Intended Beneficiary Of POD CD Has Standing To Sue Power Of Attorney After Decedents Death

In the estate litigation case of Rellick-Smith v. Rellick, PICS No. 16-1066 the Pennsylvania Superior Court ruled in a case of first impression that the intended beneficiary of a decedent’s estate has standing to sure the decedent’s power of attorney for withdrawing funds from a bank account and not evenly distributing them.

In a split decision a three-judge panel ruled Aug. 22 in Rellick-Smith vs. Rellick that Indiana’s County Orphans’ Court should have not dismissed a complaint filed by Sharleen M. Rellick-Smith alleging that two of her relatives cashed $400,00 in certificate of deposit accounts without providing Rellick-Smith her due share.

“Rellick-Smith as a beneficiary of the CD’s named by the decedent/principal during her life, had standing to challenge the propriety of the defendant’s unilateral actions, as agents under the [power of attorney] agreement, in changing the decedent’s beneficiary designation, to the defendant’s benefit,” Senior Judge John L. Musmanno wrote for the 2-1 majority. “To not afford named beneficiaries of a Totten trust standing to sue in circumstances such as those presented in the instant case could lead to an absurd and unjust result.”

Rellick-Smith, Betty Rellick and Kimberly Vasil were all relatives to Rose Rellick, who died in 2012, according to the opinion. In 2006 Betty Rellick and Vasil became power of attorney for Rose Rellick and created two CDs at First Commonwealth Bank. Rellick-Smith argued that accounts were created for the purpose of estate planning for Rose Rellick’s intended beneficiaries.

In 2009, Betty Relick and Vasil using power of attorney, removed Rellick-Smith’s name from CDs without notifying her, Musmanno said. According to Rellick-Smith, Rellick and Vasil withdrew the money in the CDs in 2013 and divided it evenly amongst themselves.

Rellick-Smith filed a complaint in 2014 arguing that she is entitled to one-third of the value of the CDs, and that Rellick and Vasil abused their authority as power of attorney by removing her name from the accounts.

The defendants filed a motion to dismiss, saying Rellick-Smith lacked standing to sue, as the only people who can challenge a power of attorneys actions are the principal, prior to death, or the personal representative of the estate from that point on. The Orphan’s Court granted the motion. In determining whether Rellick-Smith had standing, Musmanno addressed whether the power of attorney agreement authorized the defendants to change the beneficiaries of the CDs. Accepting Rellick-Smith allegations as true, he said, the decedent’s actions were inconsistent with that intent.

In addition to having standing as beneficiary, Musmanno said, “Rellick-Smith is certainly an aggrieved party, as she has substantial, direct and immediate interest in the outcome of this litigation.”

Judge Judith Ference Olson wrote in a dissenting opinion that Rellick-Smith does have standing to sue but waived any argument that she is a beneficiary by not presenting that theory to the Orphan’s Court. Olson noted that Rellick-Smith argued in three locations in her answer to the defendant’s motion to dismiss that she was not beneficiary of the trust.

Reference: Ben Seal, Of The Law Weekly, Pennsylvania Law Weekly, 39 PLW 818, August 30, 2016

Filed Under: Estate Litigation; Power of Attorney

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