In Re: B. Fiedler, Appeal of: E. Fiedler

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2016 PA Super 3IN RE: BETTY J. FIEDLER, IN THE SUPERIOR COURT OF
PENNSYLVANIA
APPEAL OF: E. O’REAN FIEDLER,
Appellant No. 2264 MDA 2013
Appeal from the Order Entered December 4, 2013
In the Court of Common Pleas of Lancaster County
Orphans’ Court at No(s): 36-2010-1237
IN RE: BETTY J. FIEDLER, IN THE SUPERIOR COURT OF
PENNSYLVANIA
APPEAL OF: LATISHA BITTS,
Appellant No. 35 MDA 2014
Appeal from the Order Entered December 4, 2013
In the Court of Common Pleas of Lancaster County
Orphans’ Court at No(s): 36-2010-1237
BEFORE: GANTMAN, P.J., BENDER, P.J.E., BOWES, PANELLA, SHOGAN,
LAZARUS, OTT, STABILE, and JENKINS, JJ.
OPINION BY SHOGAN, J.: FILED JANUARY 05, 2016
This is an appeal from the Adjudication of Account (“Account”) by E.
O’Rean Fiedler (“O’Rean”) and a cross-appeal by Latisha Bitts (“Latisha”).
O’Rean challenges gift checks written by her sister Latisha, who held their
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mother’s Power of Attorney (“POA”). We hold that when a designated POA
agent writes gift checks from a principal’s account, the agent is constrained
by the specific gift-giving limitations listed in the POA document and the
statutory requirements of the Pennsylvania Decedents, Estates and
Fiduciaries Code (“Code”). Accordingly, we affirm in part and reverse in
part.
I. Facts and Procedural History
Betty Fiedler (“Decedent”) had two daughters, O’Rean, the objector to
the Account, and Latisha, who were the sole, equal beneficiaries under
Decedent’s will. O’Rean has no children; Latisha has a biological son, Adam
Buckius (“Adam”), a step-son, Sean Bitts (“Sean”), and two granddaughters,
Emma and Lydia Buckius. N.T., 1/7/13, at 101; N.T., 1/9/13, at 190.
Decedent, who suffered from end-stage emphysema, resided at St.
Anne’s Retirement Community from July 2005, after she fell and broke her
elbow requiring surgery, until her death on September 10, 2009. N.T.,
1/7/13, at 32, 65, 104, 128. All of Decedent’s assets were contained in an
Ameriprise account (“Ameriprise Account”), which was established prior to
2006, with an original principal balance of $709,953. The Ameriprise
Account was titled to Decedent as a “TOD” or “transfer on death” account;
both O’Rean and Latisha were named as beneficiaries of the Ameriprise
Account. N.T., 1/7/13, at 56.
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On February 17, 2004, following the death of her husband, Decedent
designated both of her daughters as her agents pursuant to a power of
attorney (“POA”). N.T., 1/7/13, at 57–58, 103. O’Rean, age sixty-eight,
was a former teacher who retired in June of 1996. N.T., 1/9/13, at 229–
230. Latisha, age sixty-five, also was retired. N.T., 1/7/13, at 129. Both
Latisha and O’Rean testified that under the POA, O’Rean paid all of
Decedent’s bills, managed her affairs, and “was more involved” with
Decedent than Latisha. Id. at 86–87, 94, 132. In fact, after O’Rean’s father
died in 2004, O’Rean visited Decedent every day, cleaned her house, took
her shopping, and cared for Decedent’s dog. N.T., 1/9/13, at 234. O’Rean
signed checks that paid Decedent’s bills. She did not sign gift checks to
Latisha or herself, testifying that it was inappropriate to gift money to
herself or her sister from her mother. N.T., 1/7/13, at 86; 1/9/13, at 243.
O’Rean testified that in July 2006, Decedent told her that Latisha
wanted Decedent to gift Latisha and O’Rean each $10,000. N.T., 1/9/13, at
245. O’Rean was opposed to the action because Decedent had already
gifted them over $12,000 each in personal property when Decedent sold her
house that year. Nevertheless, O’Rean wrote a check to herself dated July
5, 2006, in the amount of $10,000, which was signed by Decedent, and an
identical check to Latisha, also signed by Decedent, at Decedent’s direction.
N.T., 1/7/13, at 88–89. Similarly, O’Rean wrote a $10,000 check to Adam
at Decedent’s direction, which O’Rean signed. Id. at 96. On the memo line
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of the check was the word, “Final.” Id. at 146. Latisha testified that Adam
telephoned O’Rean for an explanation of the memo line, and her response
was that Decedent had told her “this would be the last check.” 1 Id. at 146.
Upon hearing that, Latisha visited Decedent and inquired about O’Rean’s
response to Adam; Decedent allegedly denied saying the check was to be
Adam’s last check. Id. Less than two months later, Latisha asked Gregory
Nauman, Decedent’s financial advisor, to change the mailing address of
Decedent’s Ameriprise Account statements from O’Rean to Latisha. Id. at
17, 146–147. O’Rean visited her mother on September 29, 2006, and asked
why the Ameriprise Account statements had been changed to Latisha’s
address. Decedent refused to discuss the change, and asked O’Rean to
leave her room.2 Id. at 82–83. That was the last time O’Rean and
Decedent spoke. Id. at 82. One month later, on October 11, 2006,
Decedent revoked the POA naming both daughters as agents and executed a
new POA designating Latisha as her sole agent. Id. at 44, 146.
Latisha confirmed that “as soon as [she] became the agent under the
subsequent power of attorney signed in 2006, gifts started to be made.” Id.____________________________________________
1
Latisha also testified that she never contacted Decedent’s attorney, Patti
Spencer, about Decedent’s ability to make a gift to Adam, but later
contradicted herself and revealed that she did so inquire. N.T., 1/7/13, at
135–136, 138.
2
Latisha testified that Decedent and O’Rean, instead, argued about
O’Rean’s relationship with her “significant other” and his mother. N.T.,
1/7/13, at 110.
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at 151–152. During the period in which Latisha was named as sole agent
under the POA, she signed and wrote checks made payable to herself, as
well as her son Adam, her step-son Sean, and their wives, including Adam’s
then-wife, Kimberly Buckius (“Kim”), and Sean’s wife, Christy Bitts
(“Christy”) (collectively, “Additional Respondents”) that totaled $480,515.3
N.T., 1/7/13, at 113–123; N.T., 1/9/13, at 181–182, 186–189, 191–196.
Included in the checks that Latisha signed as POA was a check to Adam in
the amount of $330,000. Mr. Nauman testified that Latisha contacted him
about the “large gift to Adam.” N.T., 1/7/13, at 46. Decedent’s expenses at
St. Anne’s Retirement Community totaled $239,758.86. Account, 6/15/10,
Summary at unnumbered page 2. The Account listed the “combined balance
on hand” as $0.00. Id.Latisha maintained that she did not exercise discretionary power in
making any gifts as POA and that the checks she wrote were at Decedent’s
direction. N.T., 1/7/13, at 112–128. Conversely, O’Rean characterized the
checks as gifts of money made by Latisha pursuant to the POA. Petition to
Show Cause, 4/9/10, at 2.
