Philadelphia Court Upholds Stephen Girard's Intentions

Stephen Girard, late in life

Painted by J.R. Lambdin

Judge O'Keefe, Administrative Judge of the Philadelphia Court of Common Pleas, sitting in the Orphans' Court Division, issued an opinion and order, dated August 21, 2014 (filed and released on August 25, 2014), regarding the administration of Girard College.

The Court denied a petition filed in June, 2013, by the Board of Directors of City Trusts, for proposed temporary modifications of the Last Will of Stephen Girard in the Estate's operations of the 1-12 grade boarding school.

The changes would have altered its residential nature, and cut its grades from 12th down to 8th, with no graduation. Fiscal reasons were cited as the necessity for such actions.

These proposed changes required deviation from the stated intentions of Stephen Girard, characterized as the "Father of Philanthropy" in a 1997 article in The Wall Street Journal.

The case is important for both its procedural aspects and for its substantive ruling.

A copy of the Opinion Sur Decree and the Court's Decree are posted informally here (PDF, 20 pages).

The Philadelphia Inquirer posted an article about the ruling, entitled Judge: Girard must remain a boarding school, keep high school programs, by Martha Woodall (08/26/14).

I and our law firm (Serratelli, Schiffman & Brown, P.C., in Harrisburg, PA), including Carol Verish, Esq., served as counsel for the Girard College Alumni Association​, and for the representative students and parents, throughout the proceedings in their opposition. Local counsel in Philadelphia was Gerard M. McCabe, Esq., of Mitts Law.

The Alumni, students, and parents are gratified by the ruling.

This decision, like any other ruling by a court of common pleas in Pennsylvania, is subject to rights of appeal.

Update: 2014-08-28:

• The Philadelphia Inquirer published an editorial on August 28, 2014, entitled Girard's School Spirit, which contemplated the future of the College and its administration, in view of Judge O'Keefe's findings and ruling. 

• Professor Katherine M. Pearson, of Penn State Law / Dickinson School of Law, contributed a brief overview and analysis of this decision on the Elder Law Prof Blog, which she co-authors.  She identifies this ruling as a "classic" decision, likely to be studied by law students. See: The Latest Ruling on "The Most Litigated Will In History" (08/28/14).

PA Power of Attorney Reform Legislation Moves

Legislative changes appear afoot regarding Pennsylvania's Power of Attorney laws.

On Monday, June 16, 2014, the Pennsylvania Senate adopted (50-0), after three required considerations, a revised version of House Bill 1429, into a new Printers No. 3708.  The Senate's version differs from the version that the House had adopted (198-0) nearly a year ago, on June 19, 2013, in the form of HB 1429, PN 2006.

Significant changes were suggested to Powers of Attorney, under Chapter 56, of Title 20, of the PA Probate, Estates & Fiduciaries Code, since at least March, 2010, due to a Report and Recommendations on Powers of Attorney, by the Joint State Government Commission's Advisory Committee on Decedents' Estate Laws.  

That Report was updated in a further June, 2011 Report and Recommendations on Powers of Attorney and Health Care Decision-Making, to address the concerns raised by the decision of the Pennsylvania Supreme Court in Vine v. Commonwealth, 9 A.3d 1150 (Pa. 2010). 

That case involved the statutory immunity afforded to third parties that act in good faith on the instructions of an agent pursuant to a facially valid power of attorney without actual knowledge that the power of attorney is void or voidable, has expired, or that the agent is exceeding the scope of his authority.  See: PA EE&F Law Blog posting, Proposed Amendments of PA POA, Guardianship & Health Care Directive Laws (06/14/11).

On March 12, 2013, the Senate Judiciary Committee reported from committee, its legislation in the form of Senate Bill 620. The Senate passed Senate Bill 620 on March 18, 2013, by a 48-0 vote.  

On June 19, 2013, the House passed its version of reform legislation, House Bill 1429, by a 198-0 vote.

The discussions resulting from that case, those Reports, and those two bills were long and detailed among representatives of the Pennsylvania Bar Association, the Pennsylvania Chapter of the National Association of Elder Law Attorneys, and the Joint State Government Commission staff.

Nearly a year later, on June 10, 2014, upon Senate Judiciary Committee consideration of HB 1429, PN 2006, and a package of amendments proposed to it, that bill's provisions were modified, reported to the Senate, and then adopted quickly by the Senate unanimously.  The Senate's own adopted bill, SB 620, remained pending before the House Judiciary Committee, even as HB 1429, as amended, was adopted by the Senate and returned to the House for concurrence.

Without knowing (but while holding hope), I assume that the recent Senate amendments are a form of compromise offered to achieve some legislation acceptable to both the House and Senate, and thereby end the long delay for reform of Pennsylvania's power of attorney law.

So, what might change?  I refer to an excellent summary of HB 1429, in its prior Printer's No. 2006, by Senate Counsel Gregg Warner, Esq. (a highly competent lawyer and a great guy), in his Memorandum of June 5, 2014, to the Senate Judiciary Committee, chaired by the prime sponsor of SB 620, Senator Stewart J. Greenleaf.

