In re Fiedler

Decision Date05 January 2016
Docket NumberNos. 2264 MDA 2013,s. 2264 MDA 2013
Citation132 A.3d 1010
Parties In re Betty J. FIEDLER, Appeal of E. O'Rean Fiedler, Appellant. In re Betty J. Fiedler, Appeal of Latisha Bitts, Appellant.
CourtPennsylvania Superior Court

Steven R. Blair, Lancaster, for Fiedler, O.

Kendra D. McGuire, Lancaster, for Bitts, L.

Eric L. Winkle, Lancaster, for Buckius, A. and Bitts, S.

BEFORE: GANTMAN, P.J., BENDER, P.J.E., BOWES, PANELLA, SHOGAN, LAZARUS, OTT, STABILE, and JENKINS, JJ.

OPINION BY SHOGAN

, J.:

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 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.

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 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. 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 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 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, 604 Pa. 649, 987 A.2d 141 (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.

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...

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