Procedurally, the instant matter began on April 9, 2010, when O’Rean
filed a petition requesting that Latisha show cause why she should not file an
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3
Latisha also wrote checks to Adam’s daughters, Emma and Lydia.
Account, 6/15/10, at 3, Addendum to ¶ 6. The validity of these checks is
not involved in this appeal.
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Account with respect to the POA.4 Latisha filed an answer on May 13, 2010,
in which she objected to filing the Account. Following oral argument on the
issue, the orphans’ court ordered the Account to be filed. Latisha filed a
petition for reconsideration on May 26, 2010. Latisha ultimately filed the
Account on June 15, 2010, for the period from October 11, 2006, through
November 27, 2009, identifying the category of “gifts” 5 that totaled
$480,515. Account, 6/15/10, Summary at unnumbered 2. As noted, the
Account listed the balance on hand as $0.00. Id.O’Rean filed objections to the Account on June 23, 2010, and the
Account was called for audit on July 6, 2010. On August 4, 2010, O’Rean
filed a petition to show cause why Latisha and Additional Respondents
should not be required to return the gifts they received from Decedent. That
day, the orphans’ court issued a citation to show cause why Adam and Kim
Buckius and Sean and Christy Bitts should not be deemed additional
respondents. Latisha and Additional Respondents filed an answer and new
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4
Latisha had offered the last will and testament of Decedent into probate
and, as executrix of the estate, averred that there were no probate assets.
Petition to Show Cause, 4/9/10, at 1; Petition for Reconsideration, 5/26/10,
at ¶ B.
5
As the orphans’ court noted, the Account filed by Latisha grouped the
monetary transfers together into one category entitled “gifts.” Orphans’
Court Opinion, 12/4/13, at 2 n.1. While we adopt this nomenclature to
describe the checks in question for ease of reference, their categorization as
“gifts” was at issue below. As the orphans’ court stated, “It is apparent that
the real question in the instant action is who gave these ‘gifts’ and whether
they were indeed valid gifts.” Id.-6-
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matter to the petition to show cause on September 9, 2010. On September
29, 2010, O’Rean filed preliminary objections to the answer, and Latisha
filed an amended answer on October 19, 2010. O’Rean then filed
preliminary objections to the amended answer, which the orphans’ court
denied on January 27, 2011.
Thereafter, O’Rean filed a motion for partial judgment on the pleadings
on March 16, 2011, seeking the return to the estate of $360,000 in gifts that
were made to Latisha and Adam. The orphans’ court denied the motion on
August 31, 2011. By separate order that same date, the orphans’ court
ruled upon O’Rean’s August 4, 2010 citation to show cause why Adam and
Kim Buckius and Sean and Christy Bitts should not be deemed additional
respondents, and added them to the lawsuit.
On June 22, 2012, O’Rean filed a motion in limine seeking to preclude
“the testimony of [Latisha], [Additional Respondents], and Mr. Gregory
Nauman on three separate grounds, namely that their testimony would
violate the Dead Man’s Statute; the precedent established in [Estate of
Slomski v. Thermoclad Co., 956 A.2d 438 (Pa. Super. 2008), reversed in
part, 987 A.2d 141 (Pa. 2009),] and relevance,” regarding Decedent’s
verbalized intent prior to her death. Orphans’ Court Adjudication, 12/4/13,
at 3. The orphans’ court denied the motion in limine on September 12,
2012.
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A two-day hearing was held on January 7 and 9, 2013. At the start of
the January 7, 2013 hearing, all counsel entered a stipulation, which in part,
set forth the name of each recipient of the funds in dispute, the amount of
funds transferred to each recipient, and whether the amount transferred was
in excess of the amount that could be excluded from taxable gifts under the
Internal Revenue Code (“IRC”). N.T., 1/7/13, at 7–10. In pertinent part,
that stipulation provided:
AND NOW THIS 7th day of January, 2013, counsel of record
hereby stipulate[] and agree[] to the following:
* * *
2. The transfer of $12,000 to Christy Bitts on December 23,
2006 was not in excess of the amount which could be excluded
from taxable gifts by Sections 2503(b) or 2503(e) of the Internal
Revenue Code, including exclusions available through the use of
Section 2513 of the [I]nternal Revenue Code (“annual exclusion
amount”).
3. The transfer of $12,000 to Christy Bitts on December 16,
2007 was not in excess of the annual exclusion amount.
4. The transfer of $12,000 to Latisha Bitts during 2007 was not
in excess of the annual exclusion amount.
5. The transfer of $100 to Latisha Bitts on December 30, 2008
was not in excess of the annual exclusion amount.
6. The transfer of $12,000 to Sean Bitts on December 23, 2006
was not in excess of the annual exclusion amount.
7. The transfer of $12,000 to Sean Bitts on December 16, 2007
was not in excess of the annual exclusion amount.
8. The transfer of $12,000 to Adam Buckius on January 1, 2007
was not in excess of the annual exclusion amount.
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9. The transfer of $12,000 to Adam Buckius on January 1, 2008
was not in excess of the annual exclusion amount.
10. The transfer of $12,000 to Kim Buckius on December 23,
2006 was not in excess of the annual exclusion amount.
11. The transfer of $12,000 to Kim Buckius on August 20, 2007
was not in excess of the annual exclusion amount.
12. The transfer of $12,000 to Kim Buckius on January 1, 2008
was not in excess of the annual exclusion amount.
13. The transfer of $106.50 to Lydia was not in excess of the
annual exclusion amount.
14. The transfer of $108.50 to Emma was not in excess of the
annual exclusion amount.
15. Betty J. Fiedler was a resident of St. Anne’s Retirement
Community from July, 2005 until the time of her death on
October 11, 2009.[6]
16. Latisha Bitts received gifts of $25,200 during 2007 in excess
of the annual gift tax exclusion.
17. Adam Buckius received gifts of $335,000 during 2008 in
excess of the annual gift tax exclusion.
Stipulation, 1/7/13, at unnumbered 1–2.
On December 4, 2013, the orphans’ court entered its adjudication
confirming the Account with the exception of two gifts Latisha made to
herself totaling $25,200 and to post-death funeral expenses in the amount
of $7,674. The orphans’ court determined that all of the gifts that were
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6
Elsewhere in the record, the date of death was described as September
10, 2009. See e.g., N.T., 1/7/13, at 128. The orphans’ court, as well,
identified September 10, 2009, as the date of death. Orphans’ Court
Opinion, 12/4/13, at 1.
