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Schnader Achieves an Important Victory for a Firm Client in a Landmark Trusts & Estates Case

08/27/2009

On August 24, the Superior Court of Pennsylvania issued a major decision in the field of Pennsylvania trust law. In Estate of Anna E. Fridenberg, Deceased, the court held that corporate fiduciaries are no longer bound by the long-discredited “rule of Williamson’s Estate,” a 1951 Pennsylvania Supreme Court decision which had forbidden fiduciaries from receiving compensation for services as a trustee in certain trusts created in the first half of the twentieth century or earlier. Before this case, the Pennsylvania legislature had sought for many years to repeal the Williamson rule, but the Supreme Court had refused to permit any proposed legislation to take effect. In Fridenberg, a split panel allowed for the legislative repeal to apply retroactively and do away with the Williamson rule. The Legal Intelligencer published an article about the case titled “Banks May Collect Fees from Principal of Long-Term Trusts” on August 27, 2009.   

Wachovia, who brought the suit, retained Schnader to handle an appeal to the Superior Court after Judge Joseph O’Keefe of the Philadelphia Orphans’ Court ruled that Wachovia was barred under the Williamson rule from receiving commissions on trust principal for trust administration purposes because the original trustee (a predecessor bank to Wachovia) had received compensation for services as executor under the will under which the trust was established. On appeal, Wachovia argued that the Superior Court should defer to the Pennsylvania legislature’s repeated attempts to repeal the Williamson rule. The Schnader team, on behalf of Wachovia, explained that the legislature had made known its desire to repeal the rule five separate times by separate enactments. In a 2-1 decision, the Superior Court agreed with the arguments made by Wachovia and found Williamson limited to its facts. The dissent agreed on all substantive grounds as well, but felt that only the Supreme Court could change the Williamson result. The Pennsylvania Bankers Association filed an amicus brief in support of Wachovia's postion. Schnader was opposed by the Pennsylvania Attorney General’s office in its parens patriae role.