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Home My WebLink About2010-2064 ALLSTATE LIFE INSURANCE : IN THE COURT OF COMMON PLEAS OF COMPANY, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff : : CIVIL ACTION – LAW vs. : NO. 10-2064 CIVIL : RONALD M. LAIRD, and : GARY FICKEL, EXECUTOR OF : THE ESTATE OF EVA M. LAIRD, : Defendants : IN RE: NONJURY TRIAL BEFORE HESS, P.J. OPINION AND ORDER The plaintiff, Allstate Life Insurance Company, has filed this action interpleading two defendants who have made claims of ownership with respect to the same annuity. The pertinent facts in the case are not in dispute. Walter and Eva Laird married on July 6, 1982. On December 16, 1982, Walter and Eva executed several documents concerning their estates. One was a post-nuptial agreement which set aside each of their respective estates for their children from previous marriages. Walter also executed a power of attorney (POA) which named his son, Ronald M. Laird, as attorney-in-fact and a Will that named Ronald as executor and his two children as equal beneficiaries. Eva executed a Will that named her son, Gary Fickel, as executor and her four children as equal beneficiaries. More than twenty-two years later, on June 20, 2005, Walter purchased a flexible premium, fixed annuity from the Allstate Life Insurance Company with $100,000 from his checking account. Eva was named sole beneficiary. Ronald was unaware that the annuity had been purchased until late in 2009, only twenty-eight days before Walter’s death. On December 4, 2009, two days before Walter’s passing, Ronald faxed a beneficiary designation form to Allstate changing the beneficiary and designating himself as the annuity beneficiary. He now asserts a claim with respect to the annuity having designated himself the beneficiary. Eva has made a similar claim, contending that Walter’s attempt to change the beneficiary was invalid. On March 24, 2010, Allstate filed the instant action for interpleader in light of the competing claims. Eva subsequently died on May 4, 2010. Her executor, Gary Fickel, was substituted as a party to this action on November 30, 2010. The annuity proceeds ($98,820.17) are being held in escrow in the Cumberland County Prothonotary’s Office pursuant to a consent order issued on January 6, 2011. A brief nonjury trial in this matter was held on May 20, 2011. The issue in this case is whether the power of attorney, executed by Walter Laird in 1982, 1 authorized Ronald to change Walter’s annuity beneficiary designation. The law with respect to powers of attorney is codified in Chapter 56 of the Decedents, Estates and Fiduciaries Code, 20 Pa.C.S.A. Section 5601 et seq. The statute permits a principal to delegate, by way of a power of attorney, certain powers to another individual to act on the principal’s behalf. Pertinent to the matter sub judice is the following: §§ 5602 Form of power of attorney (a)Specification of powers—A principal may, by inclusion of the language quoted in any of the following paragraphs or by inclusion of other language showing a similar intent on the part of the principal, empower his attorney-in-fact to do any or all of the following, each of which is defined in section 5603 (relating to implementation of power of attorney): . . . 1 We, at first, contemplated another overarching issue; whether a power of attorney authorizes an agent to undo an act done at the direction of the principal. The various appellate cases, discussed in this opinion, infer that a POA has such authority. These cases, however, do not directly address the question. We find this interesting in light of the established principle, since codified, that the agent “ must use due care to act for” the benefit of the principal. 2 (17) “To engage in insurance transactions.” 