For the Senate's recent amendments, you must review the latest HB 1421, Printers No. 3708, which reveals additions and deletions. [See: Update below, which identifies most changes.]

The concepts discussed below highlight the many important changes proposed to PA's Power of Attorney statute, subject, still, to legislative agreement and to a Governor's concurrence.

Summary of House Bill 1429, 
in prior Printers No. 2006

Execution
 
A power of attorney shall be dated and signed by the principal. For a power of attorney executed on or after the effective date of this legislation, the signature or mark of the principal must be acknowledged before a notary public and witnessed by two individuals.

The notice provision that accompanies a power of attorney is expanded to inform the principal that the agent must act in accordance with the principal’s reasonable expectations to the extent those expectations are actually known by the agent and, otherwise, the agent must act in the principal’s best interest, in good faith and only within the scope of authority granted in the power of attorney.

If the principal grants broad authority to an agent, the notice warns the principal that the broad grant of authority may allow the agent to give away the principal’s property while the principal is alive or substantially change how the principal’s property is distributed at death. The notice advises the principal to seek the advice of an attorney.

The acknowledgement executed by the agent specifies that the agent must act with the principal’s reasonable expectations to the extent that the agent actually knows them and, otherwise, in the principal’s best interest. The agent must act in good faith and only within the scope of authority granted to the agent by the principal in the power of attorney.

The requirements for witnesses, notice and the agent’s acknowledgment do not apply to a power contained in an instrument used in a commercial transaction which authorizes an agency relationship.  The subsection has been restructured.

Also, the requirements of a notary, notice and the agent’s acknowledgment and the provisions relating to an agent’s duties do not apply to a power of attorney which exclusively provides for making health care decisions or mental health care decisions.

Agent’s duties
 
A section is added providing for the agent’s duties. Generally, an agent must act in accordance with the principal’s reasonable expectations to the extent the agent actually knows them and, otherwise, in the principal’s best interest. The agent must act in good faith and only within the scope of authority granted in the power of attorney.

In addition to the general duties, the amendment lists other duties of the agent that come into play unless otherwise provided in the power of attorney. They include acting loyally for the principal’s benefit; keeping the agent’s funds separate from the principal’s funds; acting as so not to create a conflict of interest; acting with care, competence and diligence; keeping records; cooperating with a person who has authority to make health care decisions for the principal; and attempting to preserve the principal’s estate plan.

Nonliability of an agent
 
The bill also lists when an agent is not liable. For example, an agent that acts in good faith shall not be liable to a beneficiary of the principal’s estate plan for failure to preserve the plan. Absence a breach of duty to the principal, an agent shall not be liable if the value of the principal’s property declines.

Disclosure of receipts, disbursements or transactions

Except as otherwise provided in the power of attorney, an agent shall not be required to disclose receipts, disbursements or transactions conducted on behalf of the principal unless ordered by a court or requested by the principal, a guardian, conservator, another fiduciary acting for the principal, governmental agency or, upon the principal’s death, the personal representative of the principal’s estate. The agent has 30 days to comply with the request or to indicate that additional time, up to an additional 30 days, is needed.

Specific and general grant of authority

A section is added limiting what an agent may do with the principal’s property. In these situations the power of attorney must expressly grant the agent the authority and the exercise of the authority may not have been prohibited by another instrument. The situations include powers such as creating, amending, revoking or terminating an inter vivos trust; making a gift; creating or changing rights of survivorship; and creating or changing a beneficiary designation.

Limited gifts
 
Section 5603 is amended to provide for the power to make limited gifts. Unless the power of attorney otherwise provides, language in a power of attorney granting general authority with respect to gifts authorizes the agent to make gifts in limited situations.

Third party liability

Sections 5601(f), 5608, 5608.1, 5608.2 and 5611 all apply to third party liability. A person who in good faith accepts a power of attorney without actual knowledge that it is invalid may, without liability, rely upon the power of attorney as if the power of attorney and agent’s authority were genuine, valid and still in effect and the agent had not exceeded and had properly exercised the authority.

A person who is asked to accept a power of attorney may, without liability, request further information including an agent’s certification, an English translation, or an opinion of counsel relating to whether the agent is acting within the scope of authority granted by the power of attorney.

Section 5608.1 provides for when a person may refuse to accept an acknowledged power of attorney. A person shall either accept a power of attorney or request an affidavit, certification, translation or an opinion of counsel not later than seven business days after presentation of the power of attorney for acceptance.

A power of attorney need not be accepted for certain reasons such as if the person is not otherwise required to engage in a transaction with the principal in the same circumstances; a request for a certification, a translation, an affidavit, or an opinion of counsel is refused; the person in good faith believes that the power of attorney is not valid or the agent does not have the authority to perform the act requested; or the person makes a report or has actual knowledge that another person has made a report under the Older Adults Protective Services Act stating a good faith belief that the principal is being exploited.

A person who refuses, in violation of this section, to accept a power of attorney shall be subject to civil liability for pecuniary harm to the economic interests of the principal proximately caused by the person’s refusal to comply.

Section 5608.2 provides for actions taken by employees. A person who conducts activities through employees shall be considered to be without actual knowledge of a fact relating to a power of attorney, a principal or an agent, if the employee conducting the transaction involving the power of attorney is without knowledge of the fact.

