Estate of Alexander T. Tscherneff , 203 A.3d 1020 ( 2019 )

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2019 PA Super 25IN RE: ESTATE OF ALEXANDER T. : IN THE SUPERIOR COURT OF
TSCHERNEFF, DECEASED : PENNSYLVANIA
:
:
APPEAL OF: DIMITER B. :
TSCHERNEFF :
:
:
: No. 886 MDA 2018
Appeal from the Order Entered April 30, 2018
In the Court of Common Pleas of Dauphin County Orphans’ Court at
No(s): 2216-0827
BEFORE: LAZARUS, J., OLSON, J., and MUSMANNO, J.
OPINION BY LAZARUS, J.: FILED FEBRUARY 01, 2019
Dimiter B. Tscherneff, Executor of the Will of Alexander T. Tscherneff,
Deceased (“Executor” and “Testator,” respectively), appeals from the order,
entered in the Court of Common Pleas of Dauphin County, Orphans’ Court
Division, which, inter alia, denied Executor’s petition for adjudication and
directed the filing of an amended account to include a B & B Bank account
titled jointly in the names of Executor, in his individual capacity, and Karin
Overby (“Karin”), a daughter of the Testator. Upon careful review, we
reverse.
Testator died on July 12, 2016, leaving a will dated May 13, 1999.
Testator was survived by two sons, Executor and Peter Tscherneff (“Peter”),
and two daughters, Karin and Ingrid Stow (“Ingrid”). Pursuant to the terms
of Testator’s will, Testator left his entire estate to his wife, Margot, whom he
also appointed as Executrix. Margot, however, predeceased him; in that
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event, the terms of his will provided that the estate was to be distributed to
his four children in equal shares and Dimiter was appointed Executor.
During Testator’s lifetime, Dimiter also acted as agent for Testator
pursuant to a power of attorney. In his capacity as agent, Dimiter “made
considerable distributions to himself and his sisters in recognition of their care
for the Testator” during his lifetime. Orphans’ Court Opinion, 4/30/18, at [2].
By the time of Testator’s death, the only asset remaining in his estate was the
balance of a TD Ameritrade account. The B & B Bank account, titled in the
names of Dimiter and Karin, “had been funded with Decedent’s money during
his life and used by Dimiter to pursue Decedent’s needs and wishes.” Id.Letters Testamentary were issued to Dimiter on September 16, 2016.
On July 20, 2017, Executor filed his First and Final Account with Petition for
Adjudication and Statement of Proposed Distribution. The sole asset
accounted for was the TD Ameritrade account valued at $143,238.01. The B
& B Bank account was not included in the account.
On October 27, 2017, Peter filed a petition to remove Dimiter as
Executor, claiming that Dimiter was “mismanaging the Estate assets and
misappropriated Decedent’s assets prior to Decedent’s death.” Petition to
Remove, 10/27/17, at ¶ 3. Dimiter filed an answer on November 21, 2017.
The court held a hearing on the petition on April 2, 2018 and, by order dated
April 13, 2018, denied Peter’s request to remove Dimiter as Executor. Peter
did not appeal that order.
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On April 30, 2018, the court issued a memorandum and order denying
Executor’s petition for adjudication. Relevant to this appeal, the Orphans’
Court ordered that the remaining balance of the TD Ameritrade account be
paid to Peter, rather than divided equally amongst the four siblings as
proposed by Executor in his Statement of Proposed Distribution. The court
further ordered Executor to file an amended account that was to include the
proceeds of the B & B Bank account. In doing so, the court reasoned as
follows:
At the time of the hearing on April 2, 2018, considerable testimony
was provided by Dimiter regarding discussions with [Testator],
[Testator’s] broker, his sisters and brother regarding distributions
of “advance[d] funds” to [Testator’s] children prior to his death.
The [c]ourt finds that [Testator’s] intent that his children share in
his estate in equal share during his lifetime was faithfully followed
by Dimiter acting within his then[-]authority as [Testator’s agent
under a] Power of Attorney. . . . The [c]ourt has determined that
[Testator’s] intent, as evidenced by Dimiter’s distribution of
“advanced funds” acting as [agent under a] Power of Attorney[,]
pursuant to the Will and in view of the testimony produced at the
hearing, is carried out in the distribution of the assets remaining
at the time of his death [to Peter].
Orphans’ Court Opinion, 4/30/18, at [2-3].
Executor filed a notice of appeal to this Court on May 30, 2018, followed
by a Pa.R.A.P. 1925(b) statement of errors complained of on appeal. Executor
raises the following issues for our review:
1. Did the [O]rphans’ [C]ourt err in relying on extrinsic evidence
to determine the testator’s intent, where the language of the will
was clear and unambiguous, and where, rather than carrying out
[T]estator’s express desires and intentions, as set forth in the will,
such determination instead totally frustrated the terms of the will
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and completely altered the scheme of distribution provided for
therein?
