As we've discussed before, the Pennsylvania POA law was changed in July 2014. Some of the changes became effective immediately while other provisions went into effect on January 1, 2015. If you have a power of attorney drafted before the change it is still valid, so long as valid when drafted. Some sections of the new law may affect the manner in which it is used however.
A power of attorney form is a document that allows another individual to make decisions on your behalf if you lose mental capacity or are unable to act. The person executing the document is the "principal" and the person appointed is the "agent." A person to whom the POA is presented is called a "third party" and examples are banks, landlords, utility companies, nursing homes, etc. In Pennsylvania it is assumed that all POA documents are durable (unaffected by subsequent incapacity of principal) and so it is helpful, but not necessary to designate them as such. Also, a POA expires upon the death of the maker. Although an agent under a POA loses authority at that point, the personal representative named in a will takes over.
The changes in the law were instituted to curtain abuses in use of the documents, and as a result of recent Pennsylvania Supreme Court decision. The issue before the court was what happens if someone relies on a POA document and it is later shown that the principal who signed it was not mentally competent to sign the form, or if it later turns out the form was forged. Is a third party liable for relying on the form, even if they did so in good faith? The Pennsylvania Supreme Court said that yes, the third party could be held liable for relying on a forged form, or one in which the person did not have the capacity to sign. The new law tries to mitigate that problem and reverse that holding by changes in the law.
These are some of the changes:
First, now every POA document must be signed before a notary and two independent witnesses. That should not be a problem for any of our clients because we, and most other lawyers, have always done that. Even before the new law, this was done to expedite land transfers where notarization and witnesses are required, or in case the POA was used in another state where notarization was required.
Second, The first page of the POA has a new statutory "notice" which must be capital letters and must be signed by the principal The agent must also sign an acknowledgement which has been updated. The notices and acknowledgements that were valid under the old law are still valid today and do not have to be changed.
Third, The agent now has three mandatory duties while acting under a POA: they must act in good faith; they must act only within the scope of authority granted in the POA, and they must act in accordance with the principal's reasonable expectations if known, or in the principal's best interests if they are not known.The statute imposes additional duties on the agent concerning comingling of funds and record keeping, many of which can be modified in the document itself. However, an agent must keep books and records of all the transactions and acts they perform for the principal and they must be made available on 30 days notice from a court, the local agency on aging who obtains a court order for the records, or anyone holding a fiduciary relationship to the principal. This provision of the law when into effect January 1, 2015 regardless of when the document was signed. It is important that anyone serving as agent have records kept on an accounting program, a spreadsheet, or in a journal and ledger. We are willing to assist in this important obligation.
Fourth. Any third party presented with a POA may now request (i) an agent's written certification regarding factual matters concerning either the principal, the agent, or the POA form itself; (ii) they may request an English translation of any POA in another language; (iii) if there is any articulable reason for suspicion, they may request a legal opinion confirming that the agent is acting within the scope of authority granted in the POA. If this request is made within seven days of presentation the agent under the POA must bear the cost of obtaining the legal opinion. In most cases the third party has an additional five days to act after receiving the requested information. Although we currently provide this service free for documents drafted in our office, a disturbing feature of this new law is that a third party can delay acceptance of the POA for up to 12 days by requesting the additional documentation. On the other hand, if the delay is unfounded, the third party may be subject to civil liability.
Fifth, A third-party may be immune from liability if they accept a POA in good faith, without any actual knowledge of it being void or deficient. This is a direct reversal of the Supreme Court decision.
Under the old law anyone who might inherit from the estate could file a petition for an accounting from the agent if they felt the agent was abusing his or her power. That right is removed under the new law, but the personal representative of the estate may request an accounting after the death of the principal. In all documents drafted in our office we specifically designate ourselves as a fiduciary who can demand an accounting from an agent if there is an articulable reason to suspect abuse. Some, but not all, attorneys do the same and there may be others in a fiduciary capacity who can request an accounting.
If you have any questions about the new law please do not hesitate to call our office. Although it is not necessary that you do so, we are willing to update any POA forms drafted under the old law for a nominal fee. We will continue to provide an opinion of counsel for any document we've drafted, free of charge.
