Judges Opinions, — May 3, 2023 12:50 — 0 Comments

In Re: Estate of Patricia A. Gundrum, Deceased

In Re: Estate of Patricia A. Gundrum, Deceased

 

Civil Action-Estate Law-Testate Decedent-Objections to Final Accounting-Failure to Include Property as Part of Estate-Distribution of Assets-Auditor-Standard of Review-Surcharge-Estate Mismanagement-Discretion of Executor

 

Beneficiaries of the Estate of Patricia A. Gundrum, who died testate on July 15, 2019, filed Objections to the First and Final Accounting filed by the Executor on the basis that assets including burial plots, jewelry, furniture and other household items should have been included as part of the Estate for distribution.  Beneficiaries subsequently filed Objections to the Report of the assigned Auditor’s Report and Recommendation.

 

  1. The executor of an estate, as a fiduciary, is required to use such common skill, prudence and caution as a prudent person would exercise in connection with the management of his or her own estate.

 

  1. A surcharge may be imposed upon the executor to compensate the estate for any losses incurred as a result of an executor’s lack of due care.

 

  1. When a surcharge is sought against an executor based upon an allegation of mismanagement of the estate, the party seeking the surcharge bears the burden of proving the executor’s wrongful conduct.

 

  1. When a significant discrepancy appears on the face of the record, the burden shifts to the executor to present exculpatory evidence to avoid the surcharge.

 

  1. As no significant discrepancy appears on the face of the record, the burden of proving wrongful conduct falls upon the Objectors.

 

  1. The Objectors failed to establish any mismanagement of the Estate or reason for surcharge where the sale of the burial plots would add minimal value to the Estate and the Executor will pay for the filing of an Amended Inheritance Tax Return, the Will contained no specific bequests with regard to jewelry, the value of the jewelry was deducted from the share of the beneficiary who received the jewelry and other jewelry not included in the Estate will be valued and included as part of the Estate.

 

  1. The executor of an estate is entitled to such compensation as shall be reasonable and just.

 

  1. The basis for determination of whether compensation is reasonable depends upon the value of the services rendered.

 

  1. An executor seeking compensation from an estate has the burden of establishing facts that show the reasonableness of the fee and entitlement to the compensation claimed.

 

  1. The Auditor’s determination that fees sought by the Executor and Attorney for the Estate were reasonable and warranted is supported by the record establishing that Estate settlement required a fair amount of time and work of both the Auditor and counsel including taking inventory of personal property, preparing tax returns and arranging for the sale and disposal of the property.

 

L.C.C.C.P. No. 2019-542, Opinion by John C. Tylwalk, President Judge, May 11, 2022.

 

 

 

 

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

PENNSYLVANIA

 

ORPHANS’ COURT DIVISION

 

IN RE:  ESTATE OF PATRICIA A.              :       NO. 2019-542

GUNDRUM, Deceased                      :

 

APPEARANCES:

 

Steven Miller, Esquire            For Objectors Carol L. Wisniewski and Sharon

Miller Law Offices                             Galand

 

Paul Bametzreider, Esquire    For Executor Paul Gundrum

Reilly Wolfson

 

Joshua Harshberger, Esquire  Auditor

Jacobson, Julius & Harshberger

 

Opinion, Tylwalk, P.J. May 11, 2022.

                                     

Patricia A. Gundrum (“Decedent”) died testate on July 15, 2019.  On August 7, 2019, Paul F. Gundrum (“Executor”) was appointed Executor of the Estate pursuant to Decedent’s Last Will and Testament.  Executor filed a First and Final Accounting on October 14, 2020.  On December 23, 2020, Carol L. Wisniewski and Sharon L. Galand (“Objectors”) filed Objections to the First and Final Accounting, asserting that various assets should have been included as part of the Estate for distribution.  The items in dispute included two burial plots, several pieces of jewelry, a washer, dryer and microwave, sunroom furniture, lawn/garden tools, and various household items.  Objectors also charged Executor with mismanagement and sought a surcharge for various alleged shortcomings in his handling of the Estate.  Objectors further contended that the fees charged by the Executor and his counsel were excessive.

