Court Opinion

ID: 9889424
Source: CourtListenerOpinion
Date Created: 2023-10-10 14:09:38.596921+00
Date Added: 2024-06-11T12:35:13.888515
License: Public Domain

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Bernard W. Ebersole and Jennifer    :
Matlack,                            :
                        Petitioners :
                                    :
           v.                       :        No. 360 F.R. 2020
                                    :        Submitted: April 28, 2023
Commonwealth of Pennsylvania,       :
                        Respondent :

BEFORE:     HONORABLE PATRICIA A. McCULLOUGH, Judge
            HONORABLE ELLEN CEISLER, Judge
            HONORABLE MARY HANNAH LEAVITT, Senior Judge

OPINION
BY SENIOR JUDGE LEAVITT                            FILED: October 10, 2023

            Bernard W. Ebersole and Jennifer Matlack (Grantors) petition for
review of a determination of the Board of Finance and Revenue that assessed a realty
transfer tax on their conveyance of three parcels of real property to the trust they
created as part of their estate plan. The Board of Finance and Revenue held that
these transfers did not qualify for a tax exemption because the trust authorized
distributions to persons other than a Grantor, in the event that one of the Grantors
should become incapacitated. Grantors assert that the deletion of this contingency
provision from the trust, retroactive to a date prior to the real estate transfers,
rendered the transfers tax exempt.
            On September 4, 2018, Grantors, who are husband and wife, created
the “The Bernard W. Ebersole, III and Jennifer J. Matlack Living Trust” (Trust)
dated September 4, 2018. Joint Stipulation of Facts ¶2.1 Grantors’ Trust states that
it is a “revocable living trust . . . with the intent that assets transferred to the trust be
held for our benefit while we are living, and for the benefit of our beneficiaries after
our death[.]”     Id., Exhibit A, §1.03 (emphasis added).             Those remaindermen
beneficiaries are the couple’s three children. Id., Exhibit A, Articles Two and
Eleven. During their lifetimes, Grantors are entitled to a quarterly distribution of
“net income” and a distribution of principal for their “unrestricted use,” “as directed
by either of us individually or by both of us jointly.” Id., Exhibit A, §1.05(d). Also
on September 4, 2018, Grantors executed a last will and testament providing that
upon their deaths, their estates will be distributed in accordance with the terms of
the Trust. Id., Exhibits B (Ebersole Will) and C (Matlack Will).
              On January 10, 2019, Grantors transferred three parcels of real property
to the Trust. With the recording of each deed, Grantors filed a Statement of Value
showing a “transfer to a trust” for cash compensation of $10.00. Joint Stipulation,
Exhibits D, E, and F. Each Statement claimed an exemption equal to the “computed
value”2 of the property by checking the box for “Transfer to a trust.” Id. Each
Statement of Value had a copy of the Trust attached thereto.
              On August 8, 2019, the Pennsylvania Department of Revenue
(Department) issued three Notices of Assessment. Joint Stipulation, Exhibits G, H,
and I. The Notices assessed a transfer tax on each of the three parcels transferred to
the Trust by Grantors. The Notices calculated the amount owed as of July 6, 2019,
as follows:

1
  The facts are not in dispute having been established by a Joint Stipulation of Facts (Joint
Stipulation) of the parties, which includes such relevant documents as the Trust instrument, as
amended, deeds, and a court order.
2
  The “computed value” was calculated by multiplying the county assessed value by the common
level ratio. See Joint Stipulation, Exhibits D, E, and F.
                                              2
                  (1) 160 Hunters Circle - $18,669.67
                  (2) 208-210 North Chester Road - $15,913.11
                  (3) 1461 Conifer Drive - $5,411.88.
Id. This assessment included interest and recording fees. Each Notice set forth the
basis for the assessment as follows:

                  3. The Transfer did not qualify for exclusion from payment of
                  the tax:
                         c) One or more of the possible/contingent beneficiaries
                         disqualified the transfer as an excludable transaction.
                  99. Does not qualify as a living trust.
Id.
                  On October 7, 2019, Grantors amended the Trust, effective September
4, 2018.        Joint Stipulation, Exhibit J (“1st Amendment by Grantors”).        This
amendment revised Article Five of the Trust, entitled “Administration of Our Trust
during a Grantor’s Incapacity.” Id., Exhibit A, §§5.01-5.03. The amendment
eliminated the power of the Trustee to make a distribution for the health, education,
and maintenance of a “dependent [of] the incapacitated Grantor for support.” Id.,
Exhibit A, §5.03(c); Compare Exhibit J, §5.03(c). It also eliminated the power of
the Trustee to make gifts, charitable or educational, on behalf of the incapacitated
Grantor. Id., Exhibit A, §5.03(c), (e)(1)-(9); Compare Exhibit J, §5.03(c), (e).
Finally, the amendment added a provision stating that no distributions from the Trust
“shall ever be made to any person who would fail to meet the requirements necessary
to exclude the transfer of real estate to this Trust from taxation under . . . the
Pennsylvania Realty Transfer Tax Act.”3 Id., Exhibit J, §16.26.

