Agent with power to gift under POA cannot make unlimited gifts or change retirement beneficiaries

HNWElder Law, Estate Administration and Probate

A recent 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 this case, 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 designations but not to make the large distribution to the siblings. Both sides appealed.

The Court found 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.”

Previous PostNext Post