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within the annual IRC exclusion amount were valid and permissible; thus,
the gifts to Additional Respondents were deemed valid gifts pursuant to the
POA. The orphans’ court also concluded that gifts totaling $335,000 to
Adam, which were not within the annual exclusion amount, nevertheless
were valid because they were supported by independent testimony that they
were not made pursuant to the POA but were valid inter vivos gifts from
Decedent. The orphans’ court surcharged7 Latisha $25,200 plus $7,674, for
a total of $32,874.
O’Rean filed a notice of appeal on December 23, 2013, and Latisha
filed a cross-appeal on December 31, 2013. All parties and the orphans’
court complied with Pa.R.A.P. 1925. This Court consolidated the appeals on
February 6, 2014.
A unanimous panel of this Court filed an opinion affirming in part,
reversing in part, and remanding to the orphans’ court. In re Betty J.
Fiedler, 2015 PA Super 10 (Pa. Super. 2015). Thereafter, Latisha and
Adam filed a motion for reargument en banc. We granted the motion and
heard oral arguments on October 15, 2015. This matter is now ripe for
disposition.
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7
“Surcharge is the penalty for failure to exercise common prudence,
common skill and common caution in the performance of the fiduciary’s duty
and is imposed to compensate beneficiaries for loss caused by the fiduciary’s
want of due care.” In re Estate of Bechtel, 92 A.3d 833, 839 (Pa. Super.
2014) (citing In re Miller’s Estate, 26 A.2d 320, 321 (Pa. 1942)).
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II. Issues
O’Rean’s appeal docketed at 2264 MDA 2013 raises the following two
issues:
A. Whether the orphans’ court erred in failing to grant all of
O’Rean Fiedler’s objections to the account based on the
documentary evidence she presented and the stipulations
of counsel, and in allowing and considering certain
testimonial evidence?
B. Whether, even assuming arguendo that the orphans’ court
did not err in failing to grant all of O’Rean Fiedler’s
objections to the account based on the documentary
evidence she presented and the stipulations of counsel,
and in allowing and considering certain testimonial
evidence, the orphans’ court erred in finding the
testimonial evidence supported [Latisha’s] gift making
activities?
O’Rean’s Substituted Brief (hereinafter “O’Rean’s Brief) at 3.
Latisha’s cross-appeal docketed at 35 MDA 2014 raises the following
issue:
E. Did the Orphans’ Court Err When It Surcharged Latisha
Bitts In The Amount Of $25,200 Because Latisha Provided
Third-Party And Independent Credible Testimony
Regarding Gifts [Decedent] Made To Latisha?
Latisha’s Brief on Reargument (hereinafter “Latisha’s Brief”) at 4. 8 We will
address the issues, in that they all relate to the validity of the gifts, as a
whole in due order.
____________________________________________
8
In her original brief to the Panel, Latisha raised the following two issues,
the second of which is substantially the same as the issue she has raised on
reargument:
(Footnote Continued Next Page)
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III. Standard of Review
Our standard of review is as follows:
Our standard of review of the findings of an Orphans’
Court is deferential.
When reviewing a decree entered by the
Orphans’ Court, this Court must
determine whether the record is free
from legal error and the court’s factual
findings are supported by the evidence.
Because the Orphans’ Court sits as the
fact-finder, it determines the credibility
of the witnesses and, on review, we will
not reverse its credibility determinations
absent an abuse of that discretion.
However, we are not constrained to give the same
deference to any resulting legal conclusions.
In re Estate of Harrison, 745 A.2d 676, 678–79 (Pa. Super.
2000), appeal denied, 563 Pa. 646, 758 A.2d 1200 (2000)
(internal citations and quotation marks omitted). “The Orphans’
_______________________
(Footnote Continued)
1. Should [O’Rean’s] demand for surcharge of Latisha Bitts for
$7,674.00 for payment of Decedent’s funeral expenses be
denied when [O’Rean] withdrew her objection to payment of the
funeral expenses from Latisha’s account, failed to meet her
burden in proving the payment was improper, and Latisha was a
beneficiary of the account and therefore had authority to write
checks from the account?
2. Should [O’Rean’s] demand for surcharge of Latisha Bitts in
the amount of $25,200.00 for gifts be denied when Adam
Buckius and Latisha Bitts were both competent witnesses whose
testimony proved the validity of the gifts and [O’Rean] offered
no and/or insufficient evidence to invalidate the gifts?
Latisha’s Panel Brief at 3. We have addressed both issues originally raised
before the panel.
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Court decision will not be reversed unless there has been an
abuse of discretion or a fundamental error in applying the
correct principles of law.” In re Estate of Luongo, 823 A.2d
942, 951 (Pa. Super. 2003), appeal denied, 577 Pa. 722, 847
A.2d 1287 (2003).
In re Estate of Whitley, 50 A.3d 203, 206–207 (Pa. Super. 2012).
This Court’s standard of review of questions of law is de novo, and the
scope of review is plenary, as we may review the entire record in making our
determination. Kripp v. Kripp, 849 A.2d 1159, 1164 n.5 (Pa. 2004). When
we review questions of law, our standard of review is limited to determining
whether the trial court committed an error of law. Kmonk-Sullivan v.
State Farm Mutual Automobile Ins. Co., 746 A.2d 1118, 1120 (Pa.
Super. 1999) (en banc).
IV. The Gifts and Power of Attorney
In its December 4, 2013 decision, the orphans’ court listed and
grouped the checks by payee that Latisha wrote and signed, as follows:
Christy Bitts: $12,000.00 on December 23, 2006.
Christy Bitts: $12,000.00 on December 16, 2007.
Latisha Bitts: $25,100.00 on January 1, 2007.
Latisha Bitts: $100.00 on December 11, 2007.
Latisha Bitts: $12,000.00 on December 17, 2007.
Latisha Bitts: $100.00 on December 30, 2008.
Sean Bitts: $12,000.00 on December 23, 2006.
Sean Bitts: $12,000.00 on December 16, 2007.
Adam Buckius: $12,000.00 on January 1, 2007.
Adam Buckius: $12,000.00 on January 1, 2008.
Adam Buckius: $5,000.00 on April 29, 2008.
Adam Buckius: $330,000.00 on October 1, 2008.
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Kim Buckius: $12,000.00 on December 23, 2006.
Kim Buckius: $12,000.00 on August 20, 2007.
Kim Buckius: $12,000.00 on January 1, 2008.
Lydia Buckius: Birthday gift of $50.00 undated.
Christmas gift of $56.50 undated.
Emma Buckius: Birthday gift of $52.00 undated.
Christmas gift of $56.50 undated.
Orphans’ Court Adjudication, 12/4/13, at 3–4.