3
    See infra note 12 for official citation and history of this statute.
                                                      3
              On October 10, 2019, Grantors filed petitions for a tax assessment
redetermination with the Department’s Board of Appeals.4 On October 17, 2019,
the Board of Appeals denied Grantors’ petitions, reasoning that the Trust did not
meet the definition of a “living trust” because there was a possibility that the Trustee
could make distributions to a person other than Grantors, should one of them become
incapacitated. The Board of Appeals found the amendment deleting this provision
from the Trust to be irrelevant. Grantors appealed to the Board of Finance and
Revenue.
              On December 13, 2019, Grantors filed a petition with the Chester
County Court of Common Pleas to modify the Trust to inception. On December 20,
2019, the court entered an order modifying the Trust to conform to the “Amendment
by Grantors Dated October 7, 2019, and such modification is made retroactive to
September 4, 2018.” Court of Common Pleas, Chester County, Order, No. 2019-
2490, December 20, 2019; Joint Stipulation, Exhibit K.
              On June 5, 2020, the Board of Finance and Revenue denied Grantors’
challenge to the Department’s realty transfer tax assessment, holding that the Trust
did not meet the definition of a living trust, notwithstanding the above-referenced
modification ordered by the court. Grantors then petitioned for this Court’s review.
              On appeal,5 Grantors argue that the Board of Finance and Revenue
erred in holding that their real property transfers to the Trust were taxable. Transfers

4
  The Board of Appeals exercises the powers and duties of the Department with respect to
administrative proceedings before the Department, which involve tax assessments; requests for
refunds; and denials of tax rebates. 61 Pa. Code §§7.11-7.16. Determinations of the Board of
Appeals are appealed to the Board of Finance and Revenue, which is an agency created by Section
501 of The Fiscal Code, Act of April 9, 1929, P.L. 343, as amended, 72 P.S. §501.
5
  This Court’s review of an adjudication of the Board of Finance and Revenue is de novo. Anastasi
Brothers Corporation v. Board of Finance and Revenue, 315 A.2d 267, 270 (Pa. 1974).
“Stipulations of fact are binding upon both the parties and the Court.” Kelleher v. Commonwealth,
                                               4
to an “ordinary trust” that benefit only the settlor’s6 spouse and children qualify for
a tax exemption, and transfers to a “living trust” are also excluded from the realty
transfer tax. Grantors contend that their Trust meets the definition of a living trust
or an ordinary trust and, thus, the real estate transfers were not taxable. Lest there
be any doubt, the retroactive modification to the Trust ordered by the Chester County
Court of Common Pleas established that the Trust was a living trust as of September
4, 2018, prior to the transfers.
              The Commonwealth responds that because Grantors’ brief does not
comply with the form and content requirements of the Pennsylvania Rules of
Appellate Procedure, they have waived all issues and this Court should quash their
appeal. In the alternative, the Commonwealth argues that this Court should affirm
the determination of the Board of Finance and Revenue because the Department’s
assessment of the realty transfer tax was based on the Trust as it existed when the
deeds were recorded and cannot be nullified by a subsequent amendment to the
Trust.
              We begin with the threshold issue raised by the Commonwealth that
Grantors have waived all issues on appeal because their brief does not comply with
the Pennsylvania Rules of Appellate Procedure. The Commonwealth contends that
Grantors’ brief improperly includes argument in the statement of the case (PA.