2. Did the [O]rphans’ [C]ourt err in modifying the terms of the
will, based solely upon extrinsic evidence concerning events which
took place after [T]estator executed the will, where the [O]rphans’
[C]ourt implicitly concluded that the testator’s intent at the time
of execution was clear and unambiguous, and where the various
events upon which the [O]rphans’ [C]ourt relied took place years
after [T]estator executed the will?
3. Did the [O]rphans’ [C]ourt err in disregarding the clear and
unambiguous meaning of the language of [T]estator’s will,
apparently to accomplish what the [O]rphans’ [C]ourt felt to be
the “fair” result, by treating pre-mortem transfers to certain
residuary legatees as de facto advances in lieu of their respective
shares of [T]estator’s estate?
4. Did the [O]rphans’ [C]ourt err in considering extrinsic evidence
to determine [T]estator’s intent, where construction of the will
was not at issue, and where the [O]rphans’ [C]ourt did not find
nor did any party assert the existence of any patent or latent
ambiguity in the will?
5. Alternatively, assuming arguendo that the [O]rphans’ [C]ourt
found uncertainty or ambiguity in the will, did the [O]rphans’
[C]ourt err in failing to first determine that such uncertainty or
ambiguity existed on the face of the will before relying solely on
extrinsic evidence?
6. Did the [O]rphans’ [C]ourt err in refusing to confirm Executor’s
First and Final Account, presumably based solely on the fact that
the [a]ccount did not include a certain bank account (referred to
by the [O]rphans’ [C]ourt as the “B & B Bank account”), where
such bank account is a non-probate asset, and where [Testator]
was not even a joint owner of such bank account at the time of
his death?
7. In directing Executor to include the B & B Bank account in an
amended First and Final Account, thereby implicitly determining
that the B & B Bank account is an asset of [Testator’s] estate, did
the [O]rphans’ [C]ourt err in reaching a result that is contrary to
the provisions of the Multiple-Party Accounts Act, 20 Pa.C.S.[A.]
§§ 6301-6306?
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8. Alternatively, assuming arguendo that the decedent possessed
a legally cognizable ownership interest in the B & B Bank account
at the time of his death, did the [O]rphans’ [C]ourt err in relying
solely upon its interpretation of the will and [Testator’s]
testamentary intent as the basis for its implied determination that
the B & B Bank account is an asset of the decedent’s estate?
Brief of Appellant, at 4-7 (emphasis in original).
Our standard of review of the findings of an Orphans’ Court is
deferential.
When reviewing a decree entered by the Orphans’ Court, this
Court must determine whether the record is free from legal error
and the court’s factual findings are supported by the evidence.
Because the Orphans’ Court sits as the fact-finder, it determines
the credibility of the witnesses and, on review, we will not reverse
its credibility determinations absent an abuse of that discretion.
However, we are not constrained to give the same deference to
any resulting legal conclusions.
In re Fiedler, 132 A.3d 1010, 1018 (Pa. Super. 2016), quoting In re Estate
of Harrison, 745 A.2d 676, 678–79 (Pa. Super. 2000). The decision of the
Orphans’ Court will not be reversed unless there has been an abuse of
discretion or a fundamental error in applying the correct principles of law. In
re Estate of Luongo, 823 A.2d 942, 951 (Pa. Super. 2003). This Court’s
standard of review of questions of law is de novo, and the scope of review is
plenary, as we may review the entire record in making our determination.
Kripp v. Kripp, 849 A.2d 1159, 1164 n.5 (Pa. 2004).
This matter involves the Orphans’ Court’s interpretation of Testator’s
will and its determination as to Testator’s testamentary intent. Our Supreme
Court has repeatedly stated that
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[t]he testator’s intention is the polestar in the construction of
every will and that intention must be ascertained from the
language and s[c]heme of his entire will together with the
surrounding facts and circumstances; it is not what the Court
thinks he might or would or should have said in the existing
circumstances, or even what the Court thinks he meant to say,
but what is the meaning of his words.
In re Houston's Estate, 201 A.2d 592, 595 (Pa. 1964) (brackets omitted).
Technical rules or canons of construction should be resorted to only if the
language of the will is ambiguous or conflicting or the testator’s intent is for
any reason uncertain. Id. An ambiguity in a will must be found without
reliance on extrinsic evidence before extrinsic evidence is admissible. In re
Kelly's Estate, 373 A.2d 744, 747 (Pa. 1977). A court may not rewrite an
unambiguous will. In re Wilton, 921 A.2d 509, 513 (Pa. Super. 2007).