Chapter 56 of the Code9 addresses powers of attorney. In re
Weidner, 938 A.2d 354, 359 (2007). The Pennsylvania Legislature set forth
special rules for empowering an agent to make a gift through a power of
attorney in 1999 when it added 20 Pa.C.S. § 5601.2, Special rules for gifts,
to the Code; see also 1999 Pa. Laws 39. In relevant part, section 5601.2
provides as follows:
§ 5601.2. Special rules for gifts
(a) General rule.--A principal may empower an agent to make
a gift in a power of attorney only as provided in this section.
(b) Limited gifts.--A principal may authorize an agent to make
a limited gift as defined under section 5603(a)(2) (relating to
implementation of power of attorney) by the inclusion of:
(1) the language quoted in section 5602(a)(1)[10]
(relating to form of power of attorney); or
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9
Act 1974, Dec. 10, P.L. 816, No. 271, § 5, imd. effective, substituted
“Decedents, Estates and Fiduciaries” for “Probate, Estates and Fiduciaries
Code.”
10
20 Pa.C.S. § 5602(a)(1) delineates the power “[t]o make limited gifts.”
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(2) other language showing a similar intent on the
part of the principal to empower the agent to make a
limited gift.
(c) Unlimited gifts.--A principal may authorize an agent to
make any other gift only by specifically providing for and
defining the agent’s authority in the power of attorney.
* * *
(e) Equity.--An agent and the donee of a gift shall be liable as
equity and justice may require to the extent that, as determined
by the court, a gift made by the agent is inconsistent with
prudent estate planning or financial management for the
principal or with the known or probable intent of the principal
with respect to disposition of the estate.
20 Pa.C.S. § 5601.2 (emphases added in subpart (a)).11
Section 5603 of the Code, Act of June 30, 1972, P.L. 508, No. 164, § 2
(as amended 20 Pa.C.S. §§ 101–8815), describes, inter alia, an agent’s
power to make limited gifts, in relevant part, as follows:
§ 5603. Implementation of power of attorney
(a) Power to make limited gifts.—
* * *
(2) A power “to make limited gifts” shall mean that
the agent may make only gifts for or on behalf of the
principal which are limited as follows:
(i) The class of permissible donees under
this paragraph shall consist solely of the
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11
Pursuant to 2014, July 2, P.L. 855, No. 95, § 220 Pa.C.S., 20 Pa.C.S. §
5601.2 was repealed effective Jan. 1, 2015, and the “amendment, addition
or repeal of 20 Pa.C.S . . . § 5601.2 . . . applies only to powers of attorney
created on or after the effective dates of those provisions.”
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principal’s spouse, issue and a spouse of
the principal’s issue (including the agent
if a member of any such class), or any of
them.
(ii) During each calendar year, the
gifts made to any permissible donee,
pursuant to such power, shall have an
aggregate value not in excess of, and
shall be made in such manner as to
qualify in their entirety for, the annual
exclusion from the Federal gift tax
permitted under section 2503(b) of the
Internal Revenue Code of 1986 (Public
Law 99-514, 26 U.S.C. § 1 et seq.) for
the principal and, if applicable, the
principal’s spouse.
20 Pa.C.S. § 5603 (emphasis added to subpart (a)(2)(ii)). 12 Thus,
authorized gifts to qualified individuals could not exceed that calendar year’s
annual gift tax exclusion amount.
A power of attorney is “an instrument granting someone authority to
act as agent or attorney-in-fact for the grantor.” BLACK’S LAW DICTIONARY at
1209 (8th ed. 2004). An attorney-in-fact is someone “who is designated to
transact business for another; a legal agent.” Id. at 138; see also 20
Pa.C.S. § 5601(f) (defining the term “agent” as a “person designated by a
principal in a power of attorney to act on behalf of that principal”).
____________________________________________
12
Although not applicable here, new legislation encompassing an agent’s
power to make limited gifts was added effective January 1, 2015. 20
Pa.C.S. § 5603(a.1); 30 Standard Pennsylvania Practice 2d § 143:28
(footnotes omitted).
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We must examine the relevant language of the instant POA document.
The POA document signed by Decedent defined the type of gifts Latisha was
authorized to make, as follows:
SPECIFIC ADDITIONAL POWERS INCLUDED IN GENERAL
POWER
* * *
3. Power Concerning Gifts.
To make limited gifts, as defined in Chapter 56 of the
Pennsylvania Probate, Estates and Fiduciaries Code. In addition,
to make gifts to, or for the benefit of, any donee who has been
the recipient of gifts from me or whom my attorney reasonably
considers to be the natural object of my bounty. All gifts made
under this Section 3. shall be gifts which can be excluded
from taxable gifts by Sections 2503(b) or 2503(e) of the
Internal Revenue Code, including exclusions available
through the use of Section 2513 of the Internal Revenue
Code.
General Power of Attorney, 10/11/06, at 4 (emphasis added to ¶ 3);
O’Rean’s Exhibit 2; Petition to Show Cause, 4/9/10, Exhibit A at 4.
V. Gifts Within the IRC Annual Exclusion
We turn first to the gifts to Additional Respondents minus the two
2008 gifts of $5,000 and $330,000 to Adam. As noted, Chapter 56 of the
Code addresses powers of attorney and was amended in 1999 to include the
addition of § 5601.2, Special rules for gifts. Under the special rules for gifts,
a principal may authorize an agent to make a limited gift as defined under
section 5603(a)(2). “A limited gift, by statutory definition, is one made to
a restricted class of permissible donees for a value limited to the
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annual exclusion from the federal gift tax permitted under the
Internal Revenue Code.” Metcalf v. Pesock, 885 A.2d 539, 541 (Pa.
Super. 2005) (citing 20 Pa.C.S. § 5603(a)(2)) (emphasis added). Clearly,
limited gifts are narrowly defined regarding class and value within the
statute. Here, Latisha—not Decedent herself—signed each one of the gift
checks. Moreover, Latisha signed each of the gift checks as Decedent’s POA;
otherwise, Latisha had no power or authority to sign them. Under the
applicable POA document, however, Latisha’s power to make such gifts was
circumscribed in amount by the IRC, pursuant to the clear language of the
relevant statutory provisions. Thus, the relevant question before the
orphans’ court was whether the checks Latisha signed were within the
authority of the POA and whether they complied with the applicable
statutory provisions.
The scope of authority under a POA is determined by the language of
the document creating the agency and the Code. See generally 20 Pa.C.S.
§§ 5601-5611; In re Weidner, 938 A.2d at 357–358 (analyzing language
of POA in the context of the Code to determine propriety of agent’s actions).
The POA signed by Decedent required that the agent “must use due care to
act for your benefit and in accordance with this power of attorney.” General
Power of Attorney, 10/11/06, at 1 (Notice); O’Rean’s Exhibit 2; Petition to
Show Cause, 4/9/10, Exhibit A at 1. In the “Oath of Agent of a Power of
Attorney,” Latisha agreed to “exercise reasonable caution and prudence.”