704 A.2d 729, 731 (Pa. Cmwlth. 1997). “However, the Court may draw its own legal conclusions.”
Id.
6
  A settlor is a person
        who creates or contributes property to a trust. If more than one person creates or
        contributes property to a trust, each person is a settlor of the portion of the trust
        property attributable to that person’s contribution except to the extent another
        person has the power to revoke or withdraw that portion.
20 Pa. C.S. §7703. The term “settlor” is synonymous with “grantor,” and the terms are often used
interchangeably.
                                               5
R.A.P. 2117(b));7 does not provide record citations (PA. R.A.P. 2119(c));8 and does
not develop Grantors’ legal argument in a fashion that allows for meaningful
appellate review (PA. R.A.P. 2119(a)).9
                  More specifically, the Commonwealth complains that the statement of
the case in Grantors’ brief does not cite to the record, which consists of the Joint
Stipulation. Further, because their statement of the case describes the Trust as a
“revocable living trust,” Grantors have improperly quoted the modification petition
filed with the Chester County Court of Common Pleas, which petition is not part of
the Joint Stipulation. Commonwealth Brief at 10. Grantors’ statement of the case
improperly describes the court’s order of December 20, 2019, as authorized by
statute, but that order does not reference a statute. Finally, the Commonwealth
complains that Grantors’ brief does not correctly cite Pennsylvania statutes because
it uses only the Purdon’s, or Westlaw, citation and not the official pamphlet law
citation. The Commonwealth contends that in the aggregate these defects have
resulted in a failure by Grantors to develop their argument in a meaningful way,
which requires that their appeal be quashed.

7
    It reads as follows:
           All argument to be excluded. The statement of the case does not contain any
           argument. It is the responsibility of appellant to present in the statement of the case
           a balanced presentation of the history of the proceedings and the respective
           contentions of the parties.
PA. R.A.P. 2117(b).
8
  It reads:
         Reference to record. If reference is made to the pleadings, evidence . . . or any
         other matter appearing in the record, the argument must set forth, in immediate
         connection therewith, or in a footnote thereto, a reference to the place in the record
         where the matter referred to appears[.]
PA. R.A.P. 2119(c).
9
   It reads, in pertinent part, “[t]he argument shall be divided into as many parts as there are
questions to be argued[.]” PA. R.A.P. 2119(a).
                                                     6
               Grantors’ brief explains that their statement of the case “summarize[s]”
the Joint Stipulation, which is sufficient in a case where the facts are not in dispute.
Grantors’ Brief at 2.10 Grantors’ description of the Trust as a “revocable living trust”
comes not from the modification petition11 but directly from the Trust instrument,
which is part of the record. Joint Stipulation, Exhibit A, §1.03. Grantors’ description
of the court’s order as one authorized by statute is permissible, notwithstanding the
lack of a reference to the statute in the court’s order. Finally, although a citation to
the Commonwealth’s official pamphlet laws is preferred for appellate briefs, the
Court is not aware of an appeal ever being quashed for the reason that the petitioner’s
brief has employed only the Purdon’s citation. We reject the Commonwealth’s
objections to the form and content of Grantors’ brief.
               In any case, Pennsylvania Rule of Appellate Procedure 2101 is
permissive, stating that “the appeal or other matter may be quashed or dismissed.”
PA. R.A.P. 2101 (emphasis added). Indeed, this Court has stated that we “may ignore
even egregious violations of the Rules of Appellate Procedure if these defects do not
preclude meaningful appellate review.” Arnold v. Workers’ Compensation Appeal
Board (Lacour Painting, Inc.), 110 A.3d 1063, 1067 (Pa. Cmwlth. 2015) (internal
quotations and citation omitted) (emphasis added).                 The so-called defects in
Grantors’ brief claimed by the Commonwealth, singularly or in the aggregate, are
not ones with potential to preclude meaningful appellate review.
               Accordingly, we reject the Commonwealth’s argument that Grantors
have waived all issues on appeal. We turn, then, to the merits of Grantors’ appeal

10
   The Commonwealth’s statement of the case portion of its brief also states that it is a “summary
of the Stipulation of Facts[.]” Commonwealth Brief at 6.
11
   In any case, a court filing, such as a petition, is not “factual” and need not be part of the
evidentiary record in order to be cited.
                                                7
that the Department improperly imposed a realty transfer tax on their real property
transfers to the Trust.
              We begin with a review of the relevant statutory provisions. Article
XI-C of the Tax Reform Code of 197112 (Tax Code) creates the realty transfer tax.
It states, in pertinent part, as follows:
              Every person who makes, executes, delivers, accepts or presents
              for recording any document or in whose behalf any document is
              made, executed, delivered, accepted or presented for recording,
              shall be subject to pay for and in respect to the transaction or any
              part thereof, or for or in respect of the vellum parchment or paper
              upon which such document is written or printed, a State tax at
              the rate of one per cent of the value of the real estate within this
              Commonwealth represented by such document, which State tax
              shall be payable at the earlier of the time the document is
              presented for recording or within thirty days of acceptance of
              such document[.]

