Estate of Donald T Schaefer, Appeal of Gartner, D. ( 2023 )

J-A15004-23
2023 PA Super 125IN RE: ESTATE OF DONALD THOMAS : IN THE SUPERIOR COURT OF
SCHAEFER : PENNSYLVANIA
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APPEAL OF: DONNA S. GARTNER :
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: No. 1342 WDA 2022
Appeal from the Order Entered November 15, 2022
In the Court of Common Pleas of Allegheny County
Orphans’ Court at No. 02-19-01431
BEFORE: MURRAY, J., McLAUGHLIN, J., and PELLEGRINI, J.*
OPINION BY MURRAY, J.: FILED: July 19, 2023
Donna S. Gartner (Appellant), as executrix of the estate of Donald
Thomas Schaefer (Decedent), appeals from the order dissolving a preliminary
injunction and directing distribution of Decedent’s Merrill Lynch individual
retirement account (IRA) to his second wife, Florence Schaefer (Florence).
Upon review, we vacate and remand with instructions.
We take the underlying facts and procedural history from this Court’s
prior opinion:
By way of background, in August 2018, Florence and [Decedent],
both octogenarians, entered into a premarital agreement [the
agreement] drafted by their shared attorney, Jennifer Lynch
Jackson, Esq. [Jackson]. …
The record reflects multiple contradictions and ambiguities
between Jackson and Florence’s remembrance of events. Largely
gleaned through Jackson’s statements, at Florence and
[Decedent’s] request, they met with Jackson for the specific
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* Retired Senior Judge assigned to the Superior Court.
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purpose of obtaining that premarital agreement.2 During their
several-hour meeting, Florence and [Decedent] indicated that
they, among themselves, had materially disclosed the
financial contents of their estates and sought to protect
those assets from passing, in death, to the other potential
spouse.3 Their desire to proceed having full cognition of each
other’s assets4 was communicated and emphasized to Jackson at
several points throughout the meeting, which was conducted
entirely in person. There would be no detailed accounting or
discussion of [Decedent’s] assets or liabilities during this meeting.
2 They would also present to Jackson a document
addressing religious issues between the couple. As an
addendum, they wanted it notarized and appended to
the premarital agreement. In addition, they
requested that Jackson prepare wills for them,
which would further state that there was to be
no cross inheritance. Instead, their estates
were to pass to their respective children and/or
heirs.
3 Jackson would later testify that Florence expressly
disclaimed wanting an asset and liability sheet
attached to the premarital agreement. When it was
her opportunity to do so, Florence refuted Jackson’s
statement.
4 However, Florence’s recollection of her preexisting
knowledge at the meeting was that she had not been
apprised of [Decedent’s] individual retirement
accounts and stock holdings.
In addition to general monetary discussions, Florence and
[Decedent] stressed that, should [Decedent] precede Florence in
death, Florence was permitted to stay at his residence in the form
of a life estate. This point would later become incorporated into
[Decedent’s] will.
After Jackson obtained the necessary information from
Florence and [Decedent], she explained the agreement to them,
line by line. When Jackson concluded, she specifically advised
Florence and [Decedent] that they should take the unsigned
agreement home and have it reviewed by an independent attorney
of their choosing. Florence and [Decedent] rejected this advice
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and correspondingly entered into the at-issue premarital
agreement.
Florence and [Decedent] married in the month after
consummation of their agreement. Approximately five months
into their marriage, [Decedent] died.
Following [Decedent’s] death, his will was probated.
Thereafter, Florence filed a declaratory judgment action, asserting
the agreement to be void because of Jackson’s professional
negligence that surrounded the construction of the agreement.
Specifically, Florence identified that Jackson did not properly
explain the agreement to her, failed to draft the agreement
correctly, and incorrectly executed the document. Moreover,
Florence sought damages from Jackson due to, in her words,
“malpractice.” Simultaneously, Florence sought her elective share
from [Decedent’s] estate. [In 2019, Florence sought, and the
orphans’ court granted, a preliminary injunction prohibiting the
sale or transfer of Decedent’s IRA.]
Ultimately, after the denials of both Florence’s motion for
summary judgment and [Decedent’s] estate’s motion for
judgment on the pleadings, the premarital agreement’s validity,
the subject of the case presently before this Court would be
litigated in orphans’ court, with Florence advancing several bases
as to why the agreement is legally insufficient under Pennsylvania
law. Following a hearing, the court, inter alia, found Jackson’s
recollection of events to be credible and determined the
agreement to be valid.