Saturday, March 21, 2015
National Academy of Elder Lawyers Speak out Against Proposal to Limit Veteran Benefits
Please contact us if you would like assistance in contacting your elected representative about this issue:
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Aid and Attendance is an enhanced pension available to veterans and surviving spouses, to assist with the cost of medical expenses and long-term care. The benefit varies between $1,149 and $2,120 per month, depending on whether the applicant is the veteran, a veteran with a dependant, or a surviving spouse.
On January 23rd, the Veterans Affairs Department issued proposed regulations to change the eligibility criteria for Aid and Attendance. March 24, 2015 is the last day to comment on the proposed changes, although your congressman may be contacted at any time.
Some of the changes are as follows:
1. Asset Limit: The proposed regulation establishes an asset limit equivalent to Medicaid’s maximum community spouse resource allowance, which is $119,220, in 2015, plus one primary residence. A primary residence is only excluded to the extent that it is under two acres.
The new asset limit is actually helpful to applicants because it establishes a clear limit as opposed to the current rule, which does not. However, limiting the exclusion of a primary residence to two acres poses a problem because increased acreage is not necessarily equivalent to an increase in fair market value and it penalizes veterans in more rural areas.
In addition, the proposed regulations provide that proceeds from the sale of a home will not be countable if used to purchase another home within the calendar year. Using the calendar year is odd because it favors someone who sells their home in February over someone who sold it in November.
2. Penalty for Transferring Assets: The proposed regulations impose a three-year “lookback” period for transferring assets. In other words, if an applicant transfers assets within three years of applying for Aid and Attendance, the applicant will be ineligible for a period of time. The ineligibility period is calculated by taking the value of the asset transferred and dividing it by the maximum annual pension rate for the applicant. The ineligibility period can be up to ten years and begins the month after the last transfer was made.
This is a major change because currently there is no penalty imposed for transferring assets. This is a problem for our clients because very often they transfer assets to create eligibility for Aid and Attendance to help them supplement the cost of their care, but the Aid and Attendance benefit by itself is insufficient. So family members use the transferred assets to make up the difference.
In addition, since veterans and surviving spouses of veterans receive different levels of pension under the program, a different penalty period would be created on the same transfer depending on whether you are a veteran or a surviving spouse of a veteran. See the example below:
Married Veteran transfers $25,000: penalty period = 11 months ($25,000/$2,100)
Surviving Spouse transfers $25,000: penalty period = 21 months ($25,000/$1,149)
3. Limited Permissible Transfers: The proposed regulations only authorize transfers to a child who became disabled before age 18.
What about children who became disabled later in life as a result of a brain injury? The permissible transfers in the regulations for Aid and Attendance should follow the same rules as the Social Security Administration for Supplemental Security Income and Medicaid so there is uniformity.
4. Curing Transfers: A “cure” is when a transfer can be returned to eliminate the transfer and, therefore, the penalty period.
The proposed regulations do provide that transfers can be “cured” but, do not permit a partial cure. In addition, the proposed change only allows a “cure” within 30 days of filing the application, while the applications are often not even reviewed for months. In essence, by the time an applicant is notified that there is a transfer that is being penalized, the 30 days will have come and gone.
5. Limits Hourly Rate for Home Health Aides: The proposed regulation limits the hourly rate for countable medical expenses for home health aides to $21 per hour.
This may be reasonable in some parts of the country, but in Pennsylvania the hourly cost is generally higher than this.
6. Irrevocable Trusts, Revocable Trusts and Annuities: The proposed regulations would treat all transfers to any trust (revocable or irrevocable) as a transfer for less than fair market value and impose a penalty. In addition, the changes treat the purchase of any type of annuity as a transfer for less than fair market value.
It makes no sense to penalize transfers to revocable trusts since applicants still have full control of and access to such funds. The purchase of an immediate annuity should not be treated as a transfer for less than fair market value since this is simply a form of investment. The income should be counted toward an applicant’s countable income for eligibility purposes.
If you are a veteran or an attorney who represents veterans, reach out to your Senator and Congressman to oppose these changes. We will assist you in this effort if you contact us. You may also submit comments to the VA by clicking here by March 24th. All comments must be addressed before the final ruling can be issued.
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Aid and Attendance is an enhanced pension available to veterans and surviving spouses, to assist with the cost of medical expenses and long-term care. The benefit varies between $1,149 and $2,120 per month, depending on whether the applicant is the veteran, a veteran with a dependant, or a surviving spouse.