Update:  06/19/14:

The House concurred with the Senate and voted affirmatively on Wednesday, June 18th (193-0) to adopt the amended form of HB 1429, Printers No. 3708, as adopted on Monday, June 16th by the Senate.

The legislation was sent to the Governor for his signature, which I anticipate will be forthcoming, following the compromise attained in the Legislature.  For an update, see: PA EE&F Law Blog posting PA POA Reform legislation on Governor's Desk (06/19/14).

Gregg Warner, Esq., as Senate Judiciary Counsel, also drafted on June 5, 2014, a summary of the amendments (per Amendment No. A07520) considered by the Senate Judiciary Committee that resulted in the most current printers number for HB 1429.  

Following is that summary of the Senate's amendments, which resulted in the most recent version, which was adopted by the Senate on June 16th and returned to the House for concurrence.

Summary of Senate's Amendments
to House Bill 1429, into new Printers No. 3708

• This amendment makes additional revisions in the execution of powers of attorney when the principal is unable to sign but specifically directs another person to sign the power of attorney.  The notary public or other individual authorized by law to take acknowledgments for a power of attorney may not be the agent designated in the power of attorney.  Witnesses must be 18 years of age or older.

• The provision in the bill requiring an agent to keep the agent’s funds separate from the principal’s funds is revised.  There is already an exception if the funds were not kept separate as of the date of the execution of the power of attorney.  The amendment adds an exception in the case of a principal who commingles the funds after the date of the execution of the power of attorney and the agent is the principal’s spouse.

• A principal may specify certain powers by referring to the language in the statute.  A provision is added making clear that the principal may modify the authority of an agent that is incorporated by reference.

• Currently the statute states that an executed copy of the power of attorney may be filed with the clerk of the orphans’ court.  The amendment changes the provision to an originally executed power of attorney and allows a power of attorney executed in electronic form to be recorded.  Except for the purpose of filing or recording with the clerk, a photocopy or electronically transmitted copy of an originally executed power of attorney has the same effect as the original.

• The power to engage in securities transactions is clarified to include consolidations, dissolutions and liquidations.

• A person who is asked to accept a power of attorney may request an English translation of or an opinion of counsel regarding a power of attorney.  Generally the translation or opinion is at the principal’s expense unless the request is made more than seven business days after the power of attorney is presented.  The provision is expanded to include a power of attorney which was previously accepted but is presented to exercise a power not previously exercised by the agent in a transaction with that person.

• The effective date is changed to January 1, 2015.

NPR Broadcasts "Managing Your Elderly Parents' Finances"

On Thursday morning (11:06 AM to Noon), February 27, 2014, The Diane Rehm Show, as broadcast from WAMU through the National Public Radio network, focused on the topic Managing Your Elderly Parents' Finances, with guest host Elise Labott.

The highly-qualified and well-spoken guests were:

Sally Hurme, Project Advisor, Education and Outreach, at AARP

Naomi Karp, Senior Policy Analyst, Office for Older Americans, Consumer Financial Protection Bureau

Elizabeth Loewy, Chief, Elder Abuse Unit, Special Victims/Special Prosecutions Bureau, New York County District Attorney's Office

This is the overview of the program topic:

Millions of elderly Americans suffer from dementia, Alzheimer’s disease and other disabilities that make them unable to make decisions about their finances. 

About a quarter of all people over the age of 65 rely on relatives, often their children, for help managing their money and assets. But the task of caring for elderly parents and managing their bills and property can be overwhelming and time consuming. It can also be filled with ethical and legal pitfalls and a source of family conflict.

Two of these guests were quoted recently in an article by Ann Carrns, in The New York Times published October 30, 2013, entitled New Guidelines Aim to Help Financial Caregivers. So I knew that these guests were experts.

As I listened, I heard accurate information and sound advice, without one error or overstatement. The discussion covered such concerns as:

• Need for reliable and appropriate assistance for elderly relatives by family members who care
• Mental capacity and incapacity 
• Changeability of circumstances faced by elderly relatives
• Nature of services involving banks, businesses, investments, bills, living expenses, and medical costs
• Accountability by, and communications among, persons providing assistance or care
• Fiduciary responsibilities under a power of attorney or trust 
• Conflicts of interest of a family member with an elderly person
• Potentials for personal and financial abuse of a vulnerable adult 
• Roles of family members and assistance by community, government, or church organizations
• Planning processes -- when and how
• Helpful advisors, including attorneys, accountants, bankers, and special service organizations
• Devices for financial management, including direct deposits and payments, online banking, joint bank accounts (including problems with survivorship designations, versus "convenience" accounts), Social Security representative payees, agent appointments under a power of attorney document, voluntary trust arrangements, and court-ordered guardianship
• Scams, such as those involving mortgages, lottery awards, and telemarketing
• Reports of suspected abuse to local law enforcement, abuse hotlines, or special elder abuse investigation units  

During the program, more than twenty comments from listeners accumulated [increased to 37 comments as of March 8, 2014] that shared personal experiences and raised questions.

