FAMILY AFFAIRS: The Perils of Not Documenting Family Transactions.
We have been writing about how adult children are fracturing families in pursuit of their parents’ wealth. This problem comes in a variety of forms but the published November 1 decision in Spolar Family Trust illustrates a fairly common problem that emerges where undocumented land holdings are involved. I can say this from experience because I had family members in Bucks County who were invited to “homestead” on farmland an aunt and uncle of mine acquired in 1973. The odd twist in this Superior Court case is that the family matriarch is the person who threw the match that lit the family litigation fires.
All’s well that ends well in family matters until it doesn’t. Ma and Paw Spolar acquired 55 acres of land in Susquehanna County in 1968. In 1972 they acquired a 20 acre parcel next to the original 55 acre tract. Daughter Spolar was encouraged to move onto and improve the 20 acre parcel with a water well, power and other improvements. She did this at her own expense and put a trailer on the property where she and Husband #1 lived. Next, she and #1 began to build a dwelling on the parcel. This went very slowly consuming many years. She and #1 paid all the expenses and there was no indication that Ma and Paw opposed any of this. Completion of the dwelling occurred in the early 2000s, nearly 20 years after building began. Along the way, in 1989, Daughter Spolar and Husband #1 were divorced. The dwelling was described in the agreement as marital property retained by Daughter. During testimony in the divorce proceeding daughter seems to have acknowledged that while she and #1 owned the house, they did not own the real estate on which it was situated. As the divorce concluded Daughter married Husband #2 and moved him into the dwelling on the 20 acres. Along the way, two other children of Ma & Paw put their own homes on the other 55 acre parcel. In 2015 Daughter and Husband #2 moved to Missouri but kept paying for the expenses of their home on the 20 acres.
The wheels start to come off after the Missouri move. Ma suggests to Daughter that she let one of the grandchildren occupy the house Daughter built on the 20 acres. Daughter was not chill with that. In 2017 Ma created the Spolar Family Irrevocable Trust and put all of the real estate in the trust. Daughter was named as a beneficiary of the trust. From the opinion, it’s not clear where Paw fits in this or what acknowledgement of Daughter’s rights (or those of the siblings) was created. Daughter was told nothing about the trust.
In June 2018 Ma, as trustee of the Spolar Family Trust posted the 20 acres and dwelling stating that the trust was evicting Daughter from the property. As you might suspect, the next step was grandchild was permitted to occupy the house Daughter had built.
Daughter brought an action to quiet title arguing that she was the owner of the 20 acres and the improvements. After trial, the Susquehanna County Court held that the property was Ma’s but Ma and her grantor trust had been unjustly enriched by permitting Daughter to build a home on it at her own expense.
The Court found the 20 acres to have a value of $102,000. The dwelling itself was found to be worth $133,000. The Court held that Ma and her successor trust owed Daughter for the $133,000 dwelling value in equity as a matter of unjust enrichment. Ma appealed from the judgment.
The appeal itself is dismissed because the Superior Court concludes that the appellant (Ma) is seeking to re-litigate the judicial findings from the trial court. The Superior Court has that power but it is to be exercised only in a setting where the judicial findings are patently contrary to the evidence presented. There was also a statute of limitation argument that Daughter needed to have initiated her quiet title claim within four years. 42 Pa.C.S. 5525(a)(4). The argument Ma proffered was that Daughter knew of the land title situation when she testified who held title to the 20 acres in her 1989 divorce. The Courts here found that Daughter did not know that Ma was claiming to own her house until the eviction notice was posted in 2018.
The lesson from this case is that families like to think they are united and that everyone will do the “right” thing. One might expect this brawl to erupt after Ma met her maker. But in this case, it’s Ma seeking to evict her daughter without reimbursing her for the house her own kid paid for. Taking care of family members is nice but unless there is confirming paperwork filed with the Recorder of Deeds people are at risk. Had Ma mortgaged the 20 acres and then defaulted on the loan, the foreclosure might well have wiped out Daughter’s interest in her dwelling.
Many may look at this and say “it’s only 20 acres in rural northeastern Pennsylvania.” Fair enough but a topic not mentioned in the case, perhaps because the lease rights were sold or never existed is that Susquehanna County is part of Pennsylvania’s “gas lands” where there were enormous lease option payments (termed a “paid up lease”) circa 2005-2008 and in many instances, ongoing drilling royalties for the natural gas below the surface. These payments can be enormous and may account for why an irrevocable trust was created.
Again, parents like to assume that families will get along. But in an age of blended families and siblings who live scattered across America, the idea of a united family may be fantastical. As we see in this case, the matriarch started the battle. But parents who assume that children will live happily ever after sharing the family farm or beach house, may need a reality check.
Spolar v. Spolar Family Trust, 2024 Pa. Super. 256 (2024)