Estate of Schaefer, 281 A.3d 1044 (Pa. Super. 2022) (unpublished
memorandum at *1-2) (some footnotes omitted, others in original, emphasis
added).
This Court affirmed the orphans’ court. Id. We expressly rejected
Florence’s position that she did not receive the financial disclosures. Id. at
*4-5. We observed: “The agreement clearly contemplates waiver of a right
to the other party’s estate.” Id. at *5. Further, we stated:
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As to whether Florence received the legally required financial
disclosures from [Decedent], the [orphans’] court found Jackson
to be credible when she unequivocally indicated that Florence and
[Decedent] had materially discussed all of [Decedent’s] assets in
a way that was satisfactory for both signators to the premarital
agreement and that Florence wanted no corresponding list of
assets and debts prepared. …. [W]e find no abuse of discretion
or error of law in the [orphans’] court’s determination, given
Jackson’s clear testimony as to Florence’s level of financial
knowledge and Florence’s then-desire to not delve into the
specifics of [Decedent’s] assets.
Id. See also id. *6-7 (noting Florence failed to show she was not “fully
cognizant of [Decedent’s] assets,” including the existence of Decedent’s IRA,
and concluding “there is evidence of record, both in the form of testimony and
documentary, indicating that Florence knew of [Decedent’s] assets.”
(emphasis in original)).
On September 19, 2022, Appellant filed a motion to dissolve the
preliminary injunction, and requested that the orphans’ court direct
distribution of the IRA to Decedent’s estate. Both parties submitted briefs.
On November 15, 2022, the orphans’ court filed a memorandum opinion and
order dissolving the preliminary injunction, but directing distribution of the
IRA to Florence as the surviving spouse. This timely appeal followed.1
Appellant raises a single issue for review:
I. Did the orphans’ court abuse its discretion when it granted
[Appellant’s] motion to dissolve preliminary injunction and
direct distribution of Decedent’s [IRA] but where it ordered
that said IRA be distributed to [Florence] and not to
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1 The orphans’ court did not order Appellant to file a Pa.R.A.P. 1925(b) concise
statement and did not issue an additional opinion.
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[Appellant,] despite [Florence] waiving any interest in the
IRA pursuant to [the agreement]?
Appellant’s Brief at 4.
In finding Florence was entitled to the IRA, the trial court opined:
On October 11, 2022, [Appellant] filed a brief which included a
single page of legal argument. It discussed one case. It’s not the
first time the Estate has extolled the virtues of the Ohio Supreme
Court’s decision in Kinkle v. Kinkle, 699 N.E.2d 41 (Ohio 1998).
In addressing Kinkle before, [the orphans’ c]ourt made the
following observation:
In Kinkle, the Ohio Supreme Court upheld an
antenuptial agreement involving an IRA that was
specifically listed as the decedent’s property in an
exhibit to the antenuptial agreement. The
[agreement] involved here … does not identify assets.
For that reason, the magnetic force of Kinkle
evaporates.
Opinion, pg, 3 fin. 2 (Sept. 8, 2020). The passage of time and
the Superior Court’s affirmation of [the c]ourt’s decision does
nothing to change [the orphans’ c]ourt’s view of the Kinkle case.
It just does not apply here. There, the spouse was made
aware of an IRA. Here, Florence had no knowledge about
its existence.
While the [the orphans’ c]ourt has dispatched the sole legal
theory from [Appellant] and could end on that note alone,
[Florence’s] legal team advances some reasons which are worthy
of discussion because of the likelihood of the issue arising in future
litigation. The overarching theme of the surviving spouse here is
that while the premarital agreement was deemed valid and
enforceable[,] it does not preclude giving effect to the language
in the IRA agreement. The language of the pre-marital
agreement, the language in the IRA custodial agreement and the
influence of Sections 6108(a) and 2203 of Title 20 allows the
surviving spouse to prevail in this case. That result is supported[]
by some analogous case law. See[] The Estate of Kenneth
Sipos, 47 Pa. D&C 5th 259 (CP; Phil, March 4, 2015). The Sipos
decision references a state Supreme Court decision. Alkhafaji v.
