcharge in the amount of [Appellees’]
      legal fees and costs is appropriate. [Appellant’s] mismanagement
      of the [T]rusts caused [Appellees] to file their action against him.
      [Appellant] paid for his divorce lawyer with [T]rust funds, so he
      considers lawyers’ fees and costs to be proper expenses.

Orphans’ Ct. Op. at 12-13.

      Preliminarily, we note that “[t]he award of counsel fees is within the

sound discretion of the Orphans’ Court.” In re Est. of Geniviva, 675 A.2d

306, 313 (Pa. Super. 1996).

      The general rule is that each party to adversary litigation is
      required to pay his or her own counsel fees. In the absence of a
      statute allowing counsel fees, recovery of such fees will be
      permitted only in exceptional circumstances. . . .

Est. of Wanamaker, 460 A.2d 824, 825 (Pa. Super. 1983) (citations &

quotation marks omitted). Furthermore, Section 2503(7) of “[t]he Judicial

Code permits an award of reasonable counsel fees ‘as a sanction against

another participant for dilatory, obdurate or vexatious conduct during the

pendency of a matter.’” In re Ins. Tr. Agreement of Sawders, 201 A.3d

192, 200 (Pa. Super. 2018), citing 42 Pa.C.S. § 2503(7). “Generally speaking,

‘obdurate’ conduct may be defined in this context as ‘stubbornly persistent in

wrongdoing.’” In re Est. of Burger, 852 A.2d 385, 391 (Pa. Super. 2004),

aff'd, 898 A.2d 547 (Pa. 2006). Black’s Law Dictionary defines “vexatious” as

“without reasonable or probable cause or excuse; harassing; annoying.”

Black’s Law Dictionary, “Vexatious” (11th ed. 2019).

      While we recognize the orphans’ court provided minimal explanation for

its award of attorneys’ fees, we nevertheless conclude the award was properly

imposed within the court’s discretion. Appellant’s conduct in administering

                                     - 27 -
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the Trusts after Suzanne filed for divorce was solely self-serving. Particularly

troubling is the fact that he commingled his personal funds with the Trust

funds ─ which, in fact, he treated as personal funds ─ and he used distributions

from the Trust for personal matters even after the orphans’ court directed him

to cease all distributions in October of 2021. Appellant’s conduct both before

and after Appellees petitioned for his removal of Trustee was both obdurate

and vexatious.

      We also emphasize that the orphans’ court did not require Appellant to

return the personal attorneys’ fees he paid with Trust distributions.       See

Orphans’ Ct. Op. at 3 (stating that surcharging Appellant “at this time is a

prejudice barred by laches” since Appellees “reaped the benefits of [his]

distributions during his tenure as Trustee for fifteen years”). Rather, the court

directed the payment of Appellees’ lawyer fees from Trust funds as a proper

expense. See id. at 12-13. We detect no reason to disturb this ruling.

      Therefore, because we conclude the orphans’ court’s award of $312,000

to Sean was speculative, and not supported by the record, we reverse that

part of the decree. In all other respects, we affirm.

                                     - 28 -
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     Decree affirmed in part and reversed in part. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 8/15/2023

                                   - 29 -