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HomeMy WebLinkAbout21-2014-822 In Re: : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA HOWARD F. MILLER, : : ORPHANS’ COURT DIVISION Deceased : : NO. 21-14-0822 : IN RE: PETITION FOR ACCOUNTING OPINION and ORDER BREWBAKER, J., January 19, 2017 Before the Court is a petition to compel the filing of an account filed by Renee E. Andwood (“Renee”) and Karen M. Blackbird (“Karen”) (jointly “the sisters”), seeking to compel the executors of their father’s estate, Geoff G. Miller (“Geoff”) and Huntley H. Miller (“Chet”) (jointly “the brothers”) to include the Farm Account, M&T Bank Account Nos. 15004225781639 and as an asset of the estate and not owned by the brothers as joint tenants with the right 9856467452 of survivorship. For the reasons that follow, the petition will be granted. Statement of Facts 1 The following facts are not in dispute. On November 9, 2011, Howard F. Miller (“Father”) executed a Power of Attorney, whereby Father appointed his four children, Geoff, Chet, Renee, and Karen, to act on his behalf “jointly or individually” as his co-agents. 2 Previously, Father and his wife, Marguerite E. Miller, transferred the family homestead to themselves and the four siblings as joint tenants with the right of survivorship. The siblings agreed to split equally responsibility for the real estate taxes, insurance, maintenance, upkeep and repairs to the family homestead. 1 The parties submitted a Joint Stipulation of Facts upon which this Court bases its opinion. 2 Marguerite Miller passed away in June 2011 and her estate is not at issue in the present case. Father died on August 21, 2014. In his will, signed in May 2009, Geoff and Chet were named as executors. Prior to his death, Father had jointly operated a farm on the family homestead along with Geoff and Chet. Father and his sons provided the land, the seed, the fertilizer and paid to truck the produce to market, while a Mr. Widders supplied the farm equipment and the manpower to operate the farm. Operating revenues were traditionally deposited into a checking account located at Citizens Bank, and expenses were paid for from the same account. In February 2012, Certificates of Deposit totaling approximately $70,000 matured. Geoff, acting as Father’s POA, took the $70,000 from the maturing Certificates of Deposit and $30,000 from Father’s Citizens Bank account and opened a new account at M&T Bank (“Farm Account”). The Farm Account was opened as a joint account with right of survivorship, listing Father, Geoff, and Chet as the owners. After Father’s death, the Farm Account was retitled to Geoff and Chet. Additionally, the siblings agreed to change ownership of the family homestead from joint tenants with right of survivorship to tenants in common, and have amicably agreed to partition the property. Prior to his death, Father had gifted all four siblings $6,000 on several occasions. At first, the gifts were from the Citizens Bank account. Later, Father had Geoff send the gifts from the Farm Account to avoid depleting the Citizens Bank account because Father relied upon that money to pay for his care. After Father’s death, Geoff and Chet transferred one third ($23,840.58) of the date of death value of the Farm Account ($71,522.35) to Father’s Estate Account. On January 27, 2016, Karen and Renee filed a Petition to Show Cause Why an Account 3 Should Not be Filed in Accordance with 20 Pa. C.S.A. §3501.1. Geoff and Chet filed an 3 A second action was filed, entitled a Complaint in Partition. This matter has been indefinitely stayed by the parties because the parties have agreed to voluntarily partition the family homestead. 2 Answer (Nunc Pro Tunc) on March 14, 2016, and the parties entered settlement negotiations. On October 31, 2016, counsel for all parties informed the Court that the negotiations had reached an impasse. A status conference was held on November 15, 2016, and after agreement of the parties that the matter would be decided on briefs, counsel was ordered to file stipulations of fact and legal memoranda by December 30, 2016, to enable the Court to decide the ownership of the Farm Account. The main issue between the parties at this time is over the Farm Account. The brothers assert that Father agreed to the opening of the Farm Account so that Geoff and Chet could continue to operate the farm after Father’s death. The sisters disagree. In their petition, the sisters contend that the Power of Attorney did not grant Geoff the authority to withdraw funds from one account and use those funds to open a new account jointly