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General Power of Attorney, 10/11/06, at 6; O’Rean’s Exhibit 2; Petition to
Show Cause, 4/9/10, Exhibit A at 6. Moreover, the POA is the operative
document that controls the outcome of this dispute. As O’Rean asserted, it
is axiomatic that in signing the gift checks, Latisha was acting either as a
principal or as an agent. As there is no evidence in the record suggesting
that Latisha was a principal, such as being a co-owner of Decedent’s
Ameriprise account, we agree that she had to have been acting as an agent,
thereby subject to the POA and the relevant Pennsylvania statutes. O’Rean’s
Brief at 26.
This Court has construed 20 Pa.C.S. § 5601.2(a) narrowly. Metcalf,
885 A.2d 539; see also Barnett v. U.S., 2009 WL 2426246 (W.D. Pa.
2009) (not published in F.Supp.2d). The stated purpose underlying section
5601.2 is to address the proper manner in which a principal may authorize
an agent to make a gift under a power of attorney. 20 Pa.C.S. § 5601.2,
Cmt. The statute clearly provides that the power of an agent to make a gift
as a power of attorney can occur only “as provided in this section [e.g.,
Section 5601.2].” 20 Pa.C.S. § 5601.2(a). Moreover, “powers of attorney
are to be strictly construed.” Estate of Slomski v. Thermoclad, 956 A.2d
438, 444 (Pa. Super. 2008), reversed on other grounds, 987 A.2d 141 (Pa.
2009) (quoting In re Estate of Cambest, 756 A.2d 45, 52 (Pa. Super.
2000)).
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There can be no dispute that Latisha executed each one of the gift
checks. It also is evident that Latisha signed each of the gift checks as
Decedent’s POA. The orphans’ court concluded that the checks listed in the
stipulation that are within the IRC annual exclusion amount were valid gifts
pursuant to Latisha’s authority as Decedent’s power of attorney. In terms of
being within the IRC annual exclusion amount, this conclusion by the
orphans’ court must stand.
O’Rean argues, however, that the individual gifts to Kim, Sean, and
Christy were not allowable because there was no evidence that these
individuals had received gifts from Decedent prior to the effective date of the
POA. O’Rean’s Brief at 19. She also suggests that Additional Respondents
reasonably could not have been considered by Latisha to be the natural
objects of Decedent’s bounty. We disagree.
In paragraph three, “power concerning gifts,” of the POA document,
Latisha’s power to make gifts is circumscribed by the requirements of the
Code, discussed supra, as well as the limitation that the gifts are “to, or for
the benefit of, any donee who has been the recipient of gifts from me or
whom my attorney reasonably considers to be the natural object of my
bounty.” General Power of Attorney, 10/11/06, at 4 (emphasis added).
Thus, while there may be a dearth of testimony regarding Decedent’s prior
gift giving to Kim, Sean, and Christy, see O’Rean’s Brief at 13, that does not
end the matter. The POA document utilizes the word “or” in defining other
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limitations on Latisha’s gift-giving power. “We are bound to give ‘or’ its
normal disjunctive meaning unless its ordinary meaning would ‘produce a
result that is absurd or impossible of execution or highly
unreasonable . . . .’” Commonwealth ex rel. Specter v. Vignola, 285
A.2d 869, 871 (Pa. 1971). Thus, the POA also permitted Latisha to give gifts
that were within the IRC annual exclusion amount to a donee whom Latisha
reasonably considered to be the natural object of Decedent’s bounty.
O’Rean suggests Additional Respondents cannot be objects of
Decedent’s bounty because they were not named beneficiaries in Decedent’s
will. O’Rean’s Brief at 13, 33. O’Rean’s contention is not persuasive. First,
the gift recipients’ inclusion in Decedent’s will is not controlling. Second,
Decedent’s will provided that if O’Rean did not survive Decedent, “O’Rean’s
share shall pass to [Latisha], or if she is not then living, to her then living
issue, per stirpes.” Will of Betty J. Fiedler, 10/11/06, at 1, O’Rean’s Exhibit
3; N.T., 1/7/13, at 10. The will further provided that if Latisha did not
survive her mother by thirty days, Latisha’s share would pass to Latisha’s
issue, per stirpes, not to O’Rean, unless Latisha had no living issue. Id.Clearly, Decedent’s inclusion of Latisha’s issue as secondary beneficiaries is
indicative of the value Decedent placed on those relationships. It was not
unreasonable for Latisha to draw an inference that Decedent similarly valued
the relationships with the other Additional Respondents.
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In In re Sturgeon’s Estate, 53 A.2d 139 (Pa. 1947), our Supreme
Court noted that a decedent’s sister-in-law, who was not included in the
decedent’s will, “might [have] be[en] regarded as natural objects of [the]
decedent’s bounty.” Id. at 140. Daughters-in-law were also determined to
rightfully be included in the natural objects of bounty in Mermon v.
Mermon, 232, 390 A.2d 796, 798 (Pa. Super. 1978), and Northern Trust
Co. v. Huber, 118 A. 217 (Pa. 1922). In Hiester v. Hiester, 77 A. 419(Pa. 1910), although in the context of whether a resulting trust existed, our
Supreme Court noted that a gift to a step-child or one related only by
marriage fell within “other circumstances and other relations in life” that are
noteworthy. Id. at 419. As long ago as 1859, our Supreme Court made a
point of suggesting the absurdity of an assumption that natural objects of
one’s bounty meant only heirs, as evidenced by the following:
By natural objects of his bounty, we suppose is meant
those collaterals who, had he died intestate, would have been his
heirs; but not heirs by any natural law, but only by the positive
institutions of the state--and as the point is expressed,
distribution among them is almost assumed as a necessary test
of competency. The doctrine of this point, like that of the
second, which we have considered, would, if carried out, compel
testators to give their estate to the same parties to whom the
intestate laws would give it. They might perhaps alter the
proportions of the distribution, but must not change the
distributees. In other words, the old notion that if each child
were not mentioned, though only to be cut off with a shilling, it
was evidence of the testator’s insanity, would be restored, and
extended beyond its original limits, to collateral relatives--a
failure to provide for whom by will, would be at least some
evidence of incompetency. Propositions that lead logically to
such results, ought not to be admitted. The radical error of this
first point is, that it assumes that the testator meant distribution
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of his estate, whereas the evidence, if it proved nothing else,
established beyond a doubt that, after providing for his debts,
his housekeeper, and his grave, he meant that his estate should
go in a bulk to Grier [who was not in any way related to him].
Stevenson’s Ex’r v. Stevenson, 33 Pa. 469, 472 (1859). Therefore, we
reject O’Rean’s suggestion that Decedent’s step-grandson Sean and
Decedent’s granddaughters-in-law could not be considered natural objects of
Decedent’s bounty because they were not named in Decedent’s will.
