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Procedural Blunder Leads to Beneficiary’s Big Loss

If a beneficiary finds that assets were transferred away from an estate, he or she will usually seek to recover the assets.  Often, these sums are recovered and distributed to the intended beneficiaries.  Sometimes though, the assets are found to have been the product of a legitimate transfer. And other times, like in the following case, a procedural error can cost the beneficiary their potential win. 

Pennsylvania Probate

In a non-precedential memorandum opinion, the Pennsylvania Superior Court determined that a non-beneficiary transferee was entitled to keep a sum transferred out of a decedent’s estate – a loss to the beneficiary of more than $90,000.

This particular case concentrated on following court procedure, rather than whether funds withdrawn from the decedent’s account for Medicaid planning purposes would require repayment. It is not clear from the opinion whether the decedent had actually qualified for or benefited from Medicaid. However, the opinion is clear: Pennsylvania courts take following civil procedure very seriously.

In Re: Estate of Marie Hirnyk

Facts

The decedent, Marie Hirnyk, was a Ukrainian immigrant with limited English proficiency. In 2009, she devised a will naming her daughter as beneficiary of her estate. In the same year, the decedent started a friendship with Marjorie Weiblinger. In 2010, the decedent named Weiblinger as her power of attorney. The following year, the decedent revoked this POA and named a family friend as her new agent.

In 2012, the decedent’s doctor noted that she was exhibiting signs of decreasing mental capacity. Weiblinger reappeared in her life and returned to her role of assisting the decedent with her care. The decedent then opened a joint bank account with Weiblinger, and the decedent deposited more than $90,000 of her own funds into the account. The decedent created a new will devising much of her estate to Weiblinger, revoked the current POA, and renamed Weiblinger as her agent. The decedent’s health then began to decline.

Weiblinger then transferred $60,000 from the joint account into a personal account in her own name.  Later testimony claimed that this transfer was for Medicaid planning purposes.  Weiblinger subsequently signed a new signature card for the joint account with only her name – ultimately removing the decedent from the account. After the decedent’s death, Weiblinger transferred the $60,000 back to the original account, which then had only Weiblinger’s name on it.

Proceedings

The decedent’s daughter filed probate proceedings based upon the 2009 will. Weiblinger filed for the 2012 will to be admitted. The lower court found that the 2012 will was a product of undue influence and thus the 2009 will ruled. Daughter filed suit against Weiblinger for the return of the $90,000. Weiblinger argued that the Multi-Party Account Act, a survivorship act, applied to the account and thus the money was hers to keep. Daughter then accused Weiblinger of self-dealing, as she transferred joint funds into her own account.

The court dismissed Daughter’s claim of Weiblinger’s self-dealing and petitioned for return of the assets. The funds were released to Weiblinger, minus a small sum the court found questionable. Daughter filed a motion for reconsideration and was denied. She then appealed to the Superior Court.

Procedural Error

In the end, Daughter loses her appeal – but not on the merits of her claim. Rather, she neglected to make her claims to the appellate court with the specificity required by appellate court procedure. She filed her appellate brief based on three claimed errors: 1. The survivorship act should not have been applied; 2. Failure to return the funds to the estate for Weiblinger’s claimed self-dealing; and 3. Not surcharging Weiblinger for self-dealing. Her failure rested in the contents of her statement of errors to the appellate court under Pa.R.A.P. 1925(b).

The argument presented in her appellate brief did not match the proposed errors claimed in her 1925(b) statement. Regarding the survivorship act – in the lower court proceedings, she focused her argument on the opening of the account. In her brief she shifts focus to the termination of the joint nature of the account prior to her mother’s death. The Superior Court found that although this argument was briefly addressed in Daughter’s motion for reconsideration, it was not concisely addressed as an appellate issue in her 1925(b) statement, nor was her modified argument presented for argument at the lower court level. Due to this error, the argument made during appeal was being inappropriately addressed for the first time.

The Superior Court agreed with the lower court’s findings that Weiblinger had not engaged in self-dealing under the particular circumstances of the case.  However, Daughter raised the argument on appeal that the power of attorney did not authorize gifting and so Weiblinger took erroneous actions as an agent. The Court found that this argument was also waived due to the argument’s absence from her 1925(b) statement.

Finally, without a finding of self-dealing, Daughter’s final argument was moot.

Conclusion

Unfortunately for Daughter, her lack of specificity cost her more than $90,000. Had all of the appropriate arguments been made timely, rather than as an afterthought, the outcome may have been more favorable for Daughter. This example is a reminder for all attorneys to explore and argue all possible avenues and alternatives for every case – never underestimate the possible complexity of a seemingly cut and dry scenario.

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