with the right of survivorship with just himself, Father, and Chet. The sisters argue that powers of attorney must be strictly construed, and point to language in the power of attorney in the present case stating that assets of Father were to be kept separate from the co-agents’ assets except when there was a gift. According to the language of the Power of Attorney, in the case of a gift, all four siblings were required to agree to the transfer, which did not occur with the transfer of the assets to the Farm Account. The sisters also argue that the transfer was against Father’s probable intent with respect to the distribution of his estate, and therefore in violation of the power of attorney, because Father was clear that he wanted his estate divided equally between the four siblings. The sisters also point out that nowhere in the power of attorney does it grant the authority to create an account in the name of Father along with others, such as creating a joint account with the right of survivorship, but only permits the creation of accounts in Father’s name. The sisters further 3 argue that the creation of the Farm Account was not a continuation of the farming business, but rather the creation of a new venture and a radical change. The sisters note that the farming arrangement is essentially one of landlord and tenant, and that a separate account could have been created in the name of Father and all four children to run the land that they all jointly owned. Because the transfer was not authorized by the Power of Attorney, the sisters contend that the transfer was therefore a nullity. Geoff and Chet contend that the Farm Account was lawfully opened pursuant to the power of attorney. The brothers point to various other transactions signed on behalf of Father under the power of attorney that have not been questioned. Moreover, the brothers argue that the account is legally theirs because of the right of survivorship and that the account was not a fiduciary or custodial account. The account was opened with Father’s full knowledge and consent so that the brothers could continue the farm operation after his death. The brothers also note that Karen and Renee knew about the Farm Account prior to Father’s death and did not challenge it, and also received gifts from the account totaling $12,000 each. Additionally, the brothers argue that there is no evidence that Father intended the Farm Account to be a gift, but rather the evidence shows that Father intended the account to serve as the means to continue the farm operation after he died. Analysis We begin by noting that powers of attorney are to be strictly construed. Estate of Slomski v. Thermoclad, 956 A.2d 438, 444 (Pa. Super. 2008), (quoting In re Estate of Cambest, 756 A.2d 45, 52 (Pa. Super. 2000)). 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 4 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”). Under 20 Pa. C.S. §5601, an agent is generally required to keep the funds of the principal separate from the agent’s own personal funds, unless authorized by the principal. In the present case, Section 5 of the “Durable Power of attorney for Howard F. Miller” states the siblings as co-agents have the power to “open and close checking, savings, transaction or other deposit accounts in \[Father’s\] name.” Exhibit C to Joint Stipulations, Section 5. Section \[m\]y Agents must act jointly, not individually, for all 22 of the Power of Attorney states that “ gifting .” Exhibit C to Joint Stipulations, Section 22 (emphasis in original). Section 23 further states that “\[m\]y Agent and the donee of the gift shall be responsible as equity and justice may require to the extent that a gift made by my Agent is inconsistent with my directions and planning of my probable intent with respect to the disposition of my estate.” Id. Finally, Section 22 waives the general requirement that assets may not be commingled between the principal and I specifically and expressly waive any requirements in effect now and co-agent, by stating “ in the future to have my assets kept separate from my Agent’s assets. ” Id. (Emphasis in original). We agree with Karen and Renee that Geoff and Chet acted without legal authority under the power of attorney to open the Farm Account as a joint tenancy with right of survivorship. Ultimately, we conclude that it does not matter for purposes of this case whether or not the transfer of the funds was a gift or not. If it was a gift, then all four siblings were required to agree to the transfer. Geoff and Chet contend that Karen and Renee did not dispute the opening of the