IMO the Estate of Evelyn Chambers

COURT OF CHANCERY
OF THE
STATE OF DELAWARE
SELENA E. MOLINA
MASTER IN CHANCERY
LEONARD L. WILLIAMS JUSTICE CENTER
500 NORTH KING STREET, SUITE 11400
WILMINGTON, DE 19801-3734
Final Report: June 12, 2020
Draft Report: May 29, 2020
Date Submitted: February 12, 2020
Victoria D. Chambers, pro se James D. Chambers, pro se
3 Paxton Lane 511 North Union Street, Apt. 3I
Bear, DE 19701 Wilmington, DE 19805
Sheldon S. Chambers, pro se
1332 Goldeneye Drive
New Castle, DE 19720
Re: IMO the Estate of Evelynn Chambers
Register of Wills Folio No. 168119
Dear Parties:
Pending before me are exceptions to an estate accounting. The
exceptants contend that the personal representative, their brother, failed to
provide sufficient information in the first accounting, misstated the nature and
value of the estate as well as the debts of the estate, and misused estate assets
in his administration. The personal representative denies any deficiencies or
improprieties and seeks approval of the final accounting, as is.
Register of Wills Folio No. 168119
June 12, 2020
Page 2
In this post-trial final report, I find no overarching mismanagement of
the estate, nor impermissible use of estate property by the personal
representative. But I do find that the personal representative erred in failing to
properly utilize a pension designated for funeral expenses and the estate
suffered as a result. Thus, I recommend that the personal representative be
surcharged for the misapplied pension but that the remaining exceptions be
overruled. This is my final report1
I. BACKGROUND 2
Evelyn Chambers (“Decedent”) died on November 13, 2017. 3 She is
survived by three children, Sheldon Scott Chambers, Victoria D. Chambers,
and James D. Chambers, Jr. 4 Following Decedent’s death, Sheldon Scott
Chambers (the “Personal Representative”), initiated probate proceedings in the
New Castle County Register of Wills under a will dated August 30, 2000.5
1
This report makes the same sustantive findings and recommendations as my May 29, 2020
draft report to which no exceptions were filed.
2
The facts in this report reflect my findings based on the record developed at trial held on
February 12, 2020. I grant the evidence the weight and credibility I find it deserves.
Citations to the trial transcript are in the form “Tr. #.” Trial exhibits are cited as “PR Ex.
#.”
3
Docket Item (“D.I.”) 1.
4
Id.
5
D.I. 2.
Register of Wills Folio No. 168119
June 12, 2020
Page 3
Letters were issued to the Personal Representative on December 8, 2017,6 and
he filed an inventory of the estate on December 26, 2017 and a first accounting
on March 29, 2019 (the “First Accounting”).7 A proposed final accounting
was filed on May 9, 2019 (the “Final Accounting”).8
On or about May 7, 2019, Victoria D. Chambers and James D.
Chambers, Jr. (the “Exceptants”), filed exceptions to the First Accounting pro
se. 9 The Exceptants took issue with (1) the format the Personal Representative
used to list expenditures and the representative receipts provided; (2) failure
to include information related to Decedent’s home in the accounting; (3)
failure to use the State Employee Pension Plan benefit toward Decedent’s
funeral expenses; and (4) the attorneys’ fees and expenses incurred by the
Personal Representative and charged to the estate. 10 The exceptions apply
6
D.I. 1. I presided over a related civil action challenging the validity of the will admitted
to probate, among other things. See In Re Evelyn Chambers, C.A. No. 2018-0630-SEM
(Del. Ch.). The claims were dismissed as time-barred and for failure to state claim on April
11, 2019 and September 12, 2019, respectively. See id. at D.I. 25, 45.
7
D.I. 6, 19-28.
8
See D.I. 34.
9
See D.I. 35.
10
Id. The Exceptants raised a number of additional concerns at trial including (1) alleged
entitlement to payment from the estate for caregiving services provided to Decedent and
(2) general allegations of improper motivations behind the Personal Representative’s
actions and his failure to consult with the Exceptants during his administration. See, e.g.,
Tr. 20:5-20, 24:7-12. This decision, however, focuses on the exceptions that were timely
identified; those raised for the first time at trial should be overruled as untimely. See 12
Del. C. § 2302(d) (setting forth a three (3) month deadline for exceptions).
Register of Wills Folio No. 168119
June 12, 2020
Page 4
equally to the Final Accounting, which is substantially similar to the First
Accounting. The Personal Representative responded to the exceptions on June
24, 2019, denying any wrongdoing and attesting that the First Accounting was
accurate, the Personal Representative performed his duties appropriately, and
the Final Accounting should be approved. 11 Trial on the exceptions was held
on February 12, 2020. 12
II. ANALYSIS
The Personal Representative serves in a fiduciary capacity and is
“responsible for compiling the inventory of Decedent’s estate, managing the
13
Decedent’s assets, and paying Decedent’s debts.” The Personal
Representative “has a duty of loyalty requiring [him] to act, at all times, in the
best interests of the estate”14 and is required to file accountings with the Court
with copies provided to all estate beneficiaries.