On January 23rd, the Veterans Affairs Department issued proposed regulations to change the eligibility criteria for Aid and Attendance. March 24, 2015 is the last day to comment on the proposed changes, although your congressman may be contacted at any time.
Some of the changes are as follows:
1. Asset Limit: The proposed regulation establishes an asset limit equivalent to Medicaid’s maximum community spouse resource allowance, which is $119,220, in 2015, plus one primary residence. A primary residence is only excluded to the extent that it is under two acres.
The new asset limit is actually helpful to applicants because it establishes a clear limit as opposed to the current rule, which does not. However, limiting the exclusion of a primary residence to two acres poses a problem because increased acreage is not necessarily equivalent to an increase in fair market value and it penalizes veterans in more rural areas.
In addition, the proposed regulations provide that proceeds from the sale of a home will not be countable if used to purchase another home within the calendar year. Using the calendar year is odd because it favors someone who sells their home in February over someone who sold it in November.
2. Penalty for Transferring Assets: The proposed regulations impose a three-year “lookback” period for transferring assets. In other words, if an applicant transfers assets within three years of applying for Aid and Attendance, the applicant will be ineligible for a period of time. The ineligibility period is calculated by taking the value of the asset transferred and dividing it by the maximum annual pension rate for the applicant. The ineligibility period can be up to ten years and begins the month after the last transfer was made.
This is a major change because currently there is no penalty imposed for transferring assets. This is a problem for our clients because very often they transfer assets to create eligibility for Aid and Attendance to help them supplement the cost of their care, but the Aid and Attendance benefit by itself is insufficient. So family members use the transferred assets to make up the difference.
In addition, since veterans and surviving spouses of veterans receive different levels of pension under the program, a different penalty period would be created on the same transfer depending on whether you are a veteran or a surviving spouse of a veteran. See the example below:
Married Veteran transfers $25,000: penalty period = 11 months ($25,000/$2,100)
Surviving Spouse transfers $25,000: penalty period = 21 months ($25,000/$1,149)
3. Limited Permissible Transfers: The proposed regulations only authorize transfers to a child who became disabled before age 18.
What about children who became disabled later in life as a result of a brain injury? The permissible transfers in the regulations for Aid and Attendance should follow the same rules as the Social Security Administration for Supplemental Security Income and Medicaid so there is uniformity.
4. Curing Transfers: A “cure” is when a transfer can be returned to eliminate the transfer and, therefore, the penalty period.
The proposed regulations do provide that transfers can be “cured” but, do not permit a partial cure. In addition, the proposed change only allows a “cure” within 30 days of filing the application, while the applications are often not even reviewed for months. In essence, by the time an applicant is notified that there is a transfer that is being penalized, the 30 days will have come and gone.
5. Limits Hourly Rate for Home Health Aides: The proposed regulation limits the hourly rate for countable medical expenses for home health aides to $21 per hour.
This may be reasonable in some parts of the country, but in Pennsylvania the hourly cost is generally higher than this.
6. Irrevocable Trusts, Revocable Trusts and Annuities: The proposed regulations would treat all transfers to any trust (revocable or irrevocable) as a transfer for less than fair market value and impose a penalty. In addition, the changes treat the purchase of any type of annuity as a transfer for less than fair market value.
It makes no sense to penalize transfers to revocable trusts since applicants still have full control of and access to such funds. The purchase of an immediate annuity should not be treated as a transfer for less than fair market value since this is simply a form of investment. The income should be counted toward an applicant’s countable income for eligibility purposes.
If you are a veteran or an attorney who represents veterans, reach out to your Senator and Congressman to oppose these changes. We will assist you in this effort if you contact us. You may also submit comments to the VA by clicking here by March 24th. All comments must be addressed before the final ruling can be issued.
Saturday, February 28, 2015
DELCO Resident Repaid for Sale of Bequeathed Home
The Delaware County Orphans Court recently decided that the adult son of a decedent should be compensated for the sale of a property that was devised to him in the decedent's will, even though it had been sold by the decedent's court appointed guardian earlier.