In addition, in ascertaining the testator’s intention, a will is to be
construed as of the date of its execution. Estate of Sellers, 496 A.2d 1237,
1240 (Pa. Super. 1985). Accordingly, evidence of inter vivos gifts to named
beneficiaries made after the execution of a will may not be considered as
probative of what the testator intended at the time of execution. Id.Executor’s first five assignments of error may be distilled to one core
issue: Whether the Orphans’ Court committed an error of law in considering
extrinsic evidence of Testator’s inter vivos gifts to determine his testamentary
intent. We conclude that it did.
The terms of Testator’s will are clear: the residuary estate is to be
divided equally amongst the four children. Peter did not allege, nor did the
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court find, that the will contained ambiguities, either patent or latent.1
Nevertheless, the Orphans’ Court relied upon extrinsic evidence to determine
the testator’s intent. Specifically, the court looked to events that occurred in
the intervening years between the will’s execution and Testator’s death and
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1 There are two types of ambiguity: patent and latent. In re Estate of
Beisgen, 128 A.2d 52, 55 (Pa. 1956); Krizovensky v. Krizovensky, 624
A.2d 638, 643 (Pa. Super. 1993). This court has described the difference
between patent and latent ambiguity as follows.
A patent ambiguity appears on the face of the [document]
and is a result of defective or obscure language. A latent
ambiguity arises from collateral facts which make the
meaning of a written [document] uncertain, although the
language appears clear on the face of the [document]. To
determine whether there is an ambiguity, it is proper for a
court to hear evidence from both parties and then decide
whether there are objective indications that the terms of the
[document] are subject to differing meanings.
Krizovensky, 624 A.2d at 643. “Where a latent ambiguity exists
we have repeatedly held that parol evidence is admissible to
explain or clarify the ambiguity, irrespective of whether the latent
ambiguity is created by the language of the Will or by extrinsic or
collateral circumstances.” Beisgen, [] 128 A.2d at 55; see also
In re Bloch, [] 625 A.2d 57, 61 ([Pa. Super.] 1993)[]; Estate of
McKenna, [] 489 A.2d 862, 865 ([Pa. Super.] 1985) (where the
court cannot confidently discern the testator’s intent from the will
itself, the court may “inquire into the circumstances of the testator
at the time of execution of his will and other evidence which bears
on intent”). Where a latent ambiguity exists, the court may resort
to parol evidence (such as testimony of the scrivener) to
determine the decedent’s true intent. McKenna, 489 A.2d at 867.
One limitation to the foregoing is that “[e]xtrinsic evidence of
surrounding facts must only relate to the meaning of ambiguous
words of the will. It cannot be received as evidence of testator’s
intention independent of the written words employed.” Beisgen,
[] 128 A.2d at 55.
In re Estate of Schultheis, 747 A.2d 918, 923 (Pa. Super. 2000) (emphasis
added).
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drew conclusions as to how Testator would have wanted his estate distributed
in light of those events. The court reasoned that, because the will provided
that residue be divided equally amongst Testator’s four children, it was
Testator’s global estate-planning goal to benefit his four children equally. As
a result, in light of the inter vivos transfers made by Executor to himself and
his sisters under the power of attorney, the court disregarded the plain
language of the will in an attempt to carry out this presumed goal. In doing
so, the court used extrinsic evidence to create an ambiguity in an otherwise
unambiguous will. However, any ambiguity in a will “must be found without
reliance on extrinsic evidence before extrinsic evidence is admissible.” In re
Kelly's Estate, 373 A.2d a 747 (emphasis added). The court’s reliance on
extrinsic evidence to determine Testator’s intent was impermissible, as the
terms of the will were clear and unambiguous.
Moreover, to the extent the court considered the inter vivos transfers to
Dimiter, Karin, and Ingrid to be advancements against the recipients’
residuary shares, the court also erred. An advancement “is an irrevocable gift
by a parent to a child in anticipation of such child’s future share of the parent’s
estate.” Estate of Allen, 412 A.2d 833, 839 (Pa. 1980). However, the
concept of an advancement, in its strict technical sense, relates exclusively to
cases of intestacy. Id. See 20 Pa.C.S.A. § 2109.1 (“If a person dies intestate
as to all or any part of his estate, property which he gave in his lifetime to an
heir is treated as an advancement against the latter’s share of the estate only
if declared in a writing by the decedent or acknowledged in writing by the heir
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to be an advancement.”). Where a decedent dies testate, and the will does
not refer to advancements, “it is considered that the will extinguishes or
merges all prior advancements. The law presumes that by making such a will
testator disposed of his estate as he desired and with due consideration for
the rights of those to whom advancements had been made.” Estate of Allen,
412 A.2d at 839, quoting Laughlin Estate, 46 A.2d 477, 479 (Pa. 1946).
Here, the will makes no reference to advancements. Thus, although it is clear
that Testator, as expressed by the terms of his will, contemplated equality in
the distribution of his estate amongst his children, it is equally clear that he
did not contemplate that any inter vivos gifts were to be charged against the
recipients’ shares of the residuary estate. Accordingly, it was error for the
court to treat the gifts as de facto advancements.
