A Pennsylvania appeals court rules that a durable power of attorney
that allows the agent to "make gifts" does not accord the power to
change retirement plan beneficiaries or to make large gifts of personal
property absent specific authorization in the document. In Re: Slomski v. Thermoclad, et al (Pa. Super. Ct., Nos 1330WDA2007 & 1400WDA2007, July 29, 2008).

Ronald Slomski executed a power of attorney naming his mother,
Rita Slomski, as attorney-in-fact. The document authorized the
attorney-in-fact to "make gifts" but it did not contain further
instructions regarding gifting powers. Shortly before Mr. Slomski died,
his mother, acting under the power of attorney, changed the beneficiary
designation on his retirement account from his step-children to his
siblings. She also used the document to distribute some $115,000 of Mr.
Slomski’s assets to his siblings. Mrs. Slomski claimed that she was
acting on her son’s instructions.

Mr. Slomski’s step-daughters and his estate sued Mrs. Slomski,
claiming that she lacked the proper authorization to make gifts. They
argued that Pennsylvania law requires that a power of attorney
specifically grant the authority to make unlimited gifts. Mrs. Slomski
maintained that the statute grants an attorney-in-fact broad powers to
manage bank accounts and retirement plans and that the change in
beneficiaries should not count as a "gift." The trial court ruled that
Mrs. Slomski had the power to change the beneficiary disgnations but
not to make the large distribution to the siblings. Both sides
appealed.

The Superior Court of Pennsylvania finds that the power of
attorney does not grant Mrs. Slomski the power to make unlimited gifts or
to change the beneficiaries of the retirement plan. Citing the
statute’s requirement that a power of attorney specifically authorize
even limited gift making, the court says "if the phrase ‘to
make gifts’ is insufficient to vest an agent with the authority to make
limited gifts, it is clearly insufficient to vest an agent with the
broader authority to make unlimited gifts." The court also determines
that "the legislature intended that any change in life insurance and
retirement plan beneficiaries be treated as a ‘gift’ subject to [the
statute]."

For the full text of this decision, go to:  http://www.superior.court.state.pa.us/opinions/A09040_08.PDF.