Moreover, there was testimony about a course of conduct at Christmas
when the family would receive gift checks from Decedent. N.T., 1/7/13, at
114. Further, O’Rean herself testified that she wrote a gift check to Adam in
July 2006 at Decedent’s direction, thus lending support to the implication
that Decedent was interested in passing on her bounty to subsequent
generations. Id. at 89–90.
As noted supra, O’Rean filed a motion in limine on June 22, 2012,
seeking to preclude testimony of Additional Respondents and Latisha as
irrelevant, at odds with Estate of Slomski v. Thermoclad, 956 A.2d at 444(Pa. Super. 2008), reversed on other grounds, 987 A.2d 141 (Pa. 2009), and
as violative of the Pennsylvania Dead Man’s Statute, 42 Pa.C.S. § 5930
(“Dead Man’s Act”). The orphans’ court denied the motion in limine on
September 12, 2012. O’Rean challenges this ruling on appeal.
A motion in limine is used before trial to obtain a ruling on the
admissibility of evidence. Northeast Fence & Iron Works, Inc. v.
Murphy Quigley Co., Inc., 933 A.2d 664 (Pa. Super. 2007). “It gives the
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trial judge the opportunity to weigh potentially prejudicial and harmful
evidence before the trial occurs, thus preventing the evidence from ever
reaching the jury.” Parr v. Ford Motor Co., 109 A.3d 682, 690 (Pa. Super.
2014), appeal denied, 123 A.3d 331 (Pa. 2015). A trial court’s decision to
grant a motion in limine “is subject to an evidentiary abuse of discretion
standard of review.” Id.The orphans’ court determined that Slomski did not control its
decision; we similarly conclude that O’Rean’s reliance on Slomski to
preclude Additional Respondents’ testimony is misplaced. Slomski did not
address the issue of whether a power of attorney authorized the agent to
make gifts on behalf of the principal or whether the principal ratified an
agent’s conduct in making such gifts. While both this Court and the
Supreme Court in Slomski “address[ed] the interplay of the duties and
responsibilities of an agent operating under a [POA],” Orphans’ Court
Opinion Denying Partial Summary Judgment, 8/31/11, at 5, the issue
concerned whether an agent could change the beneficiary designation of a
qualified retirement plan owned by the principal. Our Supreme Court held
that a principal’s POA granting the agent the power to engage in retirement
plan transactions authorized his agent to change the beneficiary of the
principal’s retirement plan. Slomski, 987 A.2d at 141. The case is
illustrative, not controlling.
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O’Rean also challenged the testimony on the basis that Latisha and
Additional Respondents were incompetent to testify based upon the
Pennsylvania Dead Man’s Statute, 42 Pa.C.S. § 5930 (“Dead Man’s Act”).13
O’Rean’s Brief at 5. “This statute is a reenactment of that portion of the Act
of May 23, 1887 which, among other things, abolished the rule of
incompetency for interested witnesses and created the rule of competency
for witnesses in general.” 1 West’s Pa. Prac., Evidence § 601-7 (4th ed.)
The statute is referred to as the “Dead Man’s Rule”, “Dead Man’s Act”, or
“Dead Man’s Statute.” Id. The Comment to Pa.R.E. 601 recognizes that
this ground of incompetency continues under Pa.R.E. 601(a). 1 West’s Pa.
Prac., Evidence § 601-7.
The Dead Man’s Act provides, in relevant part, as follows:
Except as otherwise provided in this subchapter, in any civil
action or proceeding, where any party to a thing or contract in
action is dead, . . . and his right thereto or therein has
passed . . . to a party on the record who represents his interest
in the subject in controversy, neither any surviving or remaining
party to such thing or contract, nor any other person whose
interest shall be adverse to the said right of such deceased . . . ,
shall be a competent witness to any matter occurring before the
death of said party . . . .
42 Pa.C.S. § 5930. “The rationale behind the Dead Man’s Act is that the law
should not permit the surviving party to testify since he could lie and
attempt to testify favorably to himself and adversely to the deceased party,
____________________________________________
13
We address this challenge regarding Latisha in Section VI, infra.
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knowing the other party is incapable of contradicting the fallacious
testimony.” Punxsutawney Mun. Airport Authority v. Lellock, 745 A.2d
666, 670 (Pa. Super. 2000). The Dead Man’s Act is an exception to the
general rule of evidence in this Commonwealth that “no interest or policy of
law . . . shall make any person incompetent as a witness.” Larkin v. Metz,
580 A.2d 1150, 1152 (Pa. Super. 1990) (citing 42 Pa.C.S. § 5921).
Under the Dead Man’s Act three conditions must exist before the
surviving party or witness is disqualified: “(1) the deceased must
have had an actual right or interest in the matter at issue, i.e. an
interest in the immediate result of the suit; (2) the interest of
the witness-not simply the testimony-must be adverse; (3) a
right of the deceased must have passed to a party of record who
represents the deceased’s interest.” In Re Hendrickson's
Estate, 388 Pa. 39, 45, 130 A.2d 143, 146-47 (1957);
Weschler v. Carroll, [578 A.2d 13 (Pa. Super. 1990)].
Larkin, 580 A.2d at 1152.
The testimony of the Additional Respondents was as follows: Sean,
who was forty years old at the time of the hearing, testified that he knew
Decedent since he was eleven years old, and he thought of her as his
grandmother. N.T., 1/9/13, at 185, 186. Sean’s wife, Christy, age thirty-
six, testified that she knew Decedent since she was ten years old because
her brother was good friends with Adam. Id. at 179–180. Christy further
testified that she had a grandparent-grandchild relationship with Decedent
since Christy married Sean fourteen years ago. Id. at 180. Adam’s wife,
Kim, thirty-eight years old, testified that she knew Decedent from the time
Kim was a teenager, she thought of Decedent as her grandmother, and she
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called Decedent “Mimi Betty.” Id. at 190, 192. All of the witnesses testified
that Decedent handed out envelopes containing checks at Christmas
gatherings. Id. at 179–192.
Regarding the application of the Dead Man’s Act to preclude this
testimony, the orphans’ court stated as follows:
The [c]ourt finds that each gift recipient was competent to
testify as a third party witness under the Dead Man’s Statute, to
the gifts given to the other recipients at the holiday gatherings.
For example, Adam Buckius was competent to testify as to the
envelopes he saw Decedent give to Sean Bitts, Christy Bitts and
Kim Buckius.
Orphans’ Court Adjudication, 12/4/13, at 7 n.3. We agree that Additional
Respondents could testify about their relationships with Decedent and as
non-adverse witnesses under the Dead Man’s Act regarding their
observations concerning the gifts given to the other recipients.
O’Rean’s final challenge to the testimony of Additional Respondents
and Latisha was that the testimony was irrelevant. The orphans’ court
rejected this basis for exclusion, as well; thus, we consider the orphans’
court’s evidentiary ruling.
