Court Opinion

ID: 4100622
Source: CourtListenerOpinion
Date Created: 2016-11-21 20:14:09.452707+00
Date Added: 2024-06-11T14:36:27.798769
License: Public Domain

J-A22024-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

IN RE: ESTATE OF JOHN J. LUCIANI,               IN THE SUPERIOR COURT OF
SR., DECEASED                                         PENNSYLVANIA

APPEAL OF: CHRISTOPHER LUCIANI

                                                     No. 293 MDA 2016

             Appeal from the Order Entered January 21, 2016
           In the Court of Common Pleas of Lackawanna County
                   Orphans' Court at No(s): 35-02-683

BEFORE: GANTMAN, P.J., PANELLA, J., and JENKINS, J.

MEMORANDUM BY PANELLA, J.                       FILED NOVEMBER 21, 2016

      Appellant, Christopher Luciani, appeals from the order denying his

objections to and approving the first and final account of his father, John J.

Luciani, Sr.’s (“Father”), federal estate tax credit shelter trust. Christopher

argues that the orphans’ court erred in concluding that the distribution of the

entirety of the trust principal to his mother, Ann Luciani (“Mother”), during

her lifetime violated the terms of the trust. After careful review, we conclude

that the orphans’ court’s findings and conclusions are well supported by the

record, and therefore affirm.

      For the purposes of this appeal, the following facts are undisputed. In

1993, Father and Mother executed coincident, reciprocal wills and revocable

trusts. The wills, in relevant part, bequeathed the majority of the value of
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their property to their respective revocable trusts. The trusts, in turn,

provided for the immediate disbursement to a surviving spouse of “the

smallest amount of principal needed to reduce the Federal Estate Tax falling

due because of the death of Settlor to the lowest possible figure.” At the

time, the federal estate tax provided for an exemption for the first $600,000

of value passed through an estate to a non-spouse. The remaining assets

would stay in a “Residuary Trust.”

      The Residuary Trust provided that the net income of the trust could be

disbursed, at the sole discretion of the trustees, to the surviving spouse or

to any of the couple’s four children. Of primary importance to this case, the

Residuary Trust also provided for the disbursement of the principal of the

trust, under the trustees’ sole discretion, for the “health, education, support

or maintenance” of the surviving spouse or any of the couple’s four children.

      Furthermore, two of the couple’s children, Jill Mooty and Christopher,

were appointed trustees of the Residuary Trust. Both children were involved

in running the family business of Concrete Step Units (“CSU”). Mooty, an

accountant,   assisted   with   bookkeeping   and    tax   preparation,   while

Christopher was heavily involved in the day-to-day operations of the

business.

      In 2001, the federal government enacted sweeping tax reform,

including a proposed phase-out of the federal estate tax. Pursuant to the

reform, the estate tax exemption was raised to $1,000,000 in 2002, and

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escalating yearly thereafter until the estate tax would be eliminated in 2010.

Ultimately, the federal estate tax was reinstated with a significantly higher

exemption that would have covered the entirety of Father’s estate.

       Father passed away in 2002, and Mother survived him. According to

estate administration documents, the estate bequeathed $1,156,084 to

Father’s revocable credit shelter trust.1 The trust retained $942,000 worth of

stock in two companies, CSU and Wayne Crushed Stone (“WCS”), in the

Residuary Trust. The trust transferred a brokerage account valued at

$164,084 and $25,000 each of CSU and WCS stock to Mother. These

distributions were memorialized in a family settlement agreement that

Christopher signed.

       Pursuant to distributions in 2003 and 2006, the Residuary Trust’s

trustees transferred the entirety of the trust’s principal to Mother. While

Christopher testified that he did not remember signing to authorize these

transfers, he did not testify that the signatures were forgeries.

       Both parties to this appeal agree that in 2006, Mother amended her

revocable trust agreement in a manner that modified the distribution

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1
   The family settlement agreement indicates that only $942,000 was
bequeathed to the trust, with $214,084 being bequeathed directly to Mother.
A family settlement agreement can be an informal arrangement amongst the
heirs, and can be inferred from circumstances. See Walworth v. Abel, 52
Pa. 370, 373 (1866). Thus, the fact that the written agreement does not
reflect the precise accounting of the estate, but rather the ultimate
distributions, does not affect the relevant circumstances of this appeal.