With any estate accounting filed, heirs and beneficiaries are provided an
opportunity to object to all or part of the accounting through exceptions.
“[T]he Delaware Constitution provides that when exceptions are heard by the
11
D.I. 36.
12
See D.I. 39.
13
Dixon v. Joyner, 2014 WL 3495904, at *3 (Del. Ch. July 14, 2014).
14
In re Estate of Rose, 2019 WL 2996887, at *3 (Del. Ch. July 9, 2019).
Register of Wills Folio No. 168119
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Court, ‘the account shall be adjusted and settled according to the right of the
matter and the law of the land.’” 15 Under Court of Chancery Rule 198, “the
personal representative bears the initial burden of demonstrating that the
account was properly prepared.”16 “That burden shifts, however, where the
exceptant seeks a surcharge. In those instances, the exceptant ‘must
demonstrate affirmatively that a surcharge is warranted.’” 17
A. The First Accounting and Final Accounting Are Sufficiently
Itemized.
The Exceptants contend that the Personal Representative failed to
properly itemize the estate expenses in, and did not attach sufficient receipts
to, the First Accounting. I disagree. The First Accounting and Final
Accounting both list the expenses by category (e.g., administrative expenses)
and then break down, within each category, the expenses by payee and total
amount. Although the Personal Representative could have been more detailed
by listing expenses bill-by-bill, there is no requirement that he do so, insofar
15
In re Estate of Rich, 2013 WL 5966273, at *1 (Del. Ch. Oct. 29, 2013) (quoting Del. Const.,
Art. IV, § 32, ¶ 2, cls. 3 & 4).
16
Id.
17
In re Estate of Marvel, 2018 WL 4762379, at *2 (Del. Ch. Oct. 1, 2018) (quoting In re Estate
of Stepnowski, 2000 WL 713769, at *1 n.1 (Del. Ch. May 2, 2000)).
Register of Wills Folio No. 168119
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as the format he chose accurately and fully represented the expenses of the
estate. It did.
Sufficient supporting documentation was also attached to the First
Accounting and incorporated into the Final Accounting. Again, although
attaching each and every invoice or bill may have been wiser, the Personal
Representative provided sufficient support for the expenses with his
representative samples; particularly for the recurring, non-fluctuating charges.
The Personal Representative is held only to a standard of “ordinary care,
prudence, skill and diligence” is his duties and he has met that standard in the
First Accounting and Final Accounting.18 Thus, the itemization exceptions
should be overruled.
B. Decedent’s Home Passed Outside the Estate.
The Exceptants contend that the Personal Representative erred or acted
improperly by failing to list Decedent’s home as an asset of the estate and
account for its sale and related mortgage pay off. The Exceptants’ concerns,
however, rest on a fundamental misunderstanding: Decedent’s home was not
part of the estate. The home passed, under Decedent’s will, to the Personal
18
See Del. Trust Co. v. McCune, 80 A.2d 507, 511 (Del. Ch. May 3, 1951) (citing In re Estate
of Spicer, 120 A. 90, 92 (Del. Orph. 1923)).
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Representative. 19 It passed outside of the estate and, as such, the Personal
Representative did not need to account for it. Nor did the Personal
Representative need to account for the mortgage, which he presumably
assumed, because it is no longer listed as a debt of the estate.20
C. The State Employee Pension Plan Should Have Been Used To
Pay The Funeral Expenses.
The Exceptants contend that the Personal Representative improperly
charged funeral expenses to the estate while at the same time retaining a burial
benefit from the State of Delaware meant to cover such expenses. Decedent
had a State Employee Pension Plan that designed $7,000.00 to be used for
funeral expenses.21 Rather than apply the benefits as they were designated,
the Personal Representative accepted the benefit as if he were the personal
19
See D.I. 2 ¶ III. At trial, the Exceptants raised concerns about how Decedent came to
acquire the home and they lobbed allegations of impropriety at the Personal Representative.
See, e.g., Tr. 18:11-19; 29:19-23. Even if true, however, the Decedent’s will unequivocally
bequeaths the home to the Personal Representative and this Court will not rewrite that even
if, in historical context, it seems unwise, inequitable, or mistaken. See Miller v. Equitable
Tr. Co., 32 A.2d 431, 434 (Del. 1943) (addressing the rules of interpreting a will and
explaining this Court is “bound thereby and the power is lacking for us to make a new will
for the testator, or by some semblance disguised under the theory of construction invoke an
idea that might to our minds be a more equitable scheme of disposition”).
20
The exceptions also contained concerns about mortgage payments but it is unclear what,
exactly, the Exceptants contested and they did not press this issue at trial. As such, any
concerns were either waived or should fail in light of the proof submitted by the Personal
Representative that he properly administered the estate.