The program's webpage provided links to accurate, helpful resources:

AARP Guide to Managing Finances

CFPB Guide: Help for Representative Payees and VA Fiduciaries

CFPB Guide: Help for Trustees Under a Revocable Living Trust

CFPB Guide: Help for Agents Under a Power of Attorney

CFPB Guide: Help for Court-Appointed Guardians of Property and Conservators 

Selected broadcasts of The Diane Rehm Show are supplemented with links to a transcript or an audio replay sometime after the broadcast.  If that happens, I will update this posting.

Update:

To read a complete transcript of the broadcast access this link. 

To listen to the recorded broadcast with a multimedia computer, access this link. 

New Postings of PA OC & R/W Forms Online

While seeking to access Pennsylvania Orphans' Court forms through this Blog's sidebar links to their source on the Internet, I discovered my links are no longer valid.  What happened?  Something changed.

On January 31, 2013, the website of the Uniform Judicial System of Pennsylvania was completely refreshed and reformatted.  Not only is there a new homepage for the PA UJS, there is also a new "portal" leading into it.

Those Orphans' Court forms were reposted to different Internet references.  Now, these forms are displayed in a more pleasant presentation, along with other content formerly on that website.

On the related new PA UJS Portal, the layout is straightforward and efficient.  The left column offers many direct links to various sections of the new website, much like a book index, thereby avoiding navigation delays.  Such links include:

• UJS Web Portal
• Attorney Registration
• County Court Calendar
• Rules of Court
• Public Calendar Schedule
• Public Web Docket Sheets
• Financial Records

The main PA UJS website is more colorful and animated.  "Welcome to the Pennsylvania Judiciary's New Website" presently is displayed upon opening its home page:

Pennsylvania’s Unified Judicial System was the second state court system—by one week—to launch a website in 1995. With nearly 60 million hits last year, Pennsylvanians have come to depend on pacourts.us for information about the judiciary, court cases and the most recent court news and statistics.

The UJS is dedicated to continuously improving the way we provide information about the courts. Our goal was to develop something that is easy to use, attractive in appearance and capable of serving our vastly diverse audience. We want to keep you up-to-date regarding events in the judiciary and news and issues, and this space will allow us to do that. 

In a Press Release entitled Redesigned courts website helps meet changing user expectations, dated January 31, 2013, the Administrative Office of Pennsylvania Courts announced the redesigned website:

Enhancements to the new website include redesigned page layouts, improved navigation and organization of various court information areas, and highlighted news of interest to the court community and general public. * * *

The changes provide Pennsylvania’s judiciary a unified website while providing each court the opportunity to feature its own news and information on separate web pages. * * *

Among the radical changes to the PA UJS website is a redesigned home page, offering recent news involving Pennsylvania's Court System.  On the right sidebar are links for the Court's welcome message, Opinions, Docket Sheets, Fee or Fine Payments, Public Records, and Forms.

In an expansive area below is a listing, with links, to components of the Court System, by function and organization, like a "mini-portal".  This lower banner appears consistently on every web page, so you can't get lost.

A link to the Orphans' Court and Register of Wills forms is prominently featured as the first category in the full list of all types of court forms provided "For the Public".

The current approved OC/RW forms, which remain unchanged so far in 2013, are then divided into categories:

• Audit and Administration (7 forms)
• Guardianship (6 forms)
• Abortion Control Act (2 forms)
• Register of Wills (10 forms)
• Model Account Forms (4 forms)
• Foreign Adoption Forms (9 forms)

My random sampling of forms indicates that most are in fillable PDF format.  This allows data entry into the form, which could be saved using PDF editing software to retain it for later revision.  PDF reader or viewer software could only print the form with data, but not save it, so that, upon closing it online, such personalized data would be lost. See: Wikipedia's List of PDF Software.

These website revisions mean greater convenience for the public and for practitioners.  

But it creates work for me.  I must go back -- once again -- and reset links in my Blog to those forms' new online references.

“This is a new year. A new beginning.

And things will change.”

― Taylor Swift
(popular singer, born December 13, 1989,
in Wyomissing, Berks County, PA) 

More "Truth About Probate and Living Trusts"

The Allegheny County Bar Association and the Pennsylvania Attorney General’s Office will conduct a second, free “Truth About Probate and Living Trusts” Clinic for the public, this time in the North Hills area of Allegheny County, PA (not the North Hills in Montgomery County, PA) on Monday, June 29, 2009.

I received word about the scheduled repeat of the public presentation in an email message from Scott P. Magnuson, Esq. (who is a contact person for the event, along with Christine Kornosky, Esq., Chair of the sponsoring ACBA Probate & Trust Section), as follows:

I understand that you were aware of our last clinic for the general public of Allegheny County regarding probate and living trusts.

The response to the clinic was so overwhelming that we are having our second clinic on the 29th in a different part of Allegheny County.

I thought I would pass this press release on to you in case you had any interest in seeing it.

Thank you for you efforts in your blog. I'm sure it is appreciated by many.

Indeed, I had noticed and promoted the first run of the ACBA's Clinic on this topic held March 31, 2009. See: PA EE&F Law Blog, Lawyers & a Judge Educate about Living Trust Scams (03/23/09).