[TIAA-CREF] Individual &Institutional Servs., LLC, 69 A.3d
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219, 223 (Pa. 2013). Despite that decision being an evenly
decided per curiam result, the case stands for the proposition
‘‘that the beneficiaries of an insurance policy could not be changed
by a will”, Justice Saylor explained, “[t]o allow modification of
non-testamentary contractual assets by testamentary documents
blurs the timeless and very practical distinction between the two,
notably set forth in 20 Pa. C. S. § 6108.” 69 A.3d at 223. He
reasoned that “[p]arties to a contract must have the ability to rely
on the terms of their contract[] and should not have to speculate
about testamentary clauses in documents of which they have no
awareness.” Id.
Subsequent cases have also referenced Alkhafaji for
recognition of an exception to the general rule. “[O]ur case law
has recognized an exception where an insured makes reasonable
but unsuccessful efforts to send notice. This exception will
recognize a change in beneficiary designation, even though notice
is received after the death of the annuitant, if the annuitant made
every reasonable effort to comply with the notice requirements of
the policy.” N.Y. Life Insurance Co. v. Legault, 15-CV-736
(E.D. Pa. Oct. 23, 2015), aff’d on appeal, N.Y. Life Ins. Co. v.
Legault, 16-3259 (3rd Cir. March 2, 2017) (citing[] Alkhafaji
and explaining that, under Pennsylvania law, a beneficiary change
can be made either by strictly complying with policy terms or by
making ‘every-reasonable effort to comply with the notice
requirements of the policy’); see also[] Estate of Wilson by
Killinger v. State Employees’ Ret. Bd., 219 A.3d 1141 (Pa.
2019).
Orphans’ Court Opinion, 11/15/22, at 3-5 (footnotes and record citations
omitted, emphasis added).
In response, Appellant argues:
The validity of the [agreement] was decided by this Court] in favor
of Appellant[.] … The [agreement] set forth that a full and
complete disclosure of property and income has been made. …
[The Superior Court] affirmed the decision of the [orphans’]
court that [Florence] waived any claim to [Decedent’s] assets and
[e]state by signing the [agreement].
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The [IRA] was part of [Decedent’s] assets when he passed.
In its [o]pinion, the [o]rphans’ [c]ourt, without any evidence of
record, states that [Florence] did not know about the IRA. This is
inconsistent with [the Superior Court’s] conclusion that the
[agreement] was valid and [Florence] was fully advised of the
assets of [Decedent]. Furthermore, the language of the IRA
specifies that the proceeds should go to Julie Schaefer [Julie],
[Decedent’s] first wife who preceded him in death. [Florence] was
never a named beneficiary.
Appellant’s Brief at 7-8.
Florence counters that the agreement “does not apply to the [IRA.]”
Florence’s Brief at 5. She maintains that “the waiver upon death provision” of
the agreement does “not apply to all assets[] but is expressly limited to
testamentary assets.” Id. Florence repudiates the orphans’ court’s finding
that she was unaware of the IRA’s existence, stating, “the parties were clearly
aware of the IRA” when drafting the agreement. Id. at 10. Florence reiterates
that the trial court erred in finding she “had no knowledge of the IRA.” Id. at
13. Florence “acknowledges that the trial court relied on this factual error to
at least some degree” in making its decision. Id. at 14.
We begin by recognizing:
The findings of a judge of the Orphans’ Court Division, sitting
without a jury, must be accorded the same weight and effect as
the verdict of a jury, and will not be reversed by an appellate court
in the absence of an abuse of discretion or a lack of evidentiary
support. This rule is particularly applicable to findings of fact
[that] are predicated upon the credibility of the witnesses, whom
the judge has had the opportunity to hear and observe, and upon
the weight given to their testimony. In reviewing the Orphans’
Court’s findings, our task is to ensure that the record is free from
legal error and to determine if the Orphans’ Court’s findings are
supported by competent and adequate evidence and are not
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predicated upon capricious disbelief of competent and credible
evidence.
In re Estate of Cassidy, --- A.3d ---, 2023 WL 3910447, at *3 (Pa. Super.