Section 1102-C of the Tax Code, 72 P.S. §8102-C. Article XI-C excludes certain
real estate transfers from the tax, including those made to an ordinary trust.
Specifically, the tax shall not be imposed upon

              [a] transfer for no or nominal actual consideration to a trustee of
              an ordinary trust where the transfer of the same property would
              be exempt if the transfer was made directly from the grantor to
              all of the possible beneficiaries that are entitled to receive the
              property or proceeds from the sale of the property under the trust,
              whether or not such beneficiaries are contingent or specifically
              named . . . .

12
  Act of March 4, 1971, P.L. 6, as amended, added by the Act of May 5, 1981, P.L. 36, 72 P.S.
§§8101-C-8114-C. Article XI-C is known commonly as the Pennsylvania Realty Transfer Tax
Act.
                                             8
Section 1102-C.3(8) of the Tax Code, 72 P.S. §8102-C.3(8)13 (emphasis added).
Article XI-C excludes from taxation real estate transfers made “directly” to certain
family members. It states that the realty transfer tax shall not be imposed upon
                 [a] transfer between husband and wife, between persons who
                 were previously husband and wife who have since been divorced,
                 provided the property or interest therein subject to such transfer
                 was acquired by the husband and wife or husband or wife prior
                 to the granting of the final decree in divorce, between parent and
                 child or the spouse of such child, between a stepparent and a
                 stepchild or the spouse of the stepchild, between brother or sister
                 or spouse of a brother or sister and brother or sister or the spouse
                 of a brother or sister and between a grandparent and grandchild
                 or the spouse of such grandchild, except that a subsequent
                 transfer by the grantee within one year shall be subject to tax as
                 if the grantor were making such transfer.

Section 1102-C.3(6) of the Tax Code, 72 P.S. §8102-C.3(6) (emphasis added).
Because a direct transfer of real property to a spouse or child is exempt from
taxation, a transfer to an ordinary trust that names those persons as beneficiaries is
likewise exempt under Section 1102-C.3(8) of the Tax Code, 72 P.S. §8102-C.3(8).
                 Article XI-C also excludes from taxation real estate transfers made to a
living trust that functions as a will substitute. It states that the realty transfer tax
shall not be imposed upon
                 [a] transfer for no or nominal actual consideration to a trustee of
                 a living trust from the settlor of the living trust. No such
                 exemption shall be granted unless the recorder of deeds is
                 presented with a copy of the living trust instrument.

Section 1102-C.3(8.1) of the Tax Code, 72 P.S. §8102-C.3(8.1). The Tax Code
defines a “living trust” as follows:

13
     Section 1102-C.3 was added by the Act of July 2, 1986, P.L. 318, as amended.
                                                 9
             Any trust, other than a business trust, intended as a will substitute
             by the settlor which becomes effective during the lifetime of the
             settlor, but from which trust distributions cannot be made to any
             beneficiaries other than the settlor prior to the death of the
             settlor.

Section 1101-C of the Tax Code, 72 P.S. §8101-C (emphasis added).
             In sum, the realty transfer tax is generally imposed on all real estate title
transfers. Section 1102-C of the Tax Code, 72 P.S. §8102-C. However, this tax
cannot be imposed upon the transfer of real property to an ordinary trust or a living
trust that names the spouse and children of the trust settlor as beneficiaries. Section
1102-C.3(8), (8.1) of the Tax Code, 72 P.S. §8102-C.3(8), (8.1).
             Grantors argue that their property transfers to the Trust were not taxable
because they, husband and wife, are the sole beneficiaries of the Trust during their
lifetimes.   Following their deaths, their children become the remaindermen
beneficiaries. Further, their Trust amendment deleted the provision that would have
allowed the Trustee to make gifts on behalf of a Grantor who becomes incapacitated.
Finally, the Trust amendment expressly prohibits any distribution to any person
whose receipt would cause the realty transfer tax to be imposed.
             The Commonwealth acknowledges that the amended Trust qualifies as
a living trust. However, at the time Grantors recorded the deeds, the Trust allowed
the Trustee to “make gifts to charitable organizations,” which are not exempt from
the real estate transfer tax, should a Grantor become incapacitated. Joint Stipulation,
Exhibit A, §5.03(e)(1). Similarly, the Trust provided that
             [o]ur Trustee may distribute as much of the net income and
             principal of the incapacitated Grantor’s trust as our Trustee
             considers necessary for the health, education, maintenance and
             support in reasonable comfort of other persons who our Trustee
             determines are dependent on the incapacitated Grantor for
             support.