Western Pennsylvania publications reported about that Clinic too. See: "Protect yourself from dubious wills, living trust schemes" (03/19/09) by Larry Walsh, posted by the Pittsburgh Post-Gazette; and "Free clinic to focus on living trusts, probate" (03/25/09) posted by The Almanac.

Years ago, the ACBA published an informative booklet on the same topic as the Clinic, entitled "The Truth About Probate & Living Trusts in Pennsylvania," which is still available for download in electronic form (2002, PDF, 4 pages) or for order in paper form.

We have produced this booklet to alleviate the confusion about living trusts and probate, and to protect consumers from purchasing a product that might not be right for them.

The booklet answers questions about probate, such as: What is probate? What are the costs of probate? Does probate take a long time? The booklet also answers questions about a living trust, such as: Why am I now hearing so much about living trusts? Do I need a living trust?

If a consumer or organization would like to obtain multiple copies of the booklet, the first copy is free and the additional booklets are $1 each to cover copying expenses.

Recently, the focus has shifted from calm education on such topics into sterner warnings. Due to growing financial elder abuse, consumers must be trained to spot and avoid unprofessional and unqualified peddlers who frighten with tales of probate woes or tax tragedies, and then pitch unnecessary, ineffective, and often expensive "living trusts" as a panacea.

This Clinic's panel will speak the truth about these matters.

Here's the ACBA's recent Press Release about the next presentation offering the “Truth About Probate and Living Trusts”:

Due to the overwhelming response to their free Truth About Probate and Living Trusts clinic held in March [2009] in the South Hills section of Pittsburgh, The Probate and Trust Law Section of the Allegheny County Bar Association along with the Pennsylvania Attorney General’s Office today announced that another free clinic will be held June 29 in the North Hills section of the city.

The clinic, which will run from 6:30 p.m. to 8:30 p.m., will be held at the Four Points by Sheraton Pittsburgh North, located at 910 Sheraton Drive, Mars, PA 16046. The clinic will again be limited to 250 people, so reservations are required. Call 412-402-6651 to make a reservation.

The clinic will feature a panel discussion of members of the bar association’s probate and trust law section in addition to the Honorable Frank J. Lucchino, administrative judge in the Orphans’ Court Division of the Allegheny County Court of Common Pleas, and John Abel, Senior Deputy Attorney General in the Bureau of Consumer Protection.

The clinic will address issues and questions about revocable living trusts and probate and will help to address misinformation that is being distributed about these subjects. The clinic will also advise attendees on how to guard against living trust scams targeting senior citizens.

According to Pennsylvania Attorney General Tom Corbett, “It is important for consumers to understand that planning an estate and choosing investments involves many different legal, financial and personal decisions. Consumers need to gather as much information as possible about these offers and look beyond fancy credentials or high-pressure sales pitches, understanding that some of these ‘consultants’ are nothing more than sales agents looking to earn a commission on living trusts or investments that may be of questionable value,” said Corbett.

“While we all understand the importance of getting this critical information out to the general public, we were pleasantly surprised by how quickly the reservations came in for our first clinic in the South Hills,” said Christine Kornosky, chairperson of the Probate and Trust Law Section of the Allegheny County Bar Association.

“Many callers asked for a similar clinic to be held in the North Hills and other parts of the city. We are pleased to again offer this important clinic in association with the Attorney General’s office. Our attorneys see firsthand every day how important it is to get the correct information about probate and living trusts into the hands of our county residents before they make misguided decisions that could negatively affect themselves and their families.”

This clinic is sponsored by: the Allegheny County Bar Association; Eckert Seamans Cherin & Mellott LLC; and PNC Bank.

Additional probate clinics are being considered for other locations in Allegheny County. If you cannot attend the clinic, important information on probate and living trusts can be found on the Allegheny County’s Bar Association For the Public website at www.acba.org.

Additional Contacts who will be part of the panel discussion:

• Raymond Vogliano, Esquire, Eckert Seamans Cherin & Mellott, LLC
• Thomas Crowley, Esquire, PNC Wealth Management
• Tom Loftus, Director of Marketing and Media Relations, Allegheny County Bar Association
  

* * *

I am not bound to win, but I am bound to be true.
I am not bound to succeed, but I am bound to live by the light that I have.
I must stand with anybody that stands right, and stand with him while he is right,
and part with him when he goes wrong.
-- Abraham Lincoln

Update: 06/17/09:

In response to this posting, I received an email message from Christine Kornosky, Esq., Chair of the sponsoring ACBA Probate & Trust Section. She reminded me about our prior discussion when we visualized just such an educational effort as now offered successfully by the ACBA:

Neil:

Thank you for your kind publicity of our events.

You may remember our discussion (about a year ago) about how to deal with the living trust peddlers who may also be attorneys and how to address truth in advertising issues without being negative.

As you can see, we took your advice to heart when we were deciding how to handle these issues. I just hope it does some good.

Best regards,
Chris Kornosky

"How Attorneys Can Address Abuse of the Elderly"

On Thursday, February 12, 2009, the Dauphin County (PA) Bar Association, through its Estate Planning & Probate Section, will host, for the Dauphin County Register of Wills, a "Breakfast with the Register" continuing legal education session for attorneys.