Jun. 9, 2023) (citation omitted). “However, we are not constrained to give
the same deference to any resulting legal conclusions. … This Court’s standard
of review of questions of law is de novo, and the scope of review is plenary,
as we may review the entire record in making our determination.” In re
Estate of Tscherneff, 203 A.3d 1020, 1024 (Pa. Super. 2019) (citations
omitted).
This case involves the interplay between the language of the agreement,
the IRA, and Decedent’s overall estate plan. Thus, we recognize:
Prenuptial agreements are contracts and should be interpreted
using contract principles. Raiken v. Mellon, [ ] 582 A.2d 11, 13
([Pa. Super.] 1990).
“When interpreting a prenuptial agreement, the court, as in
dealing with an ordinary contract, must determine the intention of
the parties. When the words of a contract are clear and
unambiguous, the intent of the parties is to be discovered from
the express language of the agreement.” Id. “The court must
construe a contract as written and may not modify the plain
meaning of the contract under the guise of interpretation.”
Tuthill v. Tuthill, 763 A.2d 417, 420 (Pa. Super. 2000)[.]
However, where an ambiguity exists, “the courts are free to
construe the terms against the drafter and to consider extrinsic
evidence in so doing.” Raiken, 582 A.2d at 13. If a contract “is
fairly susceptible of different constructions and capable of being
understood in more than one sense[,]” it will be found to be
ambiguous. Tuthill, 763 A.2d at 420. “It is the function of the
court to decide, as a matter of law, whether the contract terms
are clear or ambiguous. The fact that the parties have different
interpretations of a contract does not render the contract
ambiguous.” Id. (citations omitted).
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In re Estate of Blumenthal, 812 A.2d 1279, 1286 (Pa. Super. 2002).
Moreover:
The testator’s intent is the polestar in the construction of every
will and that intent, if it is not unlawful, must prevail. … The
words of a will are not to be viewed in a vacuum but rather as part
of an overall testamentary plan.
In re Estate of Davis, 128 A.3d 819, 821 (Pa. Super. 2015) (citation
omitted).
With these principles in mind, we address Appellant’s issue. This Court
previously determined that Florence and Decedent entered into a valid
prenuptial agreement. Schaefer, 281 A.3d at *8. The relevant portions of
the agreement provide:
1.01. The Parties to this Agreement intend to identify their
separate property as of the date of marriage, and to clarify that
neither will obtain any interest in the specified separate
property of the other as a result of the marriage except as
provided herein.
….
2.02. Each Party to this Agreement has given the other a full and
complete disclosure of his or her property and income as of the
date of this Agreement.
….
3.01. Each Party shall have the absolute and unrestricted right to
manage, control, dispose of, or otherwise deal with his or her
separate property free from any claim that may be made by the
other Party by reason of their marriage, and with the same
effect as if no marriage had been consummated between them.
By this Agreement, each Party waives, discharges, and
releases all right, title, and interest in and to the separate
property that the other Party now owns or will own in the
future. Separate property is defined as any property
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bearing the individual party’s name alone or property that
is joint with person or persons other than the Prospective
Spouse.
….
5.01. Parties acknowledge that they have been advised that by
virtue of their marriage each will have an interest in the other’s
estate or any intestacy. It is the intention of parties that each
party will waive any interest that he or she may have in the
estate or any intestacy of the other. Each party is free to
transfer his or her separate property under a Will without claim
from the other.
Agreement, 8/20/18, at 1-3 (emphasis added).
The parties agree that Decedent named Julie, who predeceased him, as
the beneficiary of his IRA. See Appellant’s Brief at 8; Florence’s Brief at 2.2
The IRA contract provides:
You can designate in writing a beneficiary to receive the balance
of your IRA upon your death. If you make no designation, the
balance will be distributed to your surviving spouse, if you are
married. If you do not have a surviving spouse, the balance will
be distributed to your estate.
You can change your designation at any time by notifying us in
writing. The change will not become effective until we receive
notice and accept the change in beneficiary.
IRA, Traditional IRA Disclosure Statement, § 4, ¶¶ 19-20 (paragraph
numbering omitted, emphasis added).
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2 Portions of copies of the IRA in the certified and reproduced records are of
poor quality, such that we are unable to discern any beneficiary designation.
As stated above, the parties do not dispute Decedent’s designation of Julie as
the IRA’s sole beneficiary.
