Philadelphia Court Gives Priority to Outstanding Child Support Claims Over Distributions to Beneficiaries

          A recent Philadelphia case focused on the liability the executrix may face for improper distribution of the estate proceeds. It also considered exceptions to the "spendthrift provisions" contained in a will or trust. In this case, Roy Creamer Sr., deceased, had a will attempting to distribute the proceeds of his house to his son Roy Jr., who  also had an outstanding $16,289.87 child support obligation. The mother of the children who were owed support filed a formal claim against the estate, saying that the children were entitled to the bequest before Roy Jr.  Roy Sr., the decedent, also failed to provide for his wife in his will, so she filed a spousal election against the estate.

          The executor initially dishonored the claim for child support, stating that only a creditor of the decedent can bring a claim against his estate, and that a creditor of a beneficiary had no standing to bring any claim at all. Furthermore, said the executor, the will contained a "spendthrift provision" which protected claims of beneficiaries against creditors.

          Note #1: each of our clients, and many others who own a will drafted by an attorney, will notice a clause under "Powers of the Personal Representative" which permit them to make payments to any beneficiary without any duty to see to the proper allocation or application of the funds paid. In many cases a trust will contain a provision that the trustee may shield the principle from claims of creditors of the beneficiary. These are similar to "spendthrift provisions."

         Note #2: No matter what a will says, a decedent may not disinherit a spouse. Under Title 20, Section 2203 of Pennsylvania laws, a spouse is entitled to at least 1/3 of the estate. However, in making this election, life insurance, annuities and other payments outside of probate are taken into consideration in computing the 1/3 share.

         In this case the Philadelphia Orphans Court refused to approve the executor's proposed distribution of the estate. The court stated that the children who were owed child support had rights to contest the distribution of the estate to the beneficiary who owed the support obligation. The court went on to say that they also might rights against the spouse taking the 1/3 elective share, and the children might have a right to have a guardian appointed for them to pursue their claim. The court postponed the settling of the estate until the parties determined if there was enough money in the estate to pay the child support obligations, and to see if the parties could resolve the matter without resort to litigation. The case is In re Estate of Creamer, Court of Common Pleas of Philadelphia 14-1760, and the 16 page decision was published on September 30, 2014.

 Stay well until the next post:

Bob Gasparro, Esq.

In Bizzare Case Before PA Supreme Court, Beneficiaries Sue the Register of Wills

Consider the case of Andre Leonti, a man who died Fayette County PA without a will. The hospital refused to release his body to his lifelong  friend, Cheryl Keefer, until she produced evidence of her authority to administer his estate. She had no luck with the Fayette County Register of Wills, who would not appoint her administrator because she could not establish that she was next of kin. So she next petitioned to the Orphans Court to be appointed administrator of the estate so she could arrange a funeral and burial for her friend, and use money from his estate to pay for the service. Although Cheryl held a power of attorney for Mr. Leonti, that expired upon his death. The court ordered the Register of Wills to appoint her administrator of the Andre’s estate and ordered the hospital to release the body to her for burial. Andre’s estate was worth about $ 242,000.  Normally the Register of Wills would require Ms. Keefer to post a bond before administering the estate, but the court order did not mention any bond requirements.

 As often happens, a distant cousin of the decedent living in Texas became aware of his possible inheritance, so he sought to have Cheryl Keefer removed as administrator and the estate, and he appointed in her place. Ms. Keefer not only refused to turn over the assets, but she also disappeared. Undaunted by this setback, the distant cousin sued the Register of Wills for failing to obtain the bond. 

Normally a government employee is exempt from suit under the doctrine of “governmental immunity,” and the Register of Wills of Fayette County thought so, too. The Pennsylvania Supreme Court held otherwise and stated that the Register of Wills of Fayette County might be liable because of a special Pennsylvania statute governing when the Register of Wills must require a bond, and they sent the case back down to the lower court for more fact finding. 

If you are appointed to administer an estate, do you need to obtain a bond? Would you qualify for a bond? Most wills contain a boilerplate provision stating the executor (also known as the “personal representative”) need not file a bond.  It is there because of  a Pennsylvania Law, similar to the laws of other states,which direct the Register of Wills to obtain a bond from a personal representative, unless waived in the will. The law, contained in Title 20 Pa. C.S.A. Section 3171 to 3175,  is too complicated to discuss in detail, but in most cases, an out of state personal representative must obtain a bond before they can administer an estate. Since they will control the checkbook, and have access to all of the funds of the estate, the bond is intended to secure faithful performance of their duties.  A bond can usually be obtained from an insurance company and most attorneys who do estate work, such as our firm, have access to companies who issue bonds. 

The case brings up a more fundamental question for anyone who drafts a will. Should you require that the representative obtain a bond? It is not impossible to purchase a bond, and it may protect your heirs. It would be pointless if the person you appoint as your personal representative is also your sole beneficiary, but it would make sense if your personal representative is a personal friend, yet not an heir of your estate. 

Without a will, there is no choice in the decision at all, and the laws stated above control. Was Cheryl Keefer a close friend of the decedent who was shortchanged because the decedent did not leave a will? She was appointed his agent under his power of attorney, and she seemed to be the only person interested in arranging decedent’s funeral, since his relatives only stepped forward when they found there was money to be claimed. Or, was she a neighbor who saw an opportunity to convince the decedent to appoint her agent under his power of attorney, and later pocket the decedent’s money by opening up an estate in his name and getting appointed administrator? We do not know enough to decide either wasy, but the case illustrates the importance of having a will.  

Have you ever had experience with getting a bond? If so, comment below.

Stay will until the next post.

Bob Gasparro