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scheme to the four children. However, this document is not in the certified or

reproduced record. The parties agree that the disposition of assets contained

in this amendment was different from that contained in the Residuary Trust.

See Appellant’s Brief, at 16; Appellee’s Brief, at 10. The only evidence

regarding the content of Mother’s 2006 amended trust agreement came

from the scrivener, Attorney Nicholas Tellie:

      In 2006 mom comes back to the office and amends her trust and
      what she amended was the allocation portion. So she said in her
      trust, in the 2006 amendment, that upon my death the real
      estate of Concrete Steps would be transferred by direct or
      subject to reorganization, tax free exchanges and so forth, to
      Wayne Crushed Stone. Then you left the operating company of
      Concrete Steps and that would still be distributed to Christopher
      and Nancy, the daughter. The remaining assets instead of just
      being shared with Jill and John Jr. would be shared with all four.
      That’s how she reallocated it. Why, again, it was numbers,
      valuations that Jill was reviewing so she signed that I think in
      June or something like that. That wouldn’t work because you had
      half of the shares in her husband John’s trust that said the real
      estate wasn’t going to be transferred – just Christopher and
      Nancy would receive Concrete Steps with the real estate, and
      the two children remaining, Jill and John Jr., would receive the
      remaining assets. Her amendment, which earned half the stock,
      was going to go differently. Her amendment she wanted to
      allocate it with Concrete Steps removing the real estate to
      Wayne Crushed Stone. Still Christopher and Nancy receiving the
      stock and the four children sharing. Well, that wouldn’t work.
      You got two trustees over here, and four trustees over here with
      different – so the only logical and reasonable thing to do was to
      transfer the assets from the estate of the father to the mother,
      which would effectuate her reallocation, which was just – all four
      children were involved it was just a different reallocation. How
      the numbers worked out. I’m assuming Jill did it with values
      equal or similar. That was the background in the 2006
      distribution.

N.T., 10/27/15, at 75-76.

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      Mother passed away in April 2012. Shortly thereafter, Christopher’s

brother, John Luciani, Jr., filed a petition requesting that Nancy Nealon, as

de facto trustee, and Christopher and Mooty, as named trustees, file a first

and final account of the Residuary Trust. On October 24, 2012, Mooty filed a

first and final account of the Residuary Trust, indicating that the principal of

the trust had been transferred to Mother as set forth above.

      Both Christopher and John, Jr. objected to the account, asserting that

the transfers to Mother were not authorized under the terms of the

Residuary Trust. Mooty passed away in February 2013, and her estate was

substituted for her as a party. Prior to her death, Mooty was deposed.

      In 2015, the orphans’ court held a hearing on Christopher’s and John,

Jr.’s objections to the account. At the close of the objectors’ case-in-chief,

the orphans’ court dismissed Nealon from the case, as no evidence had been

presented that she had acted as a trustee. Mooty’s estate presented the

deposition testimony of Mooty and the testimony of Attorney Tellie as both a

factual and expert witness. On January 19, 2016, the orphans’ court denied

Christopher’s and John, Jr.’s objections. Christopher then filed this timely

appeal. John, Jr. did not file an appeal and is no longer a party to this action.

      On appeal, Christopher raises three issues for our review. Issues one

and three are essentially identical, in that Christopher argues that the

distributions from the Residuary Trust were not appropriate under the terms

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of the Residuary Trust. Our standard in reviewing decisions of the orphans’

court is as follows:

      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
      orphans’ court’s findings, our task is to ensure that the record is
      free from legal error and to determine if the orphans’ court’s
      findings are supported by competent and adequate evidence and
      are not predicated upon capricious disbelief of competent and
      credible evidence.

      When the trial court has come to a conclusion through the
      exercise of its discretion, the party complaining on appeal has a
      heavy burden. It is not sufficient to persuade the appellate court
      that it might have reached a different conclusion if, in the first
      place, charged with the duty imposed on the court below; it is
      necessary to go further and show an abuse of the discretionary
      power. An abuse of discretion is not merely an error of
      judgment, but if in reaching a conclusion the law is overridden or
      misapplied,    or    the   judgment     exercised    is   manifestly
      unreasonable, or the result of partiality, prejudice, bias or ill-will,
      as shown by the evidence [of] record, discretion is abused. A
      conclusion or judgment constitutes an abuse of discretion if it is
      so lacking in support as to be clearly erroneous.