The DCBA website notes the upcoming CLE session, as follows:

Thursday, February 12, 2009 -- "Breakfast With The Register"

Time: 7:30 a.m. Breakfast, 8:15 - 9:15 a.m. Presentation

Topic: "Update for Practitioners on Practice Before the Orphans' Court Division and in the Register of Wills Office," featuring Hon. Todd A. Hoover, Sandra C. Snyder, Barbara A. Lundgren, Thomas P. Gacki and Neil E. Hendershot, Moderator.

Location: Radisson Penn Harris Hotel & Convention Center [located at 1150 Camp Hill Bypass, Camp Hill, PA 17011].

Such sessions held for the practicing bar in Dauphin County, PA were well-attended in the past. See: PA EE&F Law Blog posting "Probate Bar Breakfast" in Central PA (11/08/06).

As in the past, the intended audience includes:

• Lawyers who practice before the Dauphin County (PA) Register of Wills Office and the Orphans' Court Division of the Court of Common Pleas of Dauphin County, PA;
• Paralegals functioning in this practice; and
• Law students from Widener University School of Law (Harrisburg Campus) and Penn State - Dickinson School of Law (Carlisle Campus), who study this area of law.

The participants are the same as in the past:

• Todd A. Hoover is the Dauphin County Court of Common Pleas Judge assigned to the Orphans' Court Division.

• Sandra C. Snyder is the elected Register of Wills of Dauphin County and the Clerk of the Orphans' Court Division. She also serves as the 2nd Vice-President of the Registers of Wills and Clerks of Orphans' Court Association of Pennsylvania.

• Thomas P. Gacki, Esq. serves as the Solicitor for the Register of Wills Office.

• Barbara A. Lundgren serves as the Orphan’s Court Assistant Administrator.

Originally, I was proposed to serve as moderator for the panel. But, given the interest in elder abuse, Judge Hoover requested that I reprise my presentation given in November 2008 on that topic to the York County Bar Association at its "Breakfast with the Register" event. See: PA EE&F Law Blog posting "Financial Elder Abuse" Session In York (11/06/08).

Thus, for one hour (8:15 - 9:15 am), I will present a 77-slide presentation (reproduced in a handout) entitled "The Aging Process and Elder Abuse: How Attorneys Can Address Abuse of the Elderly."

Pre-registration for the session already rose to 171 attendees.

There is no fee for the session, and a breakfast buffet will be provided.

Reservations can be made by fax (717-234-4582), by mail to DCBA, 213 N. Front Street, Harrisburg, PA 17101, or by email to: Bridgette@dcba-pa.org.

Act fast, however. Pre-registration is requested.

For pre-registered attorneys, the program will provide one hour of substantive Continuing Legal Education credit.

The session is graciously underwritten by PNC Wealth Management, an affiliate of PNC Financial Services Group, Inc., based in Pittsburgh, PA, with offices throughout Central Pennsylvania. Representatives of PNC will be present with other attendees.

What is a "Gun Trust"?

Joshua G. Prince authored an article entitled The New Trust on the Block -- the "Gun Trust." I am pleased to post his simplified explanation of a concept foreign to many professionals and consumers.

Josh is now a third-year law student at Widener University School of Law (Harrisburg Campus). He was the author of three prior articles, which I edited and posted on this Blog in 2007 about the handling, transferring, and holding of weapons.

Based upon those article, he was a co-presenter with me in 2008 at three sessions for lawyers about "Guns in Estates & Trusts" held at the bar associations of Cumberland County, Dauphin County, and Berks County, PA. See: PA EE&F Law Blog posts DCBA Gun Session with a Heller of a Difference (07/07/08), and "Guns in Estates & Trusts" Seminar (04/25/08), and the many links included.

Josh can be reached at: joshua@princelaw.com. Feel free to contact him with any questions.

The New Trust on the Block -- the "Gun Trust"

Copyright © 2009 by Joshua G. Prince

As if estate planning was not already complex and all-encompassing, there is a new craze sweeping firearm enthusiasts throughout Pennsylvania and the rest of the United States. It is the Gun Trust. However, most attorneys are bewildered by this new trust and are asking: What is it? What is its purpose? What benefit does it give?

What is a "Gun Trust"?

In essence, a Gun Trust is a language specific trust that only holds Machineguns, Suppressors, Short-Barreled Rifles, Short-Barreled Shotguns, Destructive Devices, and/or Any Other Weapons (referred to as Title II weapons under the National Firearms Act¹) for the benefit of a beneficiary, while giving possessory and use rights to the trustee(s).

What is the Purpose of a "Gun Trust"?

To understand the purpose of a Gun Trust, one must understand the National Firearms Act (NFA of 1934)², the Gun Control Act (GCA of 1968)³, and the Firearms Owners Protection Act (FOPA of 1986).⁴ Specifically, under these laws, an individual must register any Machinegun, Suppressors, Short-Barreled Rifle (SBR), Short-Barreled Shotgun (SBS), Destructive Device (DD), or Any Other Weapon (AOW).