Although the court may have been motivated by a sense of fairness to
all parties involved, in construing Testator’s will to conform to the court’s belief
as to what it thought Testator “might or would or should have said in the
existing circumstances,” Houston's Estate, 201 A.2d at 595, it committed
an error of law. Testator’s will is clear and unambiguous and, as such, the
estate must be distributed in accordance with the terms thereof.
Executor’s remaining appellate issues all involve the court’s decision to
require the proceeds of the B & B Bank account, jointly titled in Executor’s and
Karin’s names and funded during Testator’s lifetime with Testator’s money, be
included in an amended account. This was also error on the part of the court.
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The question of whether the B & B Bank account was properly
characterized as an asset of Testator’s estate was not raised by any party in
the proceedings before the Orphans’ Court. Peter’s sole filing in the Orphans’
Court was a petition to remove the Executor. The court denied that petition,
see Orphans’ Court Order, 4/13/18, and Peter did not appeal that decision.
Procedurally, the proper mechanism for challenging the Executor’s failure to
include estate assets in the account is to file objections to the account, which
Peter did not do. Nor did he seek an accounting of Executor’s actions as power
of attorney. Moreover, the issue was neither argued at the hearing, nor
briefed by the parties in the court below. Thus, when the court ordered
Executor to file an amended account to include the B & B Bank account, it
acted sua sponte.2 “[I]t has long been held that a court may not raise an
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2 In its memorandum opinion, the Orphans’ Court provided no explanation for
its directive that Executor account for the B & B Bank account as an asset of
the estate, despite the fact that the account was not titled in the name of
Testator at the time of his death. The court merely noted the following:
At the time of Decedent’s death, the only remaining assets were
the balance in a TD Ameritrade account and an account at B & B
Bank in Executor’s and his sister Karin’s names. The B & B Bank
account had been funded with Decedent’s money during his life
and used by Dimiter to pursue Decedent’s needs and wishes. The
B & B Bank funds are not accounted for in the Accounts of
Decedent’s Estate and the proposed distribution presented to the
[c]ourt.
Orphans’ Court Opinion, 4/30/18, at [2]. In light of the court’s silence as to
its reasoning, we can only speculate as to why the court ruled as it did. It is
possible that the court concluded, based upon Executor’s testimony, that the
account was merely a “convenience account,” created for the sole purpose of
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issue sua sponte that does not involve the court’s subject matter jurisdiction.”3
Hertzberg v. Zoning Bd. of Adjustment of City of Pittsburgh, 721 A.2d
43, 46 n.6 (Pa. 1998). Nor should a trial court act as a party’s advocate.
Yount v. Pennsylvania Department of Corrections, 966 A.2d 1115, 1119
(Pa. 2009). By sua sponte deciding that the B & B Bank account was an asset
of the estate when the issue had not been raised by either party, the Orphans’
Court deprived the Executor of an opportunity to be heard and inappropriately
acted as an advocate for Peter. Accordingly, we must reverse.
Order reversed. Case remanded for proceedings consistent with the
dictates of this opinion. Jurisdiction relinquished.
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facilitating payment of Testator’s bills, and that the transfer did not constitute
a completed inter vivos gift to Executor and his sister. It is also possible that
the Court, in its misguided quest to equalize the shares of Testator’s four
children, simply concluded that Peter was entitled to the funds in the B & B
Bank account and acted accordingly. Ultimately, however, the court’s
rationale is irrelevant, as the issue was not properly before it.
3 There are a few discrete, limited non-jurisdictional issues that courts may
raise sua sponte. See, e.g., Commonwealth v. Passaro, 476 A.2d 346,
348 (Pa. 1984) (describing Pennsylvania’s practice of dismissing pending
appeals of escaped prisoners, which court may do sua sponte); Berg v.
Nationwide Mut. Ins. Co., Inc., 6 A.3d 1002, 1015 (Pa. 2010) (“failure to
include issues in Rule 1925(b) statement resulted in ‘automatic’ waiver, which
could be found sua sponte by courts.”); Commonwealth v. Stossel, 17 A.3d
1286, 1290 (Pa. Super. 2011) (Superior Court has authority to consider sua
sponte failure of trial court to conduct Grazier hearing to ensure that a
defendant has knowingly and voluntarily waived his right to counsel for his
first PCRA petition); Commonwealth v. Wolfe, 106 A.3d 800, 801 (Pa.
Super. 2014) (legality of sentence may be raised by Court sua sponte).
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 2/01/2019
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