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Pennsylvania Orphans’ Court 101: All the Basics You Need to Know Before Venturing In
When I first meet any client about an Orphans’ Court matter, I start with a brief explanation about this unique court system and how its judges think. It’s important to grasp these basic concepts from the beginning of each Orphans’ Court situation, so that it’s easy to understand what is happening, when it is happening, and why. For my clients now reading this piece, this basic “primer” will also help you to understand why I may recommend certain actions along the way.
“Courts of Law” vs. “Courts of Equity”
From the birth of our court system until 1968, Pennsylvania’s state trial courts (our “Courts of Common Pleas”) were divided into “Courts of Law” and “Courts of Equity.” Whether you ended up in a Court of Law or a Court of Equity depended on the type of relief you were seeking. Beginning centuries ago in England, courts “at law” dealt with actions involving claims of money damages (think breach of contract cases or personal injury cases). Actions “at equity” involved claims for legal relief not involving monetary damages (think divorce/custody of children or disputes between joint owners of land about whether one owner can build a house on that land).
The Orphans’ Court
The Orphans’ Court (named because of its historical role as the protector of “widows and orphans”) has always been its own separate “Court of Equity.” It has its own rules, procedures, and common law (judicial decisions) developed over centuries. Folks go to the Orphans’ Court to resolve disputes about estates, trusts, guardianships for incapacitated persons, and issues related to the conduct (or misconduct) of agents under powers of attorney.
In 1968, Pennsylvania formally merged its “Law” and “Equity” courts into one unitary Court known as the Court of Common Pleas. The Orphans’ Court is now a “division” of the Court of Common Pleas. The fact that the Orphans’ Court is a separate “division” of the Court of Common Pleas in any given county highlights the fact that the Orphans’ Court is fundamentally different and separate from the Civil Division of the Court of Common Pleas – the court where most folks involved in litigation end up.
Why Am I in the Orphans’ Court?
In my very first blog article, I discussed in more detail the various kinds of cases that end up in the Orphans’ Court. (You can read that blog post here.)
Although many Orphans’ Court situations arise out of someone’s illness, aging, or dementia, if you find yourself in the Orphans’ Court, then that probably means that something went wrong with someone’s money.
Maybe your mom is experiencing dementia, and one of her children has stolen some of her money, whether acting as her Agent under a Power of Attorney or simply by cunning or trickery. Maybe your dad has died, but he left his entire estate to an exotic dancer and nothing to his children. Maybe you are the beneficiary of a trust or an estate, and you receive in the mail an Account filed by the Executor or Trustee, in which that fiduciary details every dollar in and every dollar out of the estate or trust. That document , however, arrives in a format that prevents most ordinary human beings from figuring out that the Executor or Trustee made critical mistakes or paid herself or her counsel way too much money.
As I often sum it up when people ask me what I do for a living, I practice at the fascinating and often fiendish intersection of family, sickness, death and money. These are the types of cases that are handled by the Orphans’ Court within each county of Pennsylvania.
Your Orphans’ Court Matter is Not Remotely Unique
Folks have been fighting in court about sick and dead people and their assets for almost as long as people have been dying. So, although this might be your first trip into the Orphans’ Court, and although every family is of course different and special in its own way, please know and accept the reality that the Orphans’ Court has seen every type of case there is, including yours. The names, of course, change, and every family and every estate planning document and situation is, of course, unique to each Orphans’ Court matter, but trust me when I tell you that the judges and experienced practitioners of the Orphans’ Court have already seen your type of case countless times.
Do I have an “Estate” Even When I am Alive?
We think about “estates” as something that beneficiaries receive when a person dies. But every single person on earth has an “estate” during her lifetime. Your “estate” is everything that you own – however it is titled – and even if your “estate” has no real dollar value. Maybe the only value in your personal estate today is your collection of Star Wars action figures. Maybe that collection has dollar value. But even if worthless from a dollars and cents perspective, those action figures have emotional significance and value to you. If you were to die tomorrow, then you probably know who you would like to receive them. And you might “give someone her inheritance early” by handing over a piece of your personal estate – say one or more of those Star Wars action figures –while you are still alive to see her face light up when you hand them to her.
Although Orphans’ Court litigation, then, often involves the estates of dead people, we also often litigate about the “estates” of folks who are very much alive. An Agent under a Power of Attorney, for example, must account to his principal (the person for whom the Agent is acting) at any time that the principal asks – especially during the principal’s lifetime when the stealing can still be stopped.
Similarly, when an Orphans’ Court judge concludes that a person is legally incapacitated, then the judge appoints a Guardian of the Person (who makes medical and living decisions) and a Guardian of the Estate (who handles the money). They are sometimes, but not always, one person. If the sum of money is large or the financial talents of the Guardian of the Person are questionable, then the Orphans’ Court will let one person handle the medical side of things and another person (or even a bank) handle the money side of things. Guardians of the Estate must file annual reports explaining what they did with the money each year, and Guardians of the Estate can be compelled to file a complete and formal Account at any time.