The Bureau of Alcohol, Tobacco, Firearms and Explosives (BATFE) currently allows the registration of NFA firearms, by an “individual”, which is defined as: “A partnership, company, association, trust, estate, or corporation, as well as a natural person.”⁵

An individual looking to transfer/register a NFA firearm needs to file an application (BATFE Form 1 for making a NFA firearm, and BATFE Form 4 for transferring a NFA firearm⁶), in duplicate, provide a registration tax⁷, two sets of fingerprints, and two photographs.⁸ Furthermore, the individual must obtain the signature of a Chief Law Enforcement Officer (CLEO). While the application requires that the individual person obtain a CLEO signature, nothing mandates that a CLEO must sign an application for a NFA firearm, even if the applicant would pass the BATFE's rigorous background check.⁹

With many CLEOs refusing to sign for NFA firearms, even though both federal and state law allows for ownership, firearm enthusiasts sought different ways to acquire NFA firearms. In looking to the BATFE regulations, many saw corporations and trusts as viable alternatives, since they do not require a CLEO signature.¹⁰ With corporations requiring hefty startup costs, annual tax returns, and a lack of privacy, many began to investigate the trust alternative.¹¹

And so was born the Gun Trust. For a trust, the application must be submitted in duplicate, with the appropriate tax fee¹², but the trust is not required to submit fingerprints or photographs.¹³ More importantly, as stated above, a trust does not require a CLEO signature.

What benefit does a "Gun Trust" Offer?¹⁴

One of the highlights of a Gun Trust is the ability to acquire NFA firearms without a CLEO signature. However, there are numerous other benefits that flow from a gun trust. For instance, with a properly drafted gun trust, the trustee(s) will have the ability to possess and use the firearms, without violating their obligations as trustees and fiduciaries.

Another reason that many families opt for a Gun Trust is the ability for multiple people to use a weapon. When an NFA firearm is transferred or registered to an individual, only that individual may possess and use that NFA firearm. However, with a gun trust, any trustee may possess the firearm. Of course, for trustees to able to use the firearm, the trust must be properly drafted. Hence, where a family sets up a gun trust, all family members over the age of 18 could be designated trustees; thus enabling them to have possession of the firearm.

Another reason for a gun trust is the ability to draft it such that the trust will continue to hold the firearms until the beneficiary comes of age¹⁵ or until the trustee determines that the beneficiary is of such maturity that he/she can assume the responsibilities of ownership.

Also, in Pennsylvania, there is the possibility of a perpetual trust, since the Rule Against Perpetuities has been abolished. Thus, an individual who is concerned about future statutory changes, can form a gun trust that will provide these NFA firearms to generations to come without future transfers.

In states that have not done away with the rule against perpetuities or for short-term gun trusts, the BATFE allows a tax-free transfer, upon the death of the settlor/grantor, to the beneficiary, so long as, the beneficiary is a familial relation to the settlor/grantor.

Conclusion

These are but a few of the reasons that firearm enthusiasts are opting for gun trusts. However, a gun trust should not be drafted without sufficient knowledge of the NFA and BATFE's rapidly changing (sometimes daily) decisions regarding trust applications. While it is likely that the BATFE will institute a tighter regulations regarding gun trusts and gun corporations in the future, a gun trust could continue to provide substantial benefits over personal transfer/registration.

Maybe it will even be referenced in a law school textbook someday.¹⁶

* * *

Footnotes:

1 Title I weapons under the National Firearms Act, as amended, are the typical firearms that the public is accustom to seeing at the range or while hunting. These include handguns, bolt action rifles, and semi-automatic rifles.

2 26 U.S.C. § 5801 et seq.; 73 P. L. No. 474; 48 Stat. 1236.

3 90 P. L. No. 618; 82 Stat. 1213. (amending the National Firearms Act).

4 18 U.S.C. § 921 et seq.; 99 P. L. No. 308; 100 Stat. 449. (amending the National Firearms Act). FOPA prohibits the making or registering of any new machineguns. The author has posted online a copy of the entire NFA with amendments (PDF).

5 27 C.F.R. 479.11 (2003)

6 Electronic versions of these forms are posted online. Click on the desired form, and the page will change to a new page where you can input information. When submitted using the button in the lower left-hand corner, the form will be automatically filled in with that information. To see what a blank form looks like, just scroll to the bottom and hit "submit".

7 The registration tax will either be $5 (for Any Other Weapons) or $200 for all other NFA firearms.

8 26 U.S.C. § 5811; 26 U.S.C. § 5812.

9 Lomont v. O'Neill, 285 F.3d 9, 15 (D.C. Cir. 2002). Although a CLEO is not required to sign, further litigation is expected. See, Stephen P. Halbrook, Firearms Law Deskbook, 537-541 (Thomson/West, 2007).

10 BATFE, ATF National Firearms Act Handbook, 59 (June 2007) [See graphic above].

11 Another detriment to using a corporation is that many states require annual fees or levy stock assessments. Pennsylvania is not currently among those states. The author previously posted a further comparison of different entity options for NFA firearm ownership.

12 The registration tax will either be $5 (for Any Other Weapons) or $200 for all other NFA firearms.

13 26 U.S.C. § 5812.

