Estate of Richard L. Michael
501 WDA 2021
| Pa. Super. Ct. | Mar 15, 2022Background:
- Decedent Richard L. Michael died in 2010 leaving a will that devised his estate to his two daughters; Carla Stiehler (Appellant) was appointed executrix.
- Decedent had a 401(k) and a life insurance policy naming his then-wife, Shirley Cupec, as beneficiary; the parties had divorced and executed a 2006 Marital Settlement Agreement (MSA) in which Cupec waived any interest in Decedent’s retirement and insurance proceeds.
- The ERISA-regulated plan administrator paid the proceeds to Cupec (the named beneficiary); Cupec paid taxes/penalties and then issued two personal checks totaling $75,394.91 to Appellant, who deposited them and did not distribute them to the will beneficiaries.
- The estate (via Decedent’s daughter Ashley Gamble) sought recovery; the orphans’ court found the funds were estate assets, concluded it had subject-matter jurisdiction under its estate-administration powers, and ordered jurisdictional relief.
- Appellant challenged jurisdiction, arguing the funds were no longer traceable 401(k) proceeds (comingled/private funds) and invoked statutory provisions (20 Pa.C.S. §§ 6108, 6111.2) to contend the orphans’ court lacked power or that liability lay solely with Cupec.
- The Superior Court affirmed the orphans’ court: it treated the transferred funds as estate assets held by the executrix, rejected Appellant’s statutory preemption arguments, and upheld orphans’ court jurisdiction to oversee distribution.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1. Were the funds lost to the estate by comingling/fungibility? | Appellant: once Cupec comingled/rolled over the proceeds they became private/untraceable and not estate property. | Orphans’ Ct./Respondent: facts show Decedent’s assets, Cupec waived rights in MSA, Cupec voluntarily remitted proceeds to executrix, so funds are estate assets. | Held: Funds treated as estate assets; comingling did not defeat estate claim; jurisdiction proper. |
| 2. Do §6108 non-testamentary rules bar estate treatment of ERISA benefits? | Appellant: §6108 makes retirement/insurance proceeds non-testamentary and outside the estate. | Orphans’ Ct./Respondent: §6108 governs designation/payment to named beneficiary but does not preclude later estate claims (e.g., enforcement of MSA) after payment. | Held: §6108 does not divest the orphans’ court of jurisdiction to adjudicate disposition once the beneficiary waived rights and proceeds were brought into the estate. |
| 3. Is Appellant personally subject to orphans’ court jurisdiction re: transaction with Cupec and is liability only against Cupec under §6111.2? | Appellant: liability should attach to Cupec (improper recipient) and Appellant was merely a private recipient of Cupec’s funds. | Orphans’ Ct./Respondent: Appellant acted as executrix, had actual knowledge and possession of the proceeds, and waived personal-jurisdiction objections by participating in proceedings. | Held: Appellant waived personal-jurisdiction objections and, as executrix holding estate assets, the orphans’ court properly exercised jurisdiction over her and the funds. |
| 4. Should this matter be in civil/family court (non-mandatory jurisdiction) rather than orphans’ court? | Appellant: Harmon and other cases show contractual disputes over waivers belong in civil/family court. | Orphans’ Ct./Respondent: Harmon is persuasive but distinguishable; here administration/distribution via the estate (mandatory §711(1) jurisdiction) is the operative issue because proceeds were delivered to the executrix. | Held: Orphans’ court had mandatory jurisdiction under §711(1) to administer and distribute the proceeds as estate assets; affirmed. |
Key Cases Cited
- In re Estate of Sauers, 32 A.3d 1241 (Pa. 2011) (ERISA preemption limits state laws that "relate to" employee benefit plans and bars courts from altering ERISA beneficiary distributions).
- Egelhoff v. Egelhoff, 532 U.S. 141 (U.S. 2001) (Supreme Court precedent on ERISA preemption of state rules affecting beneficiary designations).
- In re Estate of Easterday, 209 A.3d 331 (Pa. 2019) (distinguishes ERISA’s focus on plan administration from state-law claims to recover funds post-distribution).
- In re Estate of Ciuccarelli, 81 A.3d 953 (Pa. Super. 2013) (orphans’ court has mandatory/exclusive jurisdiction over estate administration and distribution).
- Gordon v. Hamilton Sav. & Loan Ass’n, 217 A.2d 843 (Pa. Super. 1966) (funds collected by a fiduciary remain estate assets and may be followed into the orphans’ court).