“Personal” vs. “Subject Matter” (In Rem) Jurisdiction Explained in Two Paragraphs
As a law school student at Temple University in the late 1980s, I recall putting toothpicks into my eyes when learning about personal jurisdiction vs. subject matter/”in rem” jurisdiction (no offense intended, Professor Greenstein). Having thought a lot about those concepts in the ensuing decades, they boil down to this: most Courts have jurisdiction (the legal right, power, and authority) to decide cases because one person alleges that another person did something wrong and caused financial harm. He breached a contract. She ran me over with her car. He sold me counterfeit tickets to the Super Bowl. You get it.
But the Orphans’ Court is different. The source of the Orphans’ Court’s jurisdiction is the money – the “Estate” of the alive or dead person at issue. “In rem” is Latin for “about a thing.” The Orphans’ Court has jurisdiction not over the people involved, but over the money – the “thing.”
So, Do I “Sue” Anyone in the Orphans’ Court?
People do not enter the Orphans’ Court by “suing” someone. Instead, they enter it by either filing a Petition or responding to a Petition filed by someone else. And although the Petition may ask one person to come into the Orphans’ Court and explain him or herself, the Petition is not filed “against” anyone. Instead, a Petition is more of a request to come into the Court and explain something in question. There are no plaintiffs or defendants. Instead, there are Petitioners and Respondents. Perhaps more importantly, every person with an interest in a particular estate or trust (eg, all beneficiaries) will be identified as Interested Parties who will have an opportunity to participate in the proceeding.
Every Petition in the Orphans’ Court is about a fund of money in the hands of a fiduciary but controlled ultimately by the Orphans’ Court. The point of the Petition—and the objective of the Orphans’ Court judges— is to ensure that the fund of money at issue is in the correct amount and ends up in the correct hands.
In the Orphans’ Court, then, our papers are never captioned as “Joe Smith vs. Suzy Smith.” Instead, in the Orphans’ Court we file papers asking people who have been holding money to explain what they did with that money, or we file Petitions asking the Court to rule that our client is entitled to some or all of the money at issue.
The Orphans’ Court as Protector and Defender of “The Fund”
The Orphans’ Court cares about and focuses on that fund of money more than anything else. I often tell my clients, the Orphans’ Court judge cares about your family in the same broad sense that anyone cares about anyone else’s family. But the Orphans’ Court judges don’t actually care whether their rulings will help put your broken family back together or “right a wrong for Mom” in the same way you might wish.
No, indeed. Instead, the Orphans’ Court judge is the ultimate defender and protector of the fund in question, and the Orphans’ Court will protect that fund and ensure that the fund is distributed to the correct beneficiary under the law without regard to anyone’s “feelings” and without regard to anyone’s personal perceptions of “what is right under the circumstances.”
What is a “Fiduciary” Anyway?
A fiduciary holds money or power for the benefit of another person. In the Orphans’ Court, the fiduciaries we deal with include: Executors or Administrators of Estates, Agents under a Power of Attorney, Guardians of a Person or Estate, or Trustees of a Trust. Fiduciaries are expected and required to act in the best interests not of themselves, but of the folks who empowered them and of their beneficiaries. A fiduciary holds a position of trust.
As Ronald Reagan once famously intoned, however, “trust, but verify.”
The most fundamental way to verify that a fiduciary is complying with his or her obligations is to force that fiduciary to file an “Account.”
The Critical Importance of the Fiduciary Account
Almost nothing important happens in the Orphans’ Court unless and until the fiduciary files an Account. Why? An Account is like a giant spreadsheet showing every dollar in and every dollar out while the fiduciary controlled the money. Unless and until we see that Account, then we won’t necessarily even know where to begin examining the situation. Beneficiaries need not figure out for themselves what happened. The fiduciary must tell the beneficiaries – and the Orphans’ Court – exactly what happened, when, and why with the fund. Fiduciaries hold positions of trust, after all. And anyone who can’t explain to you immediately and with receipts and bank statements exactly what they did with every dollar they ever held in a fiduciary capacity should be fired immediately.
We don’t always learn from an Account exactly what happened. And some treacherous fiduciaries file the dreaded “Zero Account” in which they contend that they “never acted” (usually, as Agent) and therefore cannot be required to “account” to anyone. Ah yes, Mr. Badguy, I see, your 94-year-old mother transferred all of her assets electronically into the names of your children but you never touched the money and had nothing to do with that. Very interesting.
But let’s assume for today’s purposes that Badguy’s Account as filed with the Orphans’ Court reveals that Badguy in fact pocketed the dead person’s money/gave the dead person’s money away, or engaged in any of the hundreds of different ways that people steal from each other. The beneficiaries of the Estate will file Objections to that Account, cataloguing Badguy’s financial sins. And if the beneficiaries are correct, then the Orphans’ Court judge will eventually force Badguy to pay money into the Estate, or to re-title assets back into the name of the Estate. The fund will be made whole. When a fiduciary steals, then the Orphans’ Court will force the fiduciary (and sometimes the fiduciary’s counsel) to make the fund whole by taking money out of their pockets and putting that money back into the Estate. Remember: the Orphans Court judge is always focused on making the fund in question whole and on ensuring that is distributed to the intended beneficiaries.
