In Re: B. Fiedler, Appeal of: E. Fiedler
132 A.3d 1010
| Pa. Super. Ct. | 2016Background
- Decedent Betty Fiedler executed a POA in 2006 naming daughter Latisha as sole agent; both daughters (Latisha and O’Rean) were beneficiaries of a transfer-on-death Ameriprise account.
- While Latisha was agent she executed checks from Decedent’s account totaling $480,515, payable to herself, her son Adam and other family members; many transfers were within the federal gift-tax annual exclusion, but two 2008 transfers to Adam ($5,000 and $330,000) exceeded it.
- O’Rean objected, filed for accounting and sought return of transfers she alleged were improper gifts made by Latisha as agent under the POA.
- The orphans’ court upheld gifts within the IRC annual exclusion, found the $335,000 to Adam valid (reasoning Decedent had delivered the checks), and surcharged Latisha $25,200 (self-gifts) plus $7,674 (funeral costs).
- On appeal the Superior Court held agents making gifts are constrained by the POA language and the statutory gift rules (20 Pa.C.S. ch. 56), affirmed validity of gifts within the annual exclusion, reversed the denial of return for the $335,000+5,000 to Adam, and affirmed the surcharge and funeral-cost remedy.
Issues
| Issue | Plaintiff's Argument (O’Rean) | Defendant's Argument (Latisha) | Held |
|---|---|---|---|
| Admissibility of testimony re: Decedent’s intent and competence under Dead Man’s Act | Testimony from Latisha and donees should be barred under Dead Man’s Act and Slomski; record/stipulations control | Testimony was admissible as non‑adverse/third‑party observations and relevant to whether donees were natural objects of bounty | Testimony admissible; orphans’ court did not abuse discretion — donees could testify about relationships and observed gift practice |
| Validity of gifts within the IRC annual exclusion | Many transfers nevertheless were invalid because POA limited donees and required prior gifts or specific intent | Gifts were within annual exclusion and within POA language (also allowed to donees who were prior recipients or whom agent reasonably considered natural objects of bounty) | Gifts within the annual exclusion were valid under the POA/statute; orphans’ court correctly confirmed them |
| Validity of gifts exceeding the annual exclusion (Adam $335,000) | Gifts beyond annual exclusion violated the POA/statutory limited‑gift rule and must be returned | Latisha: gifts reflected Decedent’s intent (Decedent delivered checks) and thus were not constrained by agent limitations | Reversed as to the $330,000 and $5,000: agent was constrained by POA/statute; transfers exceeding annual exclusion are invalid and must be repaid to the estate |
| Surcharge for self-gifts and funeral expenses | Latisha improperly used POA to write checks to herself and pay funeral costs post‑death | Latisha contends some objections withdrawn and/or she had entitlement as TOD co‑beneficiary | Superior Court affirmed surcharge of $25,200 (self-gifts) and repayment of $7,674 (funeral); agent’s authority ended at death and self-gifts beyond POA limits must be returned |
Key Cases Cited
- Metcalf v. Pesock, 885 A.2d 539 (Pa. Super. 2005) (statutory definition and narrow construction of limited gifts under POA)
- Estate of Slomski v. Thermoclad Co., 987 A.2d 141 (Pa. 2009) (POA authority and retirement‑plan beneficiary changes; illustrative on POA duties though not controlling here)
- In re Sturgeon’s Estate, 53 A.2d 139 (Pa. 1947) (recognizing non‑heirs may be natural objects of bounty)