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In its opinion, the orphans’ court does not discuss the language of the
agreement or IRA except to say: “The language of the [agreement], the
language in the [IRA], and the influence of Sections 108(a)[3] and 2203[4] of
Title 20 allows the surviving spouse to prevail in this case.” Orphans’ Court
Opinion, 11/15/22, at 4 (footnotes added). This was error.
Our review reveals no support the orphans’ court’s determination in
favor of Florence. The parties agree that Florence was not named as a
beneficiary of the IRA, and Julie is the only named beneficiary. Appellant’s
Brief at 7-8; Florence’s Brief at 2. Under the plain language of the IRA
contract, the surviving spouse only becomes a beneficiary “[i]f you make no
designation[.]” IRA, Traditional IRA Disclosure Statement, § 4, ¶ 19. The IRA
is silent as to what occurs if the named beneficiary predeceases the owner,
and the owner does not name a new beneficiary. As noted above, it is a long-
settled principle of contract interpretation that this Court “construe a contract
as written and may not modify the plain meaning of a contract under the guise
of interpretation” Tuthill, 763 A.2d 420. See Madison Const. Co. v. The
Harleysville Mut. Ins. Co., 735 A.2d 100, 106 (Pa. 1999) (“We will not …
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3Section 6108 provides that designation of beneficiaries of insurance or
employee death benefits is not testamentary. 20 Pa.C.S.A. § 6108(a).
4 Section 2203 concerns a spouse’s elective share and provides: “Interests
under any broad-based nondiscriminatory pension, profit sharing, stock
bonus, deferred compensation, disability, death benefit or other such plan
established by an employer for the benefit of its employees and their
beneficiaries[,]” are subject to election. 20 Pa.C.S.A. § 2203(b)(3).
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distort the meaning of the language or resort to a strained contrivance in order
to find an ambiguity.”) (quotation marks and quotation omitted).
Here, the plain and unambiguous language of the IRA contract provides
for inheritance by a surviving spouse only if there is no named beneficiary. As
Decedent named Julie as his beneficiary, Florence does not inherit. The
orphans’ court’s determination is not supported by the plain language of the
IRA. See Tuthill, supra; Madison, supra.
Moreover, Florence waived any interest in the IRA by signing the
agreement. Florence argues that Article 5.01 of the agreement, titled “Waiver
Interest in Estate,” does not apply because the IRA does not pass by will or
intestacy. See Florence’s Brief at 7-10; see also 20 Pa.C.S.A. § 2203(a).
While we agree that the IRA is not testamentary, the IRA is part Decedent’s
estate.
Black’s Law Dictionary defines an “estate” as “[a]ll that a person or
entity owns, including both real and personal property. [] The property one
leaves after death; the collective assets and liabilities of a dead person.”
Black’s Law Dictionary, 304 (5th Pocket ed. 1996). Pennsylvania considers an
IRA part of a decedent’s estate and subject to state inheritance tax. In re
Estate of Neiderhiser, 850 A.2d 68, 71-72 (Pa. Cmwlth. 2004) (reversing
orphans’ court and finding decedent’s IRA subject to Pennsylvania inheritance
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tax).5 Here, Florence agreed she intended to “waive any interest [she] may
have in the estate or any intestacy of the other.” Agreement, 8/20/18, at 3
(emphasis added). As Decedent’s IRA, while not testamentary, is part of the
estate, Florence waived her interest in it.
Even if the IRA was not part of the estate, Florence further waived her
interest to it in Articles 1.01 and 3.01 of the agreement. Article 1.01 states
that the parties will not “obtain any interest in the specified separate property
of the other as a result of the marriage[.]” Agreement, 8/20/18, at 1. Article
3.01 provides:
By this Agreement, each Party waives, discharges, and releases
all rights, title, and interest in and to the separate property that
the other Party now owns or will own in the future. Separate
property is defined as any property bearing the individual’s party’s
name alone or property that is joint with person or persons other
than the Prospective Spouse.
Id. at 2. Decedent was the sole owner of the IRA when he and Florence
married. Under the agreement, the IRA was Decedent’s “separate property”
and Florence waived any interest in it. See id. at 1-2.
The Ohio Supreme Court reached the same conclusion in Kinkle,
supra.6 In Kinkle, the husband (decedent) opened an IRA in 1992 with
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5While decisions of the Commonwealth Court are not binding, they may serve
as persuasive authority. See Estate of Brown, 30 A.3d 1200, 1204 n.2 (Pa.