                                           10
Id., Exhibit A, §5.03(c) (emphasis added). The Commonwealth argues that the
opportunity for the Trustee to make distributions to dependents or charities, on
behalf of an incapacitated Grantor, made these potential recipients “beneficiaries”
of the Trust. It also argues that the retroactive elimination of those Trust provisions
is irrelevant, arguing that Grantors “cannot defeat those assessments by later
amending the documents after recordation.” Commonwealth Brief at 21.
                 Title 20 of the Pennsylvania Consolidated Statutes is known and cited
as the “Probate, Estates and Fiduciaries Code” (Probate Code). 20 Pa. C.S. §101.14
In 2006, the Probate Code, 20 Pa. C.S. §§7701-7799.3, was revised to incorporate
the amendments to the Uniform Trust Code (UTC) adopted by the National
Conference of Commissioners on Uniform State Laws. One such amendment to the
UTC was Section 416, entitled “Modification to Achieve Settlor’s Tax Objectives.”
It states:
                 To achieve the settlor’s tax objectives, the court may modify the
                 terms of a trust in a manner that is not contrary to the settlor’s
                 probable intention. The court may provide that the modification
                 has retroactive effect.

Unif. Tr. Code §416 (Unif. L. Comm’n 2000). The comment to Section 416 states
as follows:
                 This section is copied from Restatement (Third) of Property:
                 Donative Transfers §12.2 (Tentative Draft No. 1, approved
                 1995). “Modification” under this section is to be distinguished
                 from the “reformation” authorized by Section 415. Reformation
                 under Section 415 is available when the terms of a trust fail to
                 reflect the donor’s original, particularized intention. The
                 mistaken terms are then reformed to conform to this specific
                 intent. The modification authorized here allows the terms of the
                 trust to be changed to meet the settlor’s tax-saving objective as

14
     This title was consolidated by the Act of June 30, 1972, P.L. 508.
                                                  11
            long as the resulting terms, particularly the dispositive
            provisions, are not inconsistent with the settlor’s probable intent.
            The modification allowed by this subsection is similar in concept
            to the cy pres doctrine for charitable trusts (see Section 413), and
            the deviation doctrine for unanticipated circumstances (see
            Section 412).
            Whether a modification made by the court under this section will
            be recognized under federal tax law is a matter of federal law.
            Absent specific statutory or regulatory authority, binding
            recognition is normally given only to modifications made prior
            to the taxing event, for example, the death of the testator or
            settlor in the case of the federal estate tax. See Rev. Rul. 73-142,
            1973-1 C.B. 405. Among the specific modifications authorized
            by the Internal Revenue Code or Service include the revision of
            split-interest trusts to qualify for the charitable deduction,
            modification of a trust for a noncitizen spouse to become eligible
            as a qualified domestic trust, and the splitting of a trust to utilize
            better the exemption from generation-skipping tax.
            For further discussion of the rule of this section and the relevant
            case law, see Restatement (Third) of Property: Donative
            Transfers §12.2 cmts. and Reporter’s Notes (Tentative Draft No.
            1, approved 1995).

Unif. Tr. Code §416 cmt. (emphasis added).
            The Pennsylvania General Assembly adopted a nearly identical version
of Section 416 of the UTC. The Probate Code states as follows:
            §7740.6     Modification to achieve settlor’s tax objectives –
                        UTC 416
            The court may modify a trust instrument in a manner that is not
            contrary to the settlor’s probable intention in order to achieve the
            settlor’s tax objectives. The court may provide that the
            modification have retroactive effect.

                                          12
20 Pa. C.S. §7740.6.15 The only difference between Section 416 of the UTC and
Section 7740.6 of the Probate Code is the placement of the phrase “in order to
achieve the settlor’s tax objectives” in the first sentence.
              The Commonwealth argues that Section 7740.6 allows a court to
modify a trust only with respect to a tax not yet assessed. It argues that “the
comments to the relevant statute state ‘binding recognition is normally given only to
modifications made prior to the taxing event.’” Commonwealth Brief at 22 (citing
20 Pa. C.S. §7740.6 and quoting “Uniform Law Comment” appended to Westlaw
version of 20 Pa. C.S. §7740.6). On the basis of this above-quoted phrase from the
Comment to Section 416 of the UTC, the Commonwealth argues that the retroactive
modification to the Trust ordered by the Chester County Court of Common Pleas
was not effective with respect to Grantors’ transfer of real property to the Trust. We
reject this argument for several reasons.
              First, the Commonwealth’s argument is based upon a flawed
construction of the second paragraph of the UTC Comment, which paragraph is
concerned solely with federal taxation. Its topic sentence states that “[w]hether a
modification made by the court under this section will be recognized under federal
tax law is a matter of federal law.” Unif. Tr. Code §416 cmt., ¶2 (emphasis added).
The following sentences develop this topic. The second sentence states that “binding
recognition is normally given only to modifications made prior to the taxing event,
for example, the death of the testator or settlor in the case of the federal estate tax.”
Id. (emphasis added). The final sentence lists trust modifications that have been
recognized by the Internal Revenue Code or Service.

