Bequests in the News
Faulty Beneficiary Designation: Beneficiary Out of Luck
July 18, 2025
The private foundation rules impose certain additional expenses on the Wells Trust, which holds more than $2 million and provides an annual benefit to VMI of roughly $70,000. PNC, the corporate successor to the original trustee, charges yearly fees of $20,000. Expenses of private foundation compliance are $5,000.
In 2019, VMI sought court approval to terminate the Wells Trust and distribute its assets immediately. VMI asserted that the termination would make more funds available for Wells’ charitable purposes by eliminating the private foundation expenses and reducing the cost of investment management. (VMI claimed that its internal management would cost much less than PNC’s.) VMI also argued that the flexible distribution policy that it could implement would be a more productive use of Wells’ assets than the rigid formula mandated by the terms of the trust and the private foundation spending rules.
The court agreed with VMI’s assessment of the benefits of termination. Nonetheless, it declined to rewrite Mr. Wells’ estate plan. Even though the trust was not achieving optimal economy, it was providing a substantial benefit to the beneficiary and would continue to do so for a long time. VMI’s arguments failed to show that the trust’s expenses were “unreasonably out of proportion to the charitable benefits,” which is the legal standard for termination. The Wells Trust would remain as drafted. (In Re Trust B Under Agreement of Wells, ____A.3d_____(Pa. 2024))