The decedent in this case was the mother of Alfred, Francis and Adele Rich. The decedent's will left her two N.J. vacation homes valued at $650,000. to Francis and Adele. She left a third property in Clifton Heights, valued at $125,000., to Alfred. Alfred was given the less valuable property because he allegedly stole money from his mother by taking mortgages against her property without her knowledge, used her money to pay his credit card bills, and purchased a gold coin with her money which he kept for himself.
In 2008 the court stepped in and appointed a local attorney as guardian for the mother. In order to meet the expenses of his ward, and after getting court approval for the sale, the guardian sold the Clifton Heights property for $115,000. Because of this sale, the other children received the New Jersey properties upon the death of the decedent in 2011, but since the Clifton Heights property had been sold, Alfred did not receive anything.
Although the weight of authority seemed to be against him, Alfred brought a petition in Delaware County Orphans Court. In January of 2015 the court, exercising it's equitable powers, awarded part of the estate to him. The verdict awarded him the sale price of the Clifton Heights property, less the costs of the sale and less the money he owed his mother from his previous mis appropriation of her funds for personal use. The case caption was CP 63 of 2008, and the decision was made by Hon. Chad Kenney.
Note: The case illustrates the benefits of having estate documents drafted by experienced counsel, and why we caution our clients against specific bequests of real estate. An agent under a power of attorney or a court appointed guardian is usually compelled to sell assets of the estate to meet principal's day to day living expenses. An experienced attorney realizes this and drafts documents with that in mind, to avoid any later disproportionate bequest to beneficiaries.
Robert Gasparro
The decedent in this case was the mother of Alfred, Francis and Adele Rich. The decedent's will left her two N.J. vacation homes valued at $650,000. to Francis and Adele. She left a third property in Clifton Heights, valued at $125,000., to Alfred. Alfred was given the less valuable property because he allegedly stole money from his mother by taking mortgages against her property without her knowledge, used her money to pay his credit card bills, and purchased a gold coin with her money which he kept for himself.
In 2008 the court stepped in and appointed a local attorney as guardian for the mother. In order to meet the expenses of his ward, and after getting court approval for the sale, the guardian sold the Clifton Heights property for $115,000. Because of this sale, the other children received the New Jersey properties upon the death of the decedent in 2011, but since the Clifton Heights property had been sold, Alfred did not receive anything.
Although the weight of authority seemed to be against him, Alfred brought a petition in Delaware County Orphans Court. In January of 2015 the court, exercising it's equitable powers, awarded part of the estate to him. The verdict awarded him the sale price of the Clifton Heights property, less the costs of the sale and less the money he owed his mother from his previous mis appropriation of her funds for personal use. The case caption was CP 63 of 2008, and the decision was made by Hon. Chad Kenney.
Note: The case illustrates the benefits of having estate documents drafted by experienced counsel, and why we caution our clients against specific bequests of real estate. An agent under a power of attorney or a court appointed guardian is usually compelled to sell assets of the estate to meet principal's day to day living expenses. An experienced attorney realizes this and drafts documents with that in mind, to avoid any later disproportionate bequest to beneficiaries.
Robert Gasparro
Friday, January 30, 2015
Mercy Fitzgerald Hospital Thrown Out of Court in DELCO Guardianship Case
Chapter 54 of the Pennsylvania Estates, Decedents and Fiduciaries Code (20 Pa. C.S.) deals with Living Wills and Medical Powers of Attorney. Unfortunately, few medical providers are aware of the terms of the law. This problem is compounded by the fact that many people download medical power of attorney and living will forms from the Internet without realizing the implications of their choices.
These two issues played out in a recent case in the Delaware Valley Orphans Court last September. The facts were as follows:
M.J. was a patient at Mercy Fitzgerald Hospital who was being kept alive by a mechanical ventilator and a feeding tube. Doctors at Mercy Fitzgerald filed a guardianship petition and informed the DELCO court that the patient would not be able to continue indefinitely with the current life supports, and the patient was also suffering from end-stage dementia and a failure to thrive. Since the current equipment was not intended for sustained use they would have to insert a PEG tube for feeding. The doctors also felt that the operation would be painful for the patient and would only serve to prolong the patient's process of dying. The doctors and hospital had recommended that the patient be placed in hospice and palliative care. The patient had two sons: one son disagreed with the hospital and the other son wanted the parent placed on hospice and palliative care.
