Appeal on Validity of Power of Attorney and Trust

The Pa. Supreme Court is allowing an appeal from a decision of the Superior Court on the following issue (as stated by the petitioner):

What is the effect of a Power of Attorney which is not executed in conformance with the statute and did the Superior Court commit reversible error by reversing the trial court which held that a trust was void and terminated as it was created by a Power of Attorney which was later declared void ab initio?

In re: Joseph L. Koepfinger, an Individual, 162 WAL 2012 (5/12/2022).

The opinion of the Superior Court can be found at 123 WDA 2020 (2/4/2021) (non-precedential). According to that opinion, the power of attorney that was used to create the trust was signed in 2016 but was not notarized, as then required by § 5601(b)(3)(i)). In a declaratory judgment action by the principal, the lower court had held that the power of attorney was therefore void, and the trust was therefore void, relying on Vine v. Commonwealth of Pennsylvania, State Employees’ Retirement Board, 607 Pa. 625, 9 A.3d 1150 (Pa.Super. 2010). The Superior Court reversed (or perhaps vacated) the lower court order because the Vine decision was reversed when the legislature amended 20 Pa.C.S. § 5608, which protects people who rely on a power of attorney in good faith.

[DBE Comments (replacing initial comments): The Superior Court’s opinion is largely incoherent. The court says that reliance on Vine was error, but also says that § 5608 was not applicable to the validity of the trust. The court therefore seemed to recognize that the validity of the trust and the liability of the agent/trustee were two separate issues, and yet treated the legislative reversal of Vine as a reversal on both issues, rather than on just the issue of liability. It also isn’t clear whether the court vacated the trial court’s order (which would allow the trial court to reconsider the issue) or reversed the order (and so held the trust to be valid). (The word “vacate” is on page 5 of the opinion, but the opinion concludes with “reversed,” with a footnote declaring that the trust might still be terminated due to fraud or mistake, implying that the trust is otherwise valid.) More puzzling still, the court observed that “neither the [trial] court nor [the principal] points to anything in the law in force at the relevant time that would automatically render an irrevocable trust created pursuant to a POA void ab intitio because the POA is ultimate found to have been improperly executed.” This suggests that the actions of an agent under an improperly executed power of attorney might nevertheless be valid, and the Superior Court apparently decided that issue by ruling against the principal without remanding to allow the trial court to address it.]

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