Super. 2011).
6 “The decisions of courts of other states are persuasive, but not binding,
authority.” Huber v. Etkin, 58 A.3d 772, 780 n.8 (Pa. Super. 2012) (en
banc).
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Fidelity Investments Southwest Company (Fidelity). Kinkle, 699 N.E.2d, at
42. He did not designate a beneficiary. Id. In 1994, the decedent married,
but prior to the marriage, he and his future wife signed an antenuptial
agreement waiving all rights to the other’s property. Id. The decedent died
three months after getting married. Id. Following the decedent’s death, the
bank released the IRA to the wife, as the surviving spouse, pursuant to the
IRA’s clause stating if the decedent died without naming a beneficiary, the IRA
went to the surviving spouse. Id. The decedent’s children brought an action
on behalf of decedent’s estate to recover the IRA funds. Id. Both the trial
court and the intermediate appellate court ruled in favor of the estate. Id.
On discretionary appeal, the Ohio Supreme Court explained its
affirmance:
[T]here are two contracts involved in this case. The first, the
contract between Fidelity and [the decedent], was performed
according to its terms. Since [the decedent] did not designate a
specific beneficiary, the beneficiary became his wife through the
language of the IRA contract. Fidelity performed under the
contract. At that point, the second contract, the antenuptial
agreement governed by Ohio law, came into play. The question
is whether through an antenuptial agreement a spouse may waive
her right to be a beneficiary under an IRA contract. We find that
she may certainly do so.
This court has long held that prenuptial agreements
controlling the distribution of assets upon the death of a spouse
are enforceable. … In Ohio, there is no public policy, statute or
case law which prevents parties to antenuptial agreements from
cutting one another off entirely from any participation in the estate
of the other upon the death of either. [The a]ppellant … would
have us simply ignore the existence of the antenuptial agreement
as far as the IRA at issue is concerned. However, the contract
that she entered into with [the decedent] determines her rights to
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[his] property and estate, not the contract [the decedent] entered
into with Fidelity.
….
[The appellant] expressly waived and released all rights and
interests, including contingent interests, that she might acquire in
[the decedent’s] property or estate by virtue of her marriage to
him. [The appellant’s] interest in the IRA account was contingent
on [the decedent’s] death[] and arose only by virtue of her
marriage to him—she was never listed specifically as a beneficiary
under the IRA contract.
At the time [the decedent] entered into the contract, [the
appellant] was not his wife. Only because she became a
“surviving spouse,” i.e., by reason of her marriage to [the
decedent], did [the appellant’s] interest arise. [The appellant]
waived any interest of that kind in the antenuptial agreement.
Id. at 43-44 (citations and internal quotation marks omitted).
The facts in Kinkle are align with the facts before us. Further, we are
persuaded by the reasoning in Kinkle.7 Here, Decedent obtained the IRA
prior to marrying Florence. Decedent did not name Florence as a beneficiary
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7 The orphans’ court distinguished Kinkle on two bases: (1) Florence did not
know about the IRA; and (2) the list of assets attached to the antenuptial
agreement in Kinkle included the IRA, while there was no asset list attached
to the antenuptial agreement between Decedent and Florence. Orphans’
Court Opinion, at 3-4. As noted, the parties agree that Florence knew about
the IRA prior to signing the agreement. Appellant’s Brief at 7-8; Florence’s
Brief at 10. This Court affirmed the validity of the agreement, and specifically
referenced the clause stating that the parties had informed each other of all
“property and income.” Schaefer, 281 A.3d at *4-5; see also Hunnell as
Trustee of Hunnell Family Revocable Living Trust v. Krawczewicz, 284
A.3d 1192, 1202 (Pa. Super. 2022) (explaining law of the case doctrine).
Further, we rejected Florence’s claim that she had not received a full disclosure
of Decedent’s assets, noting that “Florence … wanted no corresponding list of
assets and debts prepared.” Id. at *5; see also id. at *7.
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(unlike the decedent in Kinkle, Decedent named a beneficiary). Florence
signed a prenuptial agreement waiving her right to Decedent’s separate
property and any part of his estate. As in Kinkle, we conclude Florence
waived any interest in the IRA. See id. at 44.