“[I]t is well settled that the admissibility of evidence is a
determination left to the sound discretion of the trial court, and
it will not be overturned absent an abuse of discretion or
misapplication of law.” Knowles v. Levan, 15 A.3d 504, 507
(Pa. Super. 2011) (quoting Reott v. Asia Trend, Inc., 7 A.3d
830, 839 (Pa. Super. 2010)). For a ruling on the admissibility of
evidence to constitute reversible error, it must have been
harmful or prejudicial to the complaining party. Id.- 27 -
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Koller Concrete v. Tube City, 115 A.3d 312, 316 (Pa. Super. 2015). “To
the degree the issue of whether the law has been misapplied involves a
purely legal question, it is reviewed de novo.” Brady v. William M. Urbas,
D.P.M., 111 A.3d 1155, 1161 (Pa. 2015).
We have no hesitation in concluding, as did the orphans’ court, that
the evidence was relevant and that Latisha fairly and reasonably could have
determined that Additional Respondents could be considered “the natural
object of [Decedent’s] bounty.” General Power of Attorney, 10/11/06, at 4;
O’Rean’s Exhibit 2; Petition to Show Cause, 4/9/10, Exhibit A at 4. The
orphans’ court stated:
[Latisha] was entitled and given the power to provide these
limited gifts. [O’Rean], when serving as Agent, made gifts to
Adam Buckius. Furthermore, [O’Rean] testified that Decedent
herself gave gifts to [Latisha] and [O’Rean]. Adam Buckius was
married to Kim Buckius and together they had two children,
Lydia and Emma. The Buckius family [is], quite obviously, the
natural bounty of Decedent as they are her grandson,
granddaughter-in-law and great grandchildren. Sean Bitts,
[Latisha’s] step-son, and Christy Bitts, Sean’s wife and
[Latisha’s] step-daughter-in-law, testified that they called
Decedent “Mimi Betty” and gathered with Decedent at Christmas
family gatherings. Furthermore, the testimony demonstrated
that the Decedent delivered the gifts at holiday gatherings. The
[c]ourt finds that Sean Bitts, Christy Bitts, Adam Buckius, Kim
Buckius, Lydia and Emma as well as [Latisha] herself, were the
natural object of Decedent’s bounty and could be recipients of
limited gifts under the Power of Attorney.
Orphans’ Court Opinion, 12/4/13, at 7. Following our complete review of the
record and applicable law, we agree with the orphans’ court that the gifts
within the IRC annual exclusion were valid and permissible.
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VI. Gifts Outside the IRC Annual Exclusion
O’Rean also assails the orphans’ court’s decision upholding Latisha’s
gifts to Adam in the amount of $330,000 on October 1, 2008, and $5,000 on
April 29, 2008, that were beyond the IRC annual exclusion amount.
Referencing the Code and the POA document, O’Rean asserts that if the
orphans’ court had followed the applicable statutory language and the clear,
unambiguous limited gifting language in the POA, in conjunction with the
stipulations of counsel, it would have disallowed the two 2008 gifts to Adam
totaling $335,000 because they exceeded the $12,000 IRC annual exclusion
amount. In addition, as noted supra, O’Rean challenged the testimony on
the basis that Latisha was incompetent to testify based upon the Dead Man’s
Act. We are compelled to agree.
Regarding the gifts to Adam that exceeded the annual exclusion
amount, the orphans’ court completely ignored the language of the POA
document. The orphans’ court upheld the $5,000 check to Adam in 2008 as
a valid gift, despite acknowledging that the stipulation of counsel identified it
as in excess of the annual gift tax exclusion. The court’s reliance on
Latisha’s self-serving testimony that “Decedent directed her to write the
check to Adam,” Orphans’ Court Opinion, 12/4/13, at 16, does not elevate
the gift outside of the parameter of the limited gift-giving power of the POA
document, nor eliminate the applicability of the special rules for gifts as set
forth in 20 Pa.C.S. § 5601.2. Because the stipulation and testimony
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established that Latisha had gifted Adam $12,000 on January 1, 2008, the
$5,000 check was in excess of the annual gift tax exclusion and is subject to
return.
The same is true of the $330,000 check to Adam in 2008. In
upholding the gift, the orphans’ court supported its decision with its
determination that “[s]ince Decedent delivered[, i.e., handed out, this]
gift[], Latisha was not acting under her authority outlined in the Power of
Attorney.” Orphans’ Court Opinion, 12/4/13, at 17. That reasoning is
unsupported both by the orphans’ court and the record. The consistent
testimony was that Decedent handed out the gift checks to everyone, not
just to Adam. N.T., 1/7/13, at 113–117; N.T., 1/9/13, at 182–183, 186–
189. The decisive point, however, is that it was a check signed by Latisha as
Decedent’s POA, and it did not comply with the gifting authority of the POA
because the gift exceeded the annual IRC exclusion amount. The orphans’
court also concluded, without any support, that the gift was not subject to
analysis under 20 Pa.C.S. § 5601.2. Orphans’ Court Opinion, 12/4/13, at
17. The orphans’ court clearly and properly utilized the POA document and
20 Pa.C.S. § 5601.2 to uphold the gifts within the annual exclusion amount
that related to Additional Respondents, but then erroneously ignored the
very same POA and statutory provisions regarding the 2008 gift to Adam.
Latisha also offered testimony that Decedent intended to gift Adam
$330,000 because Decedent “wanted to help [Adam] buy a house or buy a
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house for [him].” N.T., 1/7/13, at 124. Even though our decision today
does not turn on Latisha’s testimony regarding Decedent’s wishes because
Latisha was constrained by the authority granted to her in the POA
document, we address this testimony for the sake of completeness. In doing
so, we identify several problems with such testimony.
First, Latisha’s testimony does not clearly state Decedent’s intent to
give such a large check to Adam; rather, it is a self-serving statement by
Latisha. Furthermore, an argument may be made that the Dead Man’s Act
precluded Latisha’s testimony regarding Decedent’s wishes. Without such
testimony, we are left with the testimony of Gregory Nauman. While Mr.
Nauman14 originally stated on direct examination that Decedent wanted to
make the gift to Adam, on cross-examination, he stated that his
____________________________________________
14
The issue of preclusion of Mr. Nauman’s testimony under the Dead Man’s
Act also arose at the hearing. N.T., 1/7/13, at 22. The Dead Man’s Statute
renders the testimony of a party with an interest in the outcome of the
litigation, which is adverse to that of the decedent, incompetent. 42 Pa.C.S.
§ 5930; Larkin, 580 A.2d at 1152. Those without a direct and immediate
adverse interest in the outcome remain competent to testify to events
preceding the decedent’s death. O’Rean maintains that the orphans’ court
erred and abused its discretion when it found Mr. Nauman to be a
disinterested witness. We agree that the orphans’ court properly determined
that Mr. Nauman’s testimony was not precluded by the Dead Man’s Act.
Orphans’ Court Adjudication, 3/3/14, at 12–13.