20 Pa. Cons. Stat. Ann. § 5602(a)(emphasis added). §§ 5603 Implementation of power of attorney . . . (p) Power to engage in insurance transactions – A power “[t]o engage in insurance transactions” shall mean that the agent may: . . . (3) In general, exercise all powers with respect to insurance that the principal could if present; however, the attorney-in-fact cannot designate himself beneficiary of a life insurance policy unless the attorney-in-fact is the spouse, child, grandchild, parent, brother or sister of the principal. Id. at 5603. An “annuity” is generally an insurance contract to receive fixed, periodic payments in exchange for one or more premiums. Commonwealth v. Beisel, 13 A.2d 419, 420-21 (Pa. 1940). Its central characteristic – the annuitant has an interest in payments and not in the principal – sets it apart from life insurance. In re Estate of Lesko, 25 Fiduciary Reporter 2d 12 (Cambria Co. O.C. 2004). Nevertheless, Pennsylvania courts have compared annuities to life insurance for state inheritance tax purposes when proceeds are transferable upon death. Id. Because Walter 2 would never benefit from his annuity, Walter’s annuity was similar to life insurance, payable to his wife Eva after his death. 2 Payments under the annuity would commence December 31, 2106. 3 To change the annuity beneficiary pursuant to Section 5603(p)(3), the POA (i) must expressly authorize insurance transactions, or (ii) its general language must show that the principal intended for the POA to encompass such powers. In re Weidner, 938 A.2d 354, 360 (Pa. 2007); In re Estate of Reifsneider, 610 A.2d 958, 962 (Pa. 1992); In re Estate of Slomski, 987 A.2d 141, 143 (Pa. 2009). We believe Ronald’s claim must fail because the 1982 POA does not expressly reference annuities nor does it make any reference, even generally, to insurance dealings and does not, in want thereof, incorporate Section 5602(a) of the Fiduciaries Code. The Supreme Court has established that a POA need not contain express language, either identical or similar to Section 5602(a) if it can be otherwise determined that the principal intended the attorney-in-fact to have that power. Reifsneider, 610 A.2d at 962. In Reifsneider, the decedent’s wife executed a POA that authorized her daughters from a previous marriage to “commence, prosecute, … legal proceedings … touching any matter in which I or my estate be in any way concerned.” Id. It also empowered them to do “all other acts, deeds, … whatsoever in or about my estate … as I could in my own proper person ….” Id. Finally, it granted power to her daughters to act with regard to her property and estate in their “sole discretion.” Id. In Reifsneider, the daughters had filed a notice, on behalf of their mother, of spousal election to take against husband’s estate. The estate contested the filing. Id. at 960. The trial court held that the daughters were not empowered to file an election because the POA did not expressly include that power. Id. at 960. The Supreme Court reversed, holding that Section 5602(a) did not supersede well-established common law that “general language can serve to grant specific powers.” Id. at 962 (emphasis in original). The Court reasoned that the broad language 4 concerning actions which the POA was permitted to take with respect to her property and estate 3 encompassed the legal action taken with regard to the estate of their mother’s husband. The Supreme Court has also upheld the agent’s authority to act, despite the absence of specific authority to do so, when the power of attorney incorporates by reference all of the powers listed in Section 5602 of the Code. In re Weidner, 938 A.2d at 360 (Pa. 2007). In Weidner, the decedent executed a power of attorney that granted her daughters the authority to “do any act which is set forth in Chapter 56 of Title 20 of the Pennsylvania Consolidated Statutes Annotated, known as “Powers of Attorney, as amended from time to time.” Id. at 356 (emphasis added). The decedent subsequently named her husband as the beneficiary of her life insurance policy. Id. at 358. Five years later one of the daughters removed their stepfather as the beneficiary in place of herself and siblings. Id. The husband/stepfather filed a declaratory judgment action seeking a determination that the power of attorney was insufficient to allow Rhodes to change the policy’s beneficiary. The trial court determined that the language of the power of attorney was sufficient to authorize the change in the beneficiary designation. The Superior Court reversed, determining that the power of attorney’s incorporation of Chapter 56 of Title 20 by reference was insufficient to grant powers. The Supreme Court reversed, holding that the incorporation of powers referenced in Chapter 56 empowered the POA to perform insurance transactions. Id. at 360. Relying on Reifsneider, the Court reasoned that the Chapter 56 incorporation evidenced the principal’s intent to confer the agent’s broad authority to perform every act permitted by the statute. Id. Those acts included insurance transactions pursuant, specifically, to Section 5602(a)(17). 