Ten years prior to this, the patient had drafted a medical power of attorney and living will. There were several problems with those documents. The first problem was questions regarding the patient's capacity to draft the document when she did. Another problem was that the legal document appointed her two sons as her agents and gave them the power to act alone or together. The two sons could not agree on the procedure to be followed, so the hospital brought a guardianship action in court. The crux of the problem is that the power of attorney as drafted gave any of the sons the power to act as an agent either jointly or individually, thereby rendering it almost meaningless.
The DELCO Court stated that a guardianship was improper because there already was a Durable Power of Attorney in place, and the statute specifically gives preference to those documents. The Court cited Section 6612(a)(3) of the Pennsylvania Fiduciary Code stating that a guardian is generally not necessary if the principal has drafted a Power of Attorney. One of the sons who was an agent under the Power of Attorney showed up in the Delaware County court and explained how the principal would not have wanted the life support withdrawn. The court stated that although the attending physician and the hospital may not agree with the agent's decision, it should be controlling.
One thing the court did not mention is who is given the priority to make decisions under Advance Health Care Directives. Section 5461(g)(2) of the Decedent's and Fiduciaries Code - Title 20 provides express guidance to medical personnel when agents under the document are not in accord and evenly divided. In that case the law directs them to act as though no decision had been made, and to administer health care treatment "in accordance with accepted standards of medical practice." Hence, whatever options may have been available to them, the filing of a guardianship petition was not one of them.
This case points out that, contrary to rumors, if you draft one of these documents, they are honored. However, it may be worth the cost to have them drafted by a competent attorney who can offer drafting advice and spot any incongruities and/or provisions that may cause problems later.
Bob Gasparro
robert.gasparro@lifespanlegal.com
Telephone-484-451-6612
www.lifespanlegal.com
These two issues played out in a recent case in the Delaware Valley Orphans Court last September. The facts were as follows:
M.J. was a patient at Mercy Fitzgerald Hospital who was being kept alive by a mechanical ventilator and a feeding tube. Doctors at Mercy Fitzgerald filed a guardianship petition and informed the DELCO court that the patient would not be able to continue indefinitely with the current life supports, and the patient was also suffering from end-stage dementia and a failure to thrive. Since the current equipment was not intended for sustained use they would have to insert a PEG tube for feeding. The doctors also felt that the operation would be painful for the patient and would only serve to prolong the patient's process of dying. The doctors and hospital had recommended that the patient be placed in hospice and palliative care. The patient had two sons: one son disagreed with the hospital and the other son wanted the parent placed on hospice and palliative care.
Ten years prior to this, the patient had drafted a medical power of attorney and living will. There were several problems with those documents. The first problem was questions regarding the patient's capacity to draft the document when she did. Another problem was that the legal document appointed her two sons as her agents and gave them the power to act alone or together. The two sons could not agree on the procedure to be followed, so the hospital brought a guardianship action in court. The crux of the problem is that the power of attorney as drafted gave any of the sons the power to act as an agent either jointly or individually, thereby rendering it almost meaningless.
The DELCO Court stated that a guardianship was improper because there already was a Durable Power of Attorney in place, and the statute specifically gives preference to those documents. The Court cited Section 6612(a)(3) of the Pennsylvania Fiduciary Code stating that a guardian is generally not necessary if the principal has drafted a Power of Attorney. One of the sons who was an agent under the Power of Attorney showed up in the Delaware County court and explained how the principal would not have wanted the life support withdrawn. The court stated that although the attending physician and the hospital may not agree with the agent's decision, it should be controlling.
One thing the court did not mention is who is given the priority to make decisions under Advance Health Care Directives. Section 5461(g)(2) of the Decedent's and Fiduciaries Code - Title 20 provides express guidance to medical personnel when agents under the document are not in accord and evenly divided. In that case the law directs them to act as though no decision had been made, and to administer health care treatment "in accordance with accepted standards of medical practice." Hence, whatever options may have been available to them, the filing of a guardianship petition was not one of them.
This case points out that, contrary to rumors, if you draft one of these documents, they are honored. However, it may be worth the cost to have them drafted by a competent attorney who can offer drafting advice and spot any incongruities and/or provisions that may cause problems later.
Bob Gasparro
robert.gasparro@lifespanlegal.com
Telephone-484-451-6612
www.lifespanlegal.com
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