Follow the Money
In many Orphans’ Court matters—and especially the many fiduciary misconduct Orphans’ Court matters we handle at Smith Kane Holman, LLC—the underlying passions run high, and the facts are complicated. It is often especially complicated to “follow the money” and other assets which used to belong to a dead person. In a typical case, those assets should have been part of that dead person’s Estate but were instead stolen before death. By engaging in electronic fund transfers from the comfort of their own homes, an Agent under a Power of Attorney can effectively steal or give assets away to someone else by changing a beneficiary designation or re-titling a bank account from the dead person’s name alone into the name of the “helpful” Agent or someone else, for example.
We conduct financial autopsies at Smith Kane Holman, LLC, because your bank accounts die with you. But your bank statements live for years in the files of the banks we subpoena. Any given wrongdoer may have done a great job of hiding his thievery from his mom or his siblings when mom was alive. But death equalizes everything. Death impacts control. Death shuts off exit lanes, and all roads lead to the Orphans’ Court. We will find and expose in the Orphans’ Court the evidence of a wrongdoer’s treachery, and the Orphans’ Court will make that individual pay for their financial sins against the fund.
But My Case Isn’t About the Money – It’s Really “All About Mom”
Although most folks embroiled in Orphans’ Court situations may proclaim that their fight really “isn’t about the money” or that they are “truly and only” focused on “Dad’s best interests” or are “only trying to accomplish what Mom wanted,” when you get right down to it, the fight is almost always about the money. And there is nothing wrong with that!
My Orphans’ Court experience teaches me to find nothing wrong when a person loves both Mom and her money and wants to ensure that both live long and happy lives and that Mom’s money ends up exactly where she wants/wanted it to go. You must understand, however, that Orphans’ Court judges hear testimony every day that “this whole thing is all about my Mom,” in cases where that is obviously not true. Please pardon the Orphans’ Court’s skepticism, then, of those who paint themselves as seeking only justice “for Mom” or for anyone other than themselves. Even when all litigants truly do love Mom, the Orphans’ Court will keep everyone focused at all times on the money, because “justice for Mom” is ephemeral. Dollars and cents are real, and the ultimate focus of the Orphans’ Court judges.
If I “Win” in the Orphans’ Court, Will Anyone Write Me a Check for My Mental Anguish?
Except in extraordinary cases, Mr. Badguy never writes a personal check or transfers an asset to an individual beneficiary, no matter what he did. Because the Orphans’ Court focuses only on protecting the fund, and ensuring that someone replenishes the fund to the correct amount. The Orphans’ Court does not care, for example, that you suffered mental anguish when you learned after your mom died that your sister, acting as Agent under a Power of Attorney, looted your mom’s bank account and changed all of her life insurance beneficiary designations to benefit herself. The Orphans’ Court, an In Rem jurisdiction Court, cares only about protecting the fund and ensuring that money is right.
We do not seek and the law prohibits us from recovering “money damages” in the Orphans’ Court beyond the money damages necessary to ensure that the fund is restored to the correct amount. We do not have “punitive damages” in the Orphans’ Court either. The thief caught red-handed in the Orphans’ Court (and sometimes even the thief’s lawyer) will be forced to pay money into the fund and perhaps even forced to pay my law firm’s legal fees and costs to ensure that the fund is right and that my client did not lose money for having protected the fund from a predator. But the Orphans’ Court does not impose further financial punishment even on proven and quite horrible thieves (at least not yet).
The Critically Important “Equity Powers” of the Orphans’ Court
Orphans’ Court judges wield extraordinary power over the fiduciaries who appear before them and over the fiduciary funds that these judges oversee and protect. The source of that extraordinary power? As mentioned earlier, the Orphans’ Court is a “Court of Equity.”
As noted in an early Orphans’ Court opinion, an Orphans’ Court Judge can ignore the facts and ignore the law if strictly applying the law would create an “inequitable result,” because the Orphans’ Court Judge’s singular obligation is to ensure an “equitable” outcome of any given situation. See, e.g. In re: Cave’s Estate, 26 Pa. D&C 295 (1936) (“Since the Orphans’ Court is a court of equity, it administers the law with great informality, and rules of procedure which relate only to the usual methods of practice will not be allowed to become the means of working an injustice.”).
Put Your Thinking Cap On, and Stay Tuned
Wow. Think about that one for a while, because until you really wrap your head around the extraordinary power of each and every individual Orphans’ Court judge, then you will never understand Orphans’ Court litigation.
I will soon post about some recent Orphans’ Court opinions in which the judges demonstrated the extraordinary power they wield to set things straight – no matter how hard any given person or lawyer tries to keep things confused.
Watch this blog for further updates. In the meantime, if you need an Orphans’ Court litigator, I invite you to contact me at firstname.lastname@example.org or by phone at 610-518-4909.