3 We note that the power of attorney in this case was interpreted to favor the right of the agents to bring an action for the benefit of the principal. 5 Most recently, the Supreme Court ruled that the power to change a retirement plan beneficiary does not invoke a special rule for gifts under 20 Pa.C.S.A. 5601.2. In re Estate of Slomski, 987 A.2d at 144 (Pa. 2009). Because the Reifsneider Court permitted certain general language in a power of attorney to invoke specific powers under Section 5602(a), the legislature revamped Chapter 56 in 1999 to prevent an agent from making gifts unless the power of attorney 4 expressly grants that power. In Slomski, the Superior Court concluded that a change in beneficiary constituted a gift because it altered the donative intent of the principal. Slomski, 987 A.2d at 142. The Supreme Court reversed, holding in rather summary fashion that the power “to engage in retirement plan transactions” trumped any limitation on the power to make unlimited gifts. Id. at 143. The Court noted that the power to engage in retirement plan transactions specifically included the right to “exercise all powers with respect to retirement plans that the principal could if present.” Id. Citing 20 Pa.C.S.A. 5603(q). Thus, the agent in Slomski had the power to change a retirement plan beneficiary. Slomski contained a specific reference to “retirement plan transactions.” Here there is no specific reference to annuities. Unlike the power of attorney in Reifsneider, which expressly referenced actions with regard to the husband’s estate, the POA sub judice does not mention annuities or insurance transactions in any way. Moreover, unlike the situation in Weidner, the POA in this case does not incorporate the powers enumerated in Chapter 56 of the Fiduciary Code. In this case, defendant Ronald Laird relies on paragraph 12 of the power of attorney which authorizes “all and every act and thing whatsoever requisite and necessary to be done in 4 The Weidner Court disregarded the 1999 amendments because the power of attorney in that case was written in 1993. 6 connection with my property” to show that Walter intended the power of attorney to encompass annuity transactions. We have found no authority for this argument. To the contrary, to permit the “all and every act” language to include insurance transactions would be to incorporate the powers in 20 Pa.C.S.A. 5602 with no reference to it whatsoever. There is simply no basis to conclude that the power of attorney in this case granted the power to change the beneficiary of the annuity which was purchased in 2005. ORDER AND NOW, this day of June, 2011, a verdict is entered in favor of the Estate of Eva M. Laird and against Ronald M. Laird. The proceeds payable under annuity contract #GA19362482 are declared to be payable to the Estate of Eva M. Laird and the Court determines that defendant Ronald M. Laird has no interest in same. Unless post-trial motions are filed, the Prothonotary shall pay the proceeds, currently held in escrow, to the Estate of Eva M. Laird payable in such manner as counsel, Mark Mateya, Esquire, shall direct. BY THE COURT, _______________________________ Kevin A. Hess, P. J. Mark Halbruner, Esquire For Ronald M. Laird Mark Mateya, Esquire For the Estate of Eva Laird :rlm 7 ALLSTATE LIFE INSURANCE : IN THE COURT OF COMMON PLEAS OF COMPANY, : CUMBERLAND COUNTY, PENNSYLVANIA Plaintiff : : CIVIL ACTION – LAW vs. : NO. 10-2064 CIVIL : RONALD M. LAIRD, and : GARY FICKEL, EXECUTOR OF : THE ESTATE OF EVA M. LAIRD, : Defendants : IN RE: NONJURY TRIAL BEFORE HESS, P.J. ORDER AND NOW, this day of June, 2011, a verdict is entered in favor of the Estate of Eva M. Laird and against Ronald M. Laird. The proceeds payable under annuity contract #GA19362482 are declared to be payable to the Estate of Eva M. Laird and the Court determines that defendant Ronald M. Laird has no interest in same. Unless post-trial motions are filed, the Prothonotary shall pay the proceeds, currently held in escrow, to the Estate of Eva M. Laird payable in such manner as counsel, Mark Mateya, Esquire, shall direct. BY THE COURT, _______________________________ Kevin A. Hess, P. J. Mark Halbruner, Esquire For Ronald M. Laird Mark Mateya, Esquire For the Estate of Eva Laird :rlm