15
   Subchapter A through I of Chapter 77 of the Probate Code “shall be known and may be cited as
the Uniform Trust Act.” 20 Pa. C.S. §7701.
                                              13
             The Commonwealth characterizes paragraph two as “comments to the
relevant statute.” Commonwealth Brief at 22. However, it is not a comment to the
Probate Code but, rather, to the UTC. The Commonwealth then edits paragraph two
of the UTC Comment to delete any reference to federal tax law.               Id.    This
legerdemain changes the entire meaning of the UTC Comment. Under our system
of dual sovereignty, federal taxing authorities “normally” will not be bound by a
state statute or order issued thereunder. It goes without saying that a state statute,
such as the Probate Code, has effect only within the state’s borders and cannot speak
to matters governed by federal statute. Nowhere, however, does the Comment to
Section 416 of the UTC state that a court order that modifies a trust with “retroactive
effect” will not be afforded “binding recognition” under state tax law.
             Second, and more problematic, the Commonwealth reads its edited
version of the Comment into the language of Section 7740.6. This is antithetical to
our task in any statutory construction exercise. As our Supreme Court has stated:
             The object of all statutory interpretation is to ascertain and
             effectuate the intention of the General Assembly, giving effect,
             if possible, to all provisions of the statute. In general, the best
             indication of legislative intent is the plain language of a statute.
             When the words of a statute are clear and free from all ambiguity,
             the letter of it is not to be disregarded under the pretext of
             pursuing its spirit. Words of a statute are to be construed
             according to their common and approved usage.

Sivick v. State Ethics Commission, 238 A.3d 1250, 1259 (Pa. 2020) (footnote
omitted). “It is axiomatic that we cannot add statutory language where we find the
extant language somehow lacking[.]” Id. at 1264. The extant language of Section
7740.6 says nothing about a “taxing event,” whether state or federal in nature, and
we cannot add that phrase to the provision. To the contrary, we must assume that
any reference to a “taxing event” was intentionally omitted from the text of Section

                                          14
7740.6. See In re Canvassing Observation, 241 A.3d 339, 349 (Pa. 2020) (“[W]hen
interpreting a statute we must listen attentively to what the statute says, but also to
what it does not say.”) (internal citation omitted).
             Third, Comments to the UTC have limited efficacy in the construction
of Chapter 77 of the Probate Code. Our Supreme Court has explained:
             The purpose of statutory interpretation is to ascertain the General
             Assembly’s intent and to give it effect. In discerning that intent,
             courts first look to the language of the statute itself. If the
             language of the statute clearly and unambiguously sets forth the
             legislative intent, it is the duty of the court to apply that intent
             and not look beyond the statutory language to ascertain its
             meaning. Courts may apply the rules of statutory construction
             only when the statutory language is not explicit or is ambiguous.

Trust Under Agreement of Taylor, 164 A.3d 1147, 1155 (Pa. 2017) (internal citations
omitted) (emphasis added). Our Supreme Court has further stated:
             The comments or report of the commission, committee,
             association or other entity which drafted a statute may be
             consulted in the construction or application of the original
             provisions of the statute if such comments or report were
             published or otherwise generally available prior to the
             consideration of the statute by the General Assembly, but the text
             of the statute shall control in the event of conflict between its text
             and such comments or report.