21
See PR Ex. 1.
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beneficiary and charged the funeral expenses, in full, to the estate. 22 He should
not have done so. The Personal Representative owed a duty to respect and
execute Decedent’s wishes, including her plan for the State Employee Pension
benefit. The Personal Representative failed to do so in accepting the benefit
personally, rather than using it for its intended purpose. A surcharge is the
appropriate remedy.
“A surcharge is, essentially, a sanction against a personal representative
requiring the personal representative to fund (or refund) the estate because the
personal representative improperly or poorly handled the estate, engaged in
selfdealing, or improperly depleted estate assets.” 23 Here, because the
Personal Representative retained the benefit, harming the estate, which in turn
incurred greater funeral expenses, he should be surcharged for the full amount
improperly retained: $7,000.00. The Personal Representative should repay the
22
Technically, the Personal Representative arranged for payment of the funeral expenses
from a separate insurance policy and then sought reimbursement, in full, from the estate.
See Tr. 56-65. Either way, the result is the same: the estate’s coffers will pay for the funeral
expenses in full. See infra n.23.
23
In re Estate of Clark, 2019 WL 3022904, at *7 (Del. Ch. July 9, 2019). “[S]urcharges
are normally tailored to remedy the specific harm caused, rather than to punish the personal
representative.” Id.
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estate $7,000.00 and prepare and file an amended accounting to reflect the
repayment and its effect on the estate. 24
D. The Attorneys’ Fees Should Be Approved.
The Exceptants contend that the Personal Representative improperly
charged the estate for his personal attorneys’ fees and expenses. “[F]ees paid
to the attorney for the personal representative are considered an expense of the
estate.”25 “The rational[e] behind this rule is that the personal representative
and his or her attorney is providing a service to the estate and its beneficiaries
by properly and efficiently administering the estate.” 26 But, the Personal
Representative still bears the burden of proving the attorneys’ fees and
expenses were relevant, reasonable, and timely. 27 I find the Personal
Representative has met his burden.
24
The Personal Representative explained at trial that the funeral expenses listed on the Final
Accounting represent a future reimbursement to the Personal Representative and his brother
(the two beneficiaries of the insurance policy used to pay the expenses upfront) in equal
shares. Tr. 6-13. Thus, the only appropriate recipient of the surcharge ordered herein is
the estate.
25
In re Pusey, 1997 WL 311503, at *3 (Del. Ch. May 23, 1997).
26
Id.; see also Davis v. Rawlins, 2 W.W. Harr. 125, 125-126 (Del. 1836).
27
See In re Rich, 2013 WL 5966273, at *4 (Del. Ch. Oct. 29, 2013) (explaining this Court
utilizes a three-factor test to analyze “the appropriateness of [accounting] deductions:
relevance, reasonableness, and timeliness”).
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The Personal Representative has presented sufficient documentation of
the attorneys’ fees and expenses incurred, which included estate
administration fees and fees incurred in defending a civil action filed by the
Exceptants.28 All of these fees were properly charged to the estate; they were
incurred by the Personal Representative in his fiduciary capacity and provided
a service to the estate. Regarding the civil action, the Personal Representative
was named in that action in his capacity as the personal representative of the
estate and the attorneys’ fees incurred worked a benefit to the estate in
defending against the untimely will contest and permitting administration to
proceed. Further, the Personal Representative arguably “saved” the estate
additional attorneys’ fees and expenses by requesting that his attorney
withdraw before trial in this action; absent withdrawal, the attorneys’ fees and
expenses would have increased. I find that the attorneys’ fees and expenses
incurred by counsel to the Personal Representative were relevant, reasonable,
and timely. 29
28
PR Ex. 2.
29
See In re Rich, 2013 WL 5966273, at *4.
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III. CONCLUSION
For the foregoing reasons, I recommend that the exceptions be overruled
in part and sustained in part. Regarding the former, I find the Personal
Representative has met his burden of proving the estate was, generally
speaking, properly administered. On the latter, I find that the Personal
Representative improperly retained a pension benefit that should have flowed
through the estate to defray the cost of funeral expenses. I recommend that the
Personal Representative be surcharged for his retention of that benefit in the
amount of $7,000.00. The surcharge should be paid within sixty (60) days of
this report becoming final.
Once the surcharge is paid, I recommend that the Personal
Representative file a revised accounting reflecting his payment and its effect
on the estate. The amended accounting will be subject to the standard notice
and exception process, although any exceptions that were, or could have been,
raised in response to the First Accounting or Final Accounting may not be
raised in response to the amended accounting.
Register of Wills Folio No. 168119
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This is a final report and exceptions may be taken in accordance with
Court of Chancery Rule 144.
Respectfully submitted,
/s/ Selena E. Molina
Master in Chancery