As a result of the Objections, Joshua Harshberger, Esquire (“Auditor”) was appointed to conduct an audit and file a Report with recommendations.  Rather than conduct an evidentiary hearing, Auditor collected numerous documents in addition to the First and Final Accounting and the Objections.  These documents included Decedent’s Will, the Inheritance Tax Return, reports from Kleinfelter’s Auction, bank statements and a deposit slip dated April 6, 2021, the settlement sheet from the sale of Decedent’s real property,  correspondence from the parties, photographs of personal property, and the parties’ consent agreement dated October 18, 2019.  He also held several telephone and Zoom conferences with the parties and counsel.  There was no objection to this procedure, and Auditor filed his Report on October 16, 2021.  In the Report, Auditor made the following recommendations regarding the assets which were the subject of the Objections:

  1. Two burial plots should have been included as Estate assets. Both plots should be sold and the proceeds should be included for distribution.  The Executor should file an Amended Tax Return and, if necessary, pay the cost for the Amended Return.  Any additional tax, including possible late fees, should be paid by the Estate as the assets would not yield significant value.

 

  1. The “Navy Ring” (gold ring with blue stone) was not specifically devised to any beneficiary. Pursuant to the parties’ consent, the ring should be valued at $75.00, included as an estate asset, and retained by Galand.  Galand should have $75.00 deducted from her share.

 

  1. The washer and dryer were sold by Kleinfelter Auction for $320.00 and that amount was included in an overall deposit into the estate bank account. The microwave was sold with the house. No adjustment is necessary for any of these items.

 

  1. The curtains were sold with the house. No adjustment is necessary.

 

  1. The Executor retained the Keurig for his own benefit. There was no specific devise of this item and it was not part of the parties’ Consent.  This asset should be valued at $40.00 which should be added to the accounting.  Executor’s share should be reduced by this amount.

 

  1. The sunroom furniture was either sold with the house or discarded. No adjustment is necessary.

 

  1. The lawn mower may have been sold with the house or discarded. No  adjustment is necessary.

 

  1. The weed whacker may have been sold with house or discarded. No adjustment is necessary.

 

  1. The edger was either sold with the house or discarded. No adjustment is

necessary.

 

  1. The dehumidifier was either sold with the house or discarded. No adjustment is necessary.

 

  1. The silk flowers and wreaths were either sold with the house or discarded. No adjustment is necessary.

 

  1. Decedent’s class ring is in the possession of Galand despite her representation to the contrary. Galand had the ring appraised and it was valued at $130.00.    Galand should keep the ring and have that amount deducted from her share.

 

  1. The Apple TV/Router was either sold with the house or discarded. No adjustment is necessary.

 

  1. Decedent’s diamond necklace was retained by Executor. It should be appraised and retained by Executor with the value deducted from his share.  The Estate should pay for the appraisal.  Auditor found no fault on the part of any party with regard to this item.

 

  1. There is no evidence that any cash received in exchange for the sale of estate assets was not deposited into the estate account. Auditor found no fault on the part of any party with regard to this issue.

 

  1. There was no mishandling of the Estate by the Executor, although he should have provided more detail to his accounting for Decedent’s personal property. Any mistakes were minimal and included only nominal sums.  Given the significant work performed by Executor and his counsel, Auditor found that the legal and Executor fees were reasonable and were calculated based upon the percentage value of the overall estate.

 

On December 23, 2020, Objectors filed their Objections to the Auditor’s Report.  We conducted Oral Argument on the Objections on January 7, 2020 and the matter is now before us for disposition.

Objectors assign the following errors to the findings of the Auditor:

  1. The burial plots should be sold for at least $2,500.00 combined. Any amendment to the tax filing and any late fees should be paid by Executor.  If the plots cannot be sold forthat amount, Executor’s share should be decreased by $2,500.00 and that amount should be included in the other beneficiaries’ distributions.

 

  1. There was no specific bequeathal of jewelry. Based on conversations with an employee at the office of Executor’s counsel, it appears that Executor gave the “Navy Ring” to his daughter, who was not a named beneficiary of the Estate.  Executor did not want to ask his daughter for its return.  The ring should be turned over to Galand.

 

3 – 13.  Items 3 – 13 constitute negligent loss to the Estate.  The loss of the value of these assets should be included in the value of the estate and surcharged against Executor.

 

  1. Executor’s retention of the diamond necklace without an appraisal was mismanagement resulting in a negligent loss to the estate and is grounds for a surcharge. Executor should bear the cost of the appraisal and revision of the accounting.

 

  1. A check was issued by an auctioneer for the sale of Estate assets. Sixteen months later, on April 6, 2021, a deposit in the amount of $1,566.60 was made into the estate account from Executor’s personal account.  This indicates a co-mingling of personal and estate funds which is mismanagement and requires surcharge.  Objectors request additional discovery on Executor’s co-mingling of estate and personal assets.

 

  1. The Executor wrongfully mishandled the estate and his fee of $10,629 is excessive since the Estate’s value was $218,805, Executor’s fee should be $9,564.15 and he is charging $1,064.85 beyond what is reasonable.