We also conclude the orphans’ court’s reliance on the Pennsylvania
Supreme Court’s split decision in Alkhafaji,8 and the Philadelphia Orphans’
Court’s decision in Sipos,9 is misplaced. In Alkhafaji, as part of a divorce
settlement, the decedent purchased annuities naming two children from his
prior marriages as beneficiaries. Alkhafaji, 69 A.3d at 221. Years later, the
decedent executed a new will naming his then-spouse and all of his children
as beneficiaries of the annuities. Id. at 221-22, 226. The decedent did not
notify the holder of the annuities, TIAA-CREF, of the change. Id. Our
Supreme Court addressed whether a testator could change the beneficiaries
of an annuity by will, and, if so, what type of notice the testator was required
to give the plan holder. See id. at 220, 221-22, 224-25, 226.
In Sipos, the decedent designated his caretaker as beneficiary of his
IRA. Sipos, 47 Pa. D.&C. 5th, at 260-61. Two years later, the decedent
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8There are four opinions in Alkhafaji, none of which garnered a majority.
One justice did not participate; two advocated for affirmance, and two
advocated for reversal. Alkhafaji, 69 A.3d at 531.
9 “[C]ourt of common pleas decisions provide, at most, persuasive but not
binding authority.” Sears, Roebuck & Co. v. 69th St. Retail Mall, L.P., 126
A.3d 959, 972 (Pa. Super. 2015).
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executed a will naming his brother as the IRA’s beneficiary. Id. at 261. There
was no evidence the decedent attempted to comply with the IRA’s
requirements for changing a beneficiary. Id. at 268. Following the decedent’s
death, the caretaker cashed the IRA. Id. at 263. The orphans’ court found
that under those circumstances, “the beneficiary of [the decedent’s IRA] was
not changed by his will as no reasonable effort by [the decedent] to comply
with the terms of the policy was demonstrated.” Id. at 269 (footnote
omitted).
We see nothing compelling in Alkhafaji and Sipos. Both cases involve
a conflict between beneficiaries: those named in accordance with the plans,
and those named by will. By contrast, we are presented in the instant case
with the issue of whether a surviving spouse, not named as a plan beneficiary,
whose interest was acquired solely by marriage, contracted away her interest
by executing a prenuptial agreement. As the Ohio Supreme Court explained,
testamentary documents are different from prenuptial agreements:
[The case relied upon by the appellant] concern[s] testamentary
disposition, which involves a unilateral decision by the holder of
the retirement fund to change the beneficiary in a separate
document outside the IRA contract. However, there is no
testamentary disposition at issue in this case. Here, the
beneficiary herself denied any interest in the funds at issue. She
did so pursuant to an antenuptial agreement of unquestioned
validity, a contract evidencing a meeting of the minds of her and
her soon-to-be husband.
Kinkle, 699 N.E.2d at 43.
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Similarly, in this case, Decedent did not dispose of the IRA in a
testamentary document, see Will, 8/20/18, at 1-3, and Florence signed a valid
prenuptial agreement in which she waived her rights to the IRA. Thus,
Florence is not entitled to distribution of the IRA.
Our holding honors Decedent’s stated wishes. See Davis, 128 A.3d at
821. We previously observed that the agreement “clearly contemplates
waiver of a right to the other party’s estate.” Schaefer, 281 A.3d at *5; see
also id. at *1 n.2 (explaining that Decedent and Florence requested Jackson
“prepare wills for them, which would further state there was to be no cross
inheritance. Instead their estates were to pass to their respective children
and/or heirs.”). When Decedent executed the prenuptial agreement, he
changed his will in accordance with the terms of the agreement. His will
bequeathed to Florence a life interest in Decedent’s home, but if she chose to
vacate the property prior to her death, Decedent’s “real estate shall be equally
divided among my herein named children[.]” Will, 8/20/18, at 1. Also, there
is no evidence Decedent attempted to change the beneficiary of his IRA. The
record demonstrates Decedent’s intent that Florence inherit a life interest in
his home, and nothing more.
For the above reasons, we vacate the order of November 15, 2022, and
remand for entry of an order dissolving the preliminary injunction and
directing distribution of the IRA to the estate.
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Order vacated. Case remanded with instructions. Jurisdiction
relinquished.
Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 7/19/2023
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