account at that time and later received gifts from the account, thereby implicitly agreeing 5 However, neither the receipt of money from the account nor lack of protest does not indicate acquiescence in this case. There are many reasons why Karen and Renee may not have objected at the time of the account’s creation. For example, they may not have understood the implications of the joint tenancy or that Father intended the transfer to be a gift and not merely a means to keep Father’s care expenses separate from farm expenses. The power of attorney states that the siblings must unanimously agree to a transaction involving a gift. The burden therefore is on Geoff and Chet to show that there was unanimous agreement, which, given Karen and Renee’s objections, is not the case involving the Farm Account. The transfer must fail if it is considered a gift due to lack of unanimous consent. If the transfer was not a gift, then the money was required to be kept separate as the power of attorney does not permit the commingling of assets between Father and the siblings, with the sole exception of a gift. The waiver of the commingling requirement is contained within Section 22 of the power of attorney, which concerns gifts, but is not mentioned elsewhere. Moreover, the acknowledgement of the power of attorney signed by each sibling states that “I shall keep the assets of the principal separate from my assets (except where a gift of assets may be titled jointly in the names of Principal and Agent).” Exhibit C to Joint Stipulations, Acknowledgement (emphasis added). The only reasonable interpretation of these two provisions, read together to give effect to both, is that the waiver is limited to gifts and is inapplicable to other types of transactions. Father may have wished to give the money to Geoff and Chet so that they could continue operating the farm upon Father’s death. If this was in fact true, then Father should have amended his will to reflect this intent. If the intention was to separate farm expenses and revenue from Father’s day-to-day care expenses, then the account should have been created in just Father’s name. In that event, the siblings, with the power of 6 attorney, would have had the power to draw upon these funds as needed pursuant to Section 5 of the power of attorney. The clearest evidence of Father’s intent is that he wanted all four siblings to agree as to the disposition of his estate, which was not done with the Farm Account. The establishment of the Farm Account must fail, even if it is not considered a gift, as an improper commingling of assets, and not reflective of Father’s intent. Consequently, we conclude that the establishment of the Farm Account was done without authorization under the power of attorney, and therefore the transfer was invalid. The money in the account should properly be considered as part of Father’s estate and should not have transferred to Geoff and Chet as joint tenants with the right of survivorship upon Father’s death. ORDER th AND NOW, this 19 day of January, 2017, upon consideration of the Petition to Compel the Filing of an Account by Petitioners Renee E. Andwood and Karen M. Blackbird, the petition GRANTEDORDERED is hereby . It is hereby that the Executors Geoff G. Miller and Huntley H. Miller (“Chet”) are to file an accounting with the Farm Account, M&T Bank Account Nos. 15004225781639 and 9856467452 being included as part of Decedent’s estate, and that the Farm Account will not transfer to Geoff and Chet as joint tenants with right of survivorship. BY THE COURT, __________________________ Jessica E. Brewbaker, J. 7 In Re: : IN THE COURT OF COMMON PLEAS OF : CUMBERLAND COUNTY, PENNSYLVANIA HOWARD F. MILLER, : : ORPHANS’ COURT DIVISION Deceased : : NO. 21-14-0822 : IN RE: PETITION FOR ACCOUNTING ORDER th AND NOW, this 19 day of January, 2017, upon consideration of the Petition to Compel the Filing of an Account by Petitioners Renee E. Andwood and Karen M. Blackbird, the petition GRANTEDORDERED is hereby . It is hereby that the Executors Geoff G. Miller and Huntley H. Miller (“Chet”) are to file an accounting with the Farm Account, M&T Bank Account Nos. 15004225781639 and 9856467452 being included as part of Decedent’s estate, and that the Farm Account will not transfer to Geoff and Chet as joint tenants with right of survivorship. BY THE COURT, __________________________ Jessica E. Brewbaker, J. Robert G. Frey, Esquire 5 South Hanover Street Carlisle, PA 17013 For the Petitioners Kathleen Misturak-Gingrich, Esquire 5006 E. Trindle Road, Suite 203 Mechanicsburg, PA 17050 For the Co-Executors