 

In response to the Objections to the Auditor’s Report, Executor submitted the following:

  1. The Auditor correctly found that any loss from the oversight of the burial plots was de minimis, the return on the sale will be minimal, and any resulting tax will be negligible. Objectors have failed to show any loss and have failed to carry their burden of showing significant mismanagement.  This was an easily solved oversight.

 

  1. Executor admits that the gold ring with the blue stone was given to his daughter. Executor argues that this was, at most, an error in judgment and does not constitute mismanagement.  He claims that the facts surrounding the ring were ambiguous and that no one was at fault.  Giving the ring to Decedent’s granddaughter was a mere error in judgment concerning discretionary acts and does not justify surcharge as it resulted in no loss to the estate.

 

3-13.  Objectors mischaracterize the Auditor’s findings.  Auditor did not find that Executor retained any of these items except for the Keurig and that was easily remedied by adding its value back into the estate.

 

  1. Executor’s actions regarding the diamond necklace did not result in negligent loss to Estate. There was ambiguity as to who should retain it and there was no fault shown.  It should be appraised and its value added back into the estate.

 

  1. The April 6, 2021 deposit was not mismanagement. The money from the auction was paid into the estate and the estate suffered no loss.

 

  1. Executor argues that his fee was not excessive. He notes that the Auditor recognized that Executor performed significant work, that there was no mishandling or wrongdoing, and that there was minimal, if any, loss to the Estate.

 

In ruling on these Objections, we are mindful that

[f]indings of fact made by the auditor or auditing judge will not be disturbed by the Orphans’ Court division if the findings accord with the testimony submitted at the audit hearing. The auditor’s findings have the weight and effect of a jury verdict as long as the findings have evidentiary support. On the other hand, where the record of the auditor’s proceedings, as presented in the Orphans’ Court division, reveals that certain facts and circumstances relating to an exception have not been presented to the auditing judge with sufficient particularity, the Orphans’ Court division may recommit the record to the auditing judge for further consideration

 

33 Standard Pennsylvania Practice 2d §158:128.

 

An executor of an estate, as a fiduciary, is required to use such common skill, prudence and caution as a prudent man, under similar circumstances, would exercise in connection with the management of his own estate.  In re Estate of Geniviva, 675 A.2d 396, 310 (Pa. Super. 1996).  A surcharge may be imposed on the executor to compensate the estate for any losses incurred by the executor’s lack of due care.  In re Estate of Geniviva, 675 A.2d 306, 311 (Pa. Super. 1996).  When a surcharge is sought against an executor based on allegations of mismanagement of an estate, the parties seeking the surcharge bear the burden of proving the executor’s wrongful conduct.  Id.  However, when a significant discrepancy appears on the face of the record, the burden shifts to the executor to present exculpatory evidence and thereby avoid the surcharge.  Id.

No significant discrepancy with regard to the issues raised in the Objections appears from the face of the record.  Therefore, the burden to prove the alleged wrongful conduct of Executor fell upon Objectors.  We believe that the Auditor’s recommendations were supported by sound reasoning and that Objectors failed to establish any mismanagement of the Estate or any reason to surcharge Executor.

The sale of the burial plots will add minimal value to the Estate.  Due to his failure to include these in the accounting, it is fair that Executor should pay for the filing of an Amended Inheritance Tax Return.  However, any tax due on that value would have been paid by the Estate regardless and we believe that the Estate should bear the obligation to pay the additional tax.

It appears that there was some confusion regarding the whereabouts of several rings and the disposition of Decedent’s jewelry as no specific bequests were made.  Executor admits that he gave the gold ring with the blue stone and the diamond necklace to his daughter.  We find no issue of mismanagement with regard to Executor giving some of Decedent’s jewelry to her granddaughter with the value of that jewelry being deducted from Executor’s share of the distribution.  This was a discretionary act and the Auditor noted the ambiguity as to who should receive the jewelry.  It appears, however, Objector Galand was to receive the gold ring with the blue stone pursuant to the parties’ Consent agreement.  Therefore, we conclude that the ring ‘s value should be included as an asset of the Estate and the ring should be returned to Galand with  Galand’s distribution decreased by the ring’s $75.00 value.

Auditor also determined that Galand is in possession of the Decedent’s class ring.  Galand had the ring appraised at a value of $130.00.  We believe it is reasonable for Galand to retain the ring.  However, this is an Estate asset which should be included in the accounting and Galand should have this amount deducted from her share of the distribution.

We further accept Auditor’s decision that Executor should retain Decedent’s diamond necklace.  The necklace should be appraised and its value should be included in the accounting, with that amount deducted from Executor’s share of distribution.  It is fair that the Estate should pay for the appraisal as the necklace is an estate asset and the Estate would have been responsible for obtaining an appraisal for its inclusion in the accounting.