Id. at 1159 (quoting 1 Pa. C.S. §1939) (emphasis added).
             In the matter sub judice, we are concerned with two statutes, the Tax
Code and the Probate Code. Because each statute addresses the subject of taxation
and trusts, they are in pari materia.           See Section 1932(a) of the Statutory
Construction Act of 1972, 1 Pa. C.S. §1932(a) (“[S]tatutes . . . are in pari materia
when they relate to the same persons or things[.]”) Statutes that are “in pari materia
shall be construed together, if possible, as one statute.” 1 Pa. C.S. §1932(b). The

                                           15
Tax Code exempts transfers to a living trust from the realty transfer tax, and the
Probate Code authorizes a court to modify a living trust, retroactively, in order to
achieve a settlor’s tax objectives. See Section 1102-C.3(8.1) of the Tax Code, 72
P.S. §8102-C.3(8.1); 20 Pa. C.S. §7740.6. The two statutes can, and must, be read
together as a single statute.
             There is no need to resort to the UTC or its Comments because there is
no ambiguity to resolve. To the extent there is any conflict, it lies between the
Commonwealth’s recasting of paragraph two of the UTC Comment, which is
mistaken at best, and Section 7740.6 of the Probate Code.
             The Commonwealth does not offer any construction of “retroactive
effect” of a trust modification “in order to achieve the settlor’s tax objectives.” 20
Pa. C.S. §7740.6. Instead, it leaps to the Comment to Section 416 of the UTC, which
it edits to suit its purpose. In this way, the Commonwealth construes Section 7740.6
as limiting the effect of the trust modification to tax assessments that take place in
the future, post-modification. This reads “retroactive effect” out of the Probate
Code.
             The Commonwealth also directs this Court to our decision in Sabatine
v. Commonwealth, 398 A.2d 741 (Pa. Cmwlth. 1979) aff’d on other grounds, 442
A.2d 210 (Pa. 1981). That case concerned a transfer of real property from Madden
to Sabatine, for which a realty transfer tax in the amount of $5,510.48 was paid.
Subsequently, Sabatine filed a suit in equity to set aside the conveyance and to have
the deed declared void because of Madden’s misrepresentations and a mutual
mistake of fact. The parties settled the litigation with a court-approved consent
decree that nullified the transfer. Thereafter, Madden and Sabatine filed a petition
for a refund of the realty transfer tax, which was denied. On appeal, our Court

                                         16
affirmed the Board of Finance and Revenue’s adjudication, explaining that the
county court
               had no jurisdiction over the Commonwealth or the subject
               matter of the realty transfer tax when the consent decree
               was entered. While a consent decree is as binding upon
               the parties as a final decree after a trial on the merits . . . it
               has no effect upon parties or subject matter beyond the
               Court’s jurisdiction.

Sabatine, 398 A.2d at 742-43. On appeal, the Supreme Court affirmed this Court,
but on other grounds. Sabatine, 442 A.2d 210.
               The Commonwealth argues that, as in Sabatine, the Department was
not a party to the court proceeding that approved the Trust amendment retroactive
to September 4, 2018, and, thus, the court’s jurisdiction was limited. It believes that
Sabatine requires this Court to affirm the Board of Finance and Revenue.
               Sabatine is distinguishable. First, the order of the Chester County Court
of Common Pleas to modify the Trust with a retroactive effective date was done
under authority of state statute. By contrast, Sabatine concerned litigation brought
under common law.16 Second, Section 7740.6 of the Probate Code expressly
authorizes a court of common pleas to order a trust modification with a “retroactive
effect” where it will “achieve the settlor’s tax objectives.” 20 Pa. C.S. §7740.6.17

16
   In M6 Realty LLC, a New Jersey Limited Liability Company v. Commonwealth (Pa. Cmwlth.,
No. 797 F.R. 2017, filed August 4, 2021), the petitioner asserted that it was the “holder of a bona
fide mortgage in default in lieu of a foreclosure” and entitled to a realty transfer tax exemption.
72 P.S. §8102-C.3(1a). This Court held that because another party held the mortgage on the date
the deed was recorded, the petitioner could not claim the exemption. M6 Realty stands for the
principle that the operative documents are evaluated as of the date of transfer, not on the basis of
documents executed and dated several days later. M6 Realty is distinguishable. Here, a state
statute authorized the court to order the operative document modified with an effective date prior
to the deeds’ filing “in order to achieve the settlor’s tax objectives.” 20 Pa. C.S. §7740.6.
17
   As noted by Grantors, a tax of 4.5% will be imposed on the value of the inheritance received by
the remainderman beneficiaries, after the death of Grantors. Section 2116(a)(1)(i) of the Tax Code,
                                                17
The Department, an executive branch agency, cannot disregard a judicial order
issued under authority of the Probate Code.18 Third, Sabatine does not stand for the
broad proposition that the Commonwealth must be a party to any court proceeding
that may have a tax consequence. In any case, the Supreme Court did not follow
this Court’s analysis on jurisdiction. See Sabatine, 442 A.2d at 212. We reject the
Commonwealth’s argument that Sabatine is dispositive.
               Without any limitations, Section 7740.6 of the Probate Code allows a
court to order a retroactive modification to a trust in order “to achieve the settlor’s
tax objectives” so long as it aligns with the settlor’s “probable intention.” 20 Pa.
C.S. §7740.6.19 Without question, that is the case here. The Statements of Value
filed by Grantors with the recorder of deeds demonstrate the settlors’ tax objective,
and the Trust amendment established their “probable intention.” Consistent with
Section 7740.6, the court’s order has established the terms of the Trust as of
September 4, 2018.