      We are not constrained to give the same level of deference to
      the orphans’ court’s resulting legal conclusions as we are to its
      credibility determinations. We will reverse any decree based on
      palpably wrong or clearly inapplicable rules of law. Moreover,
      we are not bound by the chancellor's findings of fact if there has
      been an abuse of discretion, a capricious disregard of evidence,
      or a lack of evidentiary support on the record. If the lack of
      evidentiary support is apparent, reviewing tribunals have the
      power to draw their own inferences and make their own
      deductions from facts and conclusions of law. Nevertheless, we
      will not lightly find reversible error and will reverse an orphans’
      court decree only if the orphans’ court applied an incorrect rule

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      of law or reached its decision on the basis of factual conclusions
      unsupported by the record.

In re Paxson Trust I, 893 A.2d 99, 112-113 (Pa. Super. 2006) (citations

and quotation marks omitted; brackets in original).

      Christopher’s challenge to the account of the Residuary Trust requires

us to construe its terms. “The touchstone in construing a trust is the settlor’s

intent; the language of the trust deed itself is the best and controlling

evidence of such intent.” In re Estate of Devine, 910 A.2d 699, 703 (Pa.

Super. 2006) (citation omitted).

      The Residuary Trust explicitly set forth Father’s intent: “The intent is

to treat the children of settlor equally after taking into consideration all of

the values. … The intent is that each child shall receive equal values.”

Revocable Trust Agreement, 3/9/93, at 5-6. Furthermore, the Residuary

Trust provided that the trustees, within their discretion, could transfer the

principal of the Residuary Trust to Mother or any of the children for purposes

of “health, education, support or maintenance.” Id., at 4. Thus, the

Residuary Trust gave the trustees significant discretion in how to distribute

the principal of the trust, so long as the distribution was done in a manner

that ultimately treated Christopher, John, Jr., Nealon, and Mooty equally.

      Based upon the certified record before us, we cannot say that the

children were ultimately treated disparately. In fact, we cannot even

ascertain how the principal of the Residuary Trust was ultimately distributed.

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Mother’s trust agreement is not in the record. Nor is any accounting of her

estate or trust.

       While it is possible that the distribution to Mother of the entirety of the

principal of the Residuary Trust, for the undisputed purpose of estate

planning, was not entirely authorized by the trust, that conclusion cannot be

reached without a finding that Mother’s estate plan was not in accordance

with the stated intent of the Residuary Trust. Furthermore, there is no

allegation, and no proof, that Mother dissipated these assets in a manner

that defeated the Residuary Trust’s purposes.

       The Residuary Trust at issue here was an estate-planning tool, with a

primary goal of reducing of the impact of the federal estate tax. By 2002,

that concern had been largely mooted by changes in the law. Beyond that,

the trust explicitly and clearly stated its intent to treat the children equally

after the death of Mother. The certified record contains no evidence that

Mother’s inter vivos gifts, estate, and trust distributions did not treat the

children equally.2 Therefore, Christopher did not establish his right to relief,

and is due no relief on this issue on appeal.

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2
   There is some evidence in the record that Mother’s changes were
motivated by the discovery of valuable mineral rights in land transferred to
Christopher and John, Jr., thereby causing an imbalance in the values of the
shares to be distributed to the children by the Residuary Trust. See N.T.,
Deposition of Jill Mooty, 1/16/13, at 33. However, it is unclear who
transferred this property to the brothers, or whether this transfer was an
inter vivos gift or a distribution from an estate or trust. Furthermore, it is not
(Footnote Continued Next Page)

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      In his remaining issue, Christopher contends that the orphans’ court

erred in permitting Attorney Tellie to testify to Father’s intent in construing

the Residuary Trust. We conclude that this issue is moot, as we have already

determined, referring to only the trust agreement itself, that Christopher is

not entitled to relief on appeal.

      Order affirmed. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 11/21/2016

                       _______________________
(Footnote Continued)

even clear that this was a factor that motivated Mother’s changes. Under
these circumstances, we cannot conclude that this passing reference is
capable of supporting any finding relevant to this matter.

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