14 The author previously posted a full discussion of gun trust issues and considerations.

15 To own or possess a NFA firearm, the individual must be at least 18 years of age.

16 Editors Note: Maybe, Josh; but "gun trusts" likely will not be promoted in the ATF's National Firearms Act Handbook.

"The Electronic Practice" Book for T&E Pros

On November 24, 2008, a message on the ACTEC listserv noted release of a new book by Donald H. Kelley entitled The Electronic Practice (Nov., 2008), published by Penton Media (Trusts & Estates/Wealth Management Press).

Don Kelley previously authored at least two books still in print:

• Estate Planning for Farmers and Ranchers (West Group 3e, 2004)
• Family Business Organizations (West Group 2e, 1996, Supp 2004)

In his new book's Introduction, Don recognizes the book's audience and summarizes the topics he targeted: "The focus of this work is on information of assistance to Trust and Estates professionals" who include attorneys, and also "accountants, financial planners and charitable organization professionals."

Generally, the book addresses these subjects:

• Discussions, in the Trusts and Estates setting, of basic computer usage
• Identification of computational or drafting software and web-based facilities
  
• Search tools to find information and resources on the Internet
• Surveys of websites offering value to Trust & Estate practitioners
• Information and checklists to evaluate software and hardware capabilities
  

The promotional information about the book notes a special feature of the publication package -- an accompanying CD-ROM (accessed through the included new Adobe Air software) that creates a "Trusts & Estates Desktop" on your computer. Clicking on the icon then opens an "online text equivalent of The Electronic Practice hard copy treatise, with hyperlinks among chapters and subheadings and with live links to Internet websites."

Don tells us that this book will not be static in its electronic counterpart:

It is intended that periodic updates to these materials will be made available for download from the Trusts and Estates website.

You will be given an ID and Password to access the download area of the Trusts and Estates website and you will be notified by email when updates are available. * * *

Don sent me a copy of the book (with CD-ROM) about two weeks ago; and I reviewed its chapters, both in print and on my computer (spontaneously accessing websites through those live Internet links):

Part 1: Electronic Resources – Background

Chapter 1: Basics of Computer Operation for T & E Practitioners
Chapter 2: Tricks and Traps - Computer Operation for Non-Techies
Chapter 3: Technical Resources On Law Office Technology
Chapter 4: Web-Based Services
Chapter 5: The Limits of Technology -- The ”Black Box” Effect
Chapter 6: The Mac Alternative
Chapter 7: The Internet as Part of Your Desktop

Part 2: Electronic Facilities for the Trusts and Estates Practice

Chapter 8: Software Selection and Lists and Reviews of Trusts & Estates Software
Chapter 9: Client Data Gathering and Organization and Case Management Systems
Chapter 10: Comprehensive and Basic Estate Planning Programs
Chapter 11: Standalone Handtool Programs and Spreadsheets
Chapter 12: State Estate and Inheritance Tax Calculations
Chapter 13: Life Insurance Calculations, Planning and Resources
Chapter 14: Charitable Giving Software & Calculation Tables – Commercial & Free
Chapter 15: Business Entity Planning Software and Resources
Chapter 16: Pension, Retirement and Financial Planning and Collectibles
Chapter 17: Programs & Web-Based Calculators for Miscellaneous Calculations

Part 3: Client Communication – Client and Group Presentations

Chapter 18: Presentation of Client Reports, Flow Charts and Aids to Decision Making
Chapter 19: Adobe Acrobat and PDF File Creation and Application
Chapter 20: PowerPoint Opportunities for Communication

Part 4: Drafting and Document Assembly

Chapter 21: Will and Trust Drafting Programs and Their Evaluation

Part 5: Tax Return Preparation and Valuation Resources

Chapter 22: Valuation of Securities and Other Property
Chapter 23: Estate and Gift Tax Return Preparation and Utilities
Chapter 24: Fiduciary Accounting and Income Tax Return Preparation

Part 6: Trusts and Estates Resources on the Web

Chapter 25: Legal Forms Available on the Web
Chapter 26: Planned Giving Resources on the Web
Chapter 27: Organization and Operation of the Family Office
Chapter 28: Primary Sources for Federal & state Tax Materials and Federal Agencies

Part 7: Trusts and Estates Legal Research on the Web

Chapter 29: Resources for Tax, Trusts and Estates Research
Chapter 30: Using Generic Search Engines for Tax and Other T & E Research

As to breadth, depth, and currency of references within his topics, I have not seen a match for Don's new book and its "Trusts & Estates Desktop" resource. In addition, the entire electronic text is searchable by word and phrase -- that's far better than a book index!

I am convinced that if, as a trust & estate professional, you want to get from where you are now in your practice or on a particular case, to where helpful resources are, a great start would be Don's published book & software package, The Electronic Practice.

In publishing this book and by updating its electronic counterpart routinely, Don Kelley has created a GPS for the trust & estate professional.

Notice Requirements by PA Trustees

On October 29, 2008, Vincent F. Lackner, Jr., Esq., posted on the Pennsylvania Bar Association's "Probate & Trust Law Division Listserv" a helpful guide regarding trustee notice requirements under the present form of the Pennsylvania Uniform Trust Act.

Vince is an excellent attorney, and also