Agent Cannot Revoke Principal’s Revocable Trust

An agent with the power to receive the income or corpus of a trust, as provided in 20 Pa.C.S. § 5602(a)(7), cannot revoke the principal’s revocable trust by withdrawing all of the income and principal; an agent’s power over a revocable trust is subject to the provisions of the trust.  Estate of: Bernice M. Kane, Power of Attorney, No. 2158 EDA 2016 (Pa. Super. 4/24/2017) (non-precedential), appeal den., 363 MAL 2017 (10/10/2017).

[Comment:  We do not often cite non-precedential opinions because of their limited value, but this case involved some important issues about the relationship between the agent under a durable power of attorney and the trustees of the principal’s revocable trust and the powers of an agent over the revocable trust.  Unfortunately, the agent-appellant failed to provide adequate arguments or authorities, and so was deemed to have waived many issues.  Still, the principles and reasoning of the court may be useful or instructive.]

Agent Surcharged for Breaches of Fiduciary Duties

Agent under power of attorney who was appointed “to serve jointly” with co-agent, but who acted alone, is surcharged for unexplained or unaccounted for expenditures, for changing an IRA beneficiary to herself, which was inconsistent with the principal’s intent as expressed in her will, and for unauthorized purchases on the principal’s credit card, all of which were the result of self-dealing and failure to exercise common prudence in the exercise of her fiduciary duties.  Nixon Power of Attorney, 7 Fid.Rep.3d 81 (O.C. Philadelphia Co. 2016).

Trust Voided for Fraud in the Inducement

An irrevocable trust created by a husband and wife will be voided for fraud upon the petition of the wife when the wife was not involved in the planning of the trust or the selection of marital assets to be placed in the trust and the husband had purchased other properties with marital assets that were not known to the wife and omitted those properties from the assets included in the trust, while wife believed that the trust was intended to hold all of their marital assets.  Passarelli Family Trust, 7 Fid.Rep.3d 63 (O.C. Chester Co. 2016), rev’d, Passarelli Family Trust2019 PA Super 95 (3/28/2019) (en banc), aff’d ___ A.3d ___, 71 MAP 2019 (Pa. 12/22/2020).  (A previous decision of a three-judge Superior Court panel, 2017 PA Super 366 (11/16/2017), was withdrawn and en banc rearg. granted3150 EDA 2016 (1/12/18).) 

Jurisdiction to Determine Incapacity

The court lacks jurisdiction to determine incapacity when Pennsylvania is not the “home state” of the incapacitated person under the Uniform Adult Guardian and Protective Proceedings Jurisdictional Act (20 Pa.C.S. 5901 et seq.) and an agent under a power of attorney has objected to the court’s jurisdiction, because the agent is a person entitled to notice of the proceeding.  Greco Estate, 7 Fid.Rep.3d 50 (O.C. Montgomery Co. 2016).

Substituted Judgment to Change Incapacitated Person’s Will

A change to an incapacitated person’s will was approved, the court exercising its power of substituted judgment, when the incapacitated person and her husband both had children from prior marriages, each had executed reciprocal wills each leaving their estates to the other with their estates divided in equal shares among the children of both spouses upon the death of the survivor, but the husband had changed his will after his wife had become incapacitated and his estate went only to his children when he predeceased his incapacitated wife, the court agreeing that the incapacitated wife would have wanted to disinherit her husband’s children.  Navarra Estate, 7 Fid.Rep.3d 39 (O.C. Lawrence Co. 2016), aff’d, 2018 PA Super 84 (4/11/2018) (but vacated and remanded as to a deceased child for whom a personal representative was not substituted).

(For the earlier decision in which the court held that it had the power to substitute its judgment, see  6 Fid.Rep.3d 368.)