added by the Act of August 4, 1991, P.L. 97, 72 P.S. §9116(a)(1)(i). That tax exceeds the realty
transfer tax rate. Grantors’ Brief at 9, n.4.
18
   See generally McCray v. Pennsylvania Department of Corrections, 872 A.2d 1127, 1133 (Pa.
2005) (“The Department [of Corrections] is an executive branch agency that is charged with
faithfully implementing sentences imposed by the courts. As part of the executive branch, the
Department lacks the power to adjudicate the legality of a sentence or to add or delete sentencing
conditions.”). The Department of Revenue, likewise, lacks the power to add or delete provisions
of a trust that have been established by an order of the court of common pleas under authority of
the Probate Code.
19
   “Probable intention” considers the settlor’s “non-tax as well as tax objectives.” Restatement
(Third) of Property, Donative Transfers §12.2, Comment f (Am. Law Inst. 1999). Here, Grantors
jointly amended the Trust, so there can be no question of their probable intention. The Restatement
also provides that the settlor’s tax objectives can be inferred from the donative document or from
extrinsic evidence, and the settlor’s tax objective can be specific, as to a particular tax, or general,
such as an objective to minimize taxes. Id., Comment c. Here, the Statements of Value establish
“the settlor’s tax objectives.” 20 Pa. C.S. §7740.6.
                                                  18
                The Commonwealth acknowledges that the amended Trust now meets
the Tax Code definition of a living trust.20 As a result of the court order entered
under Section 7740.6 of the Probate Code, the Trust existed as a living trust on
September 4, 2018, prior to the January 10, 2019, property transfers to the Trust.
Accordingly, those transfers are excluded from the realty transfer tax, and the Board
of Finance and Revenue erred in denying Grantors’ petition for a redetermination of
the Department’s assessment of realty transfer taxes for the January 2019 transfers
to the Trust.
                Based on the foregoing analysis, we reverse the determination of the
Board of Finance and Revenue. Because Grantors’ conveyance of three parcels of
real property to the Trust was not subject to the realty transfer tax, their petition for
a tax assessment redetermination should have been granted.

                                ____________________________________________
                                MARY HANNAH LEAVITT, President Judge Emerita

20
   Because of our disposition of this appeal, we do not address the question of whether the Trust
meets the definition of a living trust or an ordinary trust, with or without the modification. The
Commonwealth argues that under the erstwhile incapacity provision, the potential for a distribution
to a person other than a Grantor, even if made on behalf of an incapacitated Grantor, made that
person a beneficiary of the “living trust.” See Section 1101-C of the Tax Code, 72 P.S. §8101-C
(defining “Living trust”). If the definition of living trust is read literally, then a payment to an
accountant or attorney, whose services have been engaged by the Trust, would make the accountant
or lawyer a “beneficiary.” For their part, Grantors argue that the Trust qualifies for the ordinary
trust tax exclusion because the only beneficiaries named in the trust instrument are the settlor’s
spouse or child. Section 1102-C.3(6) of the Tax Code, 72 P.S. §8102-C.3(6).
                                                19
          IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Bernard W. Ebersole and Jennifer    :
Matlack,                            :
                        Petitioners :
                                    :
           v.                       :       No. 360 F.R. 2020
                                    :
Commonwealth of Pennsylvania,       :
                        Respondent :

                                    ORDER

             AND NOW, this 10th day of October, 2023, the June 25, 2020, order of
the Board of Finance and Revenue, in the above-captioned matter, is REVERSED.
This matter is remanded to the Board of Finance and Revenue for further remand to
the Department of Revenue for action on the petitions for redetermination filed by
Bernard W. Ebersole and Jennifer Matlack that is consistent with the attached
Opinion. Unless exceptions are filed within thirty (30) days pursuant to PA. R.A.P.
1571(i), this Order shall become final.

                           ____________________________________________
                           MARY HANNAH LEAVITT, President Judge Emerita