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“understanding was that Latisha Bitts wanted to make a gift to Adam.
That is what I was told.” N.T., 1/7/13, at 47 (emphasis added).15
Also, the method of withdrawing the funds from the Ameriprise
account was unconventional and does not reflect a direct gift from Decedent
to Adam. Mr. Nauman testified that in generating the Ameriprise form for
cash withdrawal for the purpose of making the gift to Adam, he partially
filled out the form before taking it to Decedent based on direction from
Latisha. N.T., 1/7/13, at 48. Mr. Nauman testified, “I was told probably by
[Latisha] that she wanted to make a withdrawal, make a gift. So I had the
form ready when I went to see [Decedent].” N.T., 1/7/13, at 48–49. His
____________________________________________
15
Latisha suggests that this testimony is a “transcript error.” Latisha’s Brief
at 18. At reargument, she referred us to the Reproduced Record (“R.R.”) at
192a where Latisha, in a reply brief filed in the trial court on May 6, 2013,
stated, “[Latisha] believes” that Mr. Nauman’s testimony was an error.” The
brief then references an e-mail from Mr. Nauman stating that he had
received Latisha’s counsel’s “letter requesting clarification,” and his
statement that he “should have said, ‘My understanding was that [Decedent]
wanted to make a gift to Adam.’” R.R. at 199a. Despite Latisha’s claim in
the May 6, 2013 brief that she “intends to move to correct the transcript,”
R.R. at 193a, we note that Latisha has not referenced the certified record
with such a motion to correct the record. While the general rule is that this
Court generally may consider facts only if they are duly certified in the
record, Commonwealth v. Young, 317 A.2d 258, 264 (Pa. 1974), we
recently acknowledged that “where the accuracy of a pertinent document is
undisputed, the Court could consider that document if it was in the
Reproduced Record, even though it was not in the record that had been
transmitted to the Court.” WMI Grp., Inc. v. Fox, 109 A.3d 740, 744 n.5
(Pa. Super. 2015) (citing Pa.R.A.P. 1921). Here, the accuracy of Mr.
Nauman’s testimony as contained in the certified transcript is disputed; thus,
Fox does not persuade us to consider Latisha’s reference to the reproduced
record.
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testimony was consistent: “[Latisha] called [him] and told [him] that there
should be a liquidation done in order to have a check sent or given to
[Adam].” Id. at 54. Instead, however, the funds were deposited into the
POA account, and one month later, Latisha wrote a check to Adam in the
amount of $330,000. The Ameriprise Redemption Form makes no mention
of any amount of gift to be made to Adam. N.T., 1/7/13, at 53.
Additionally, Mr. Nauman testified that on the Ameriprise Redemption Form,
he checked the “No” box in answer to the question, “[I]s this transaction
based on a recommendation by an Ameriprise Financial advisor.” Id. at 37–
38. He opined that the transaction should have been handled differently.
Id. at 52, 59. Therefore, even if Decedent directed that funds be liquidated,
she did not directly give the funds to Adam. Once the funds were under the
control of Latisha, she was bound by the constraints of her agency, and
Decedent’s intent was no longer controlling.
In summary, we hold that when a designated POA agent writes gift
checks from a principal’s account, the agent is constrained by the gift-giving
limitations listed in the POA document and the statutory requirements of the
Code. There is nothing about the gifts to Adam in this case to differentiate
them from any of the other gift checks written and signed by Latisha. As
such, the $330,000 check and the $5,000 check were subject to the
authority of the POA and the statutory requirements of the Code. They are
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beyond the IRC annual gift tax exclusion, as evidenced by counsels’
stipulation; thus, they are not valid.
VII. Latisha’s Cross Appeal
In her cross appeal, Latisha assails the orphans’ court’s surcharge to
her of $25,200, which represented two checks Latisha wrote to herself in
2007, one for $25,100 and one for $100. The orphans’ court correctly
concluded that since Latisha previously wrote a check to herself for $12,000
in 2007, which was within “the limited gifting power outlined in Decedent’s
Power of Attorney,” the other gifts were “not valid.” Orphans’ Court Opinion,
12/4/13, at 17. There is nothing in the record that can validly remove these
two checks from the applicable language of the POA document and the
relevant statutes. The same reasoning applicable to the $335,000 in gifts to
Adam applies to the $25,200 in checks to Latisha.
Finally, Latisha challenged the orphans’ court’s conclusion that her
payment of $7,674 to cover funeral costs should be returned to Decedent’s
estate. Latisha contends that O’Rean had withdrawn her objection to the
payment of funeral expenses. While it is true that O’Rean initially testified
that she did not object to Latisha’s payment of funeral expenses, she later
clarified that she indeed objected to their payment. N.T., 1/7/13, at 92;
N.T., 1/9/13, at 256. The orphans’ court properly relied upon O’Rean’s
clarification. Orphans’ Court Opinion, 12/4/13, at 18.
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Latisha suggests that because the Ameriprise account was titled
“TOD,” and she, along with O’Rean, “split any assets in the account following
death,” Latisha’s Panel Brief at 41, as fifty percent owner of the account,
Latisha had a right to pay Decedent’s funeral expenses. Id. We reject this
claim. The orphans’ court’s determination was correct based on the
evidentiary record. We do not agree that the record conclusively established
Latisha’s lawful right to draw checks on the account. As the orphans’ court
stated, when she paid the funeral expenses, Latisha “was no longer
authorized to make withdrawals after her mother’s death.” Orphans’ Court
Opinion, 12/4/13, at 18. Latisha’s authority as agent under the POA expired
upon her mother’s death. General Power of Attorney, 10/11/06, at 1
(NOTICE); O’Rean’s Exhibit 2; Petition to Show Cause, 4/9/10, Exhibit A at
1. However, also as noted by the orphans’ court, “The payment of funeral
expenses is a legitimate expense of an Estate[,] and the [c]ourt, in this
ruling, in no way bars [Latisha] from requesting and being reimbursed for
this cost from the Estate.” Orphans’ Court Opinion, 12/4/13, at 18 n.5.
Latisha’s challenge has no merit.
Therefore, for the aforementioned reasons, we affirm the validity of
the gifts that were within the annual gift tax exclusion amount and affirm
the surcharge to Latisha Bitts for gifts of $25,200 and funeral costs of
$7,674, totaling $32,874. In addition, we reverse the orphans’ court’s
decision that the gifts of $330,000 and $5,000 to Adam Buckius were not
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J-E03003-15
subject to return, and order the repayment of $335,000.00 to Decedent’s
estate. We remand to the orphans’ court to direct the return of said gifts
and funeral costs to Decedent’s estate.16 Jurisdiction relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 1/5/2016
____________________________________________
16
In the absence of any particularized argument regarding interest, we
affirm the orphans’ court’s denial of interest. Orphans’ Court Opinion,
12/4/13, at 19.
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