The household items, at Nos. 3 through 11 and 13, which are missing from the accounting most likely had little to no true value.  If there was any loss at all to the Estate from their exclusion from the accounting, such loss was minimal. It appears that most were sold with the home, and would have added to the amount received from that sale, or had no value and were discarded.  The only item retained by Executor was the Keurig, and we accept the recommendation that he should retain that item with its value deducted from his share of the distribution.

We also accept Auditor’s determination of no fault on the part of Executor with regard to the disposition of the proceeds from the auction of Decedent’s personal property.  It appears that some of Executor’s personal items were sold at auction at the same time as Estate assets and Executor was paid for all items at the same time.  While Executor’s deposit of the auctioneer’s check for the Estate items into his personal account and his subsequent deposit of that amount into the Estate account was not the ideal way to handle this item, the Estate suffered no loss and the full amount was deposited and made available for distribution to the beneficiaries.   Due to Executor’s correction of this error, we find no basis for a finding of mismanagement or surcharge.  We find no need for further discovery on the co-mingling of any Estate and personal funds as there are no other contentions of this nature.

We also accept the Auditor’s finding that the fees charged by the Executor and the Estate attorney were reasonable and based on the work performed.   The executor of an estate is entitled to such compensation as shall be reasonable and just.  20 Pa.C.S.A. §3537.  The basis for determining whether compensation is reasonable depends upon the value of the services actually rendered.  Geniviva, 675 A.2d at 312-313.  Executors seeking compensation from an estate have the burden of establishing facts which show the reasonableness of their fees and entitlement to the compensation claimed.  Id. at 313.

The auditor determined that these fees were warranted due to the amount of work which was required of Executor and his counsel.  Our review likewise indicates that the settlement of this Estate involved a fair amount of work and consumed a fair amount of time of both Executor and his counsel.  This included taking inventory of personal property, preparing tax returns, arranging for the auction of personal property and the sale of Decedent’s home, and arranging for the disposal of items which were unable to be sold or which had no value.  We believe that Auditor correctly assessed the reasonableness of these fees with regard to the amount of work necessitated by the circumstances and the size of this Estate.

We recognize that this matter was handled in a somewhat unorthodox manner in that we have no record to refer to as an evidentiary hearing was not conducted and the Auditor performed the audit through review of documentation and meetings with the parties and their counsel.  At Oral Argument, it was suggested that we recommit the Objections to the Auditor for the development of a formal record.  We will decline this suggestion.  It appears that none of the parties objected to the matter being handled in this fashion and there does not appear to be any major discrepancy in the facts surrounding the issues raised in the Objections.  Moreover, due to the minimal amount at stake, we do not believe it would be fruitful for any of the parties to spend the additional time and funds that an evidentiary hearing would require at this juncture.  Therefore, with the exception of Objectors’ contentions regarding the gold ring with the blue stone, we will overrule the Objections and confirm the Auditor’s Report in all other aspects.

 

 

 

 

IN THE COURT OF COMMON PLEAS OF LEBANON COUNTY

PENNSYLVANIA

 

ORPHANS’ COURT DIVISION

 

IN RE:  ESTATE OF PATRICIA A.              :       NO. 2019-542

GUNDRUM, Deceased                      :

 

DECREE ABSOLUTE

 

AND NOW, this 11th day of May, 2022, upon consideration of the Objections of Carol L. Wisniewski and Sharon L. Galand to the Report of the Auditor for the Estate, the Briefs submitted by the parties, and after Oral Argument conducted on January 7, 2022, it is hereby Ordered that the Objections are OVERRULED, in part, and SUSTAINED, in part, as follows:

  1. The Objection with regard to the gold ring with the blue stone is SUSTAINED. It is hereby Ordered that the gold ring with the blue stone shall be turned over to Objector Sharon L. Galand.  The ring shall be valued at $75.00 and that amount is to be deducted from Galand’s share of distribution of the Estate assets.
  2. All other Objections are OVERRULED.
  3. All other recommendations of the Auditor’s Report are CONFIRMED AND ADOPTED by the Court.

BY THE COURT:

 

                                                          ____________________________, P.J.

                                                          JOHN C. TYLWALK

 

JCT/jah

 

Cc:  Steve Miller, Esquire/718 Poplar Street/Lebanon, PA  17042

       Paul Bametzreider, Esquire

       Joshua Harshberger, Esquire

       Judith Huber, Esquire/Law Clerk

About the author

Ben has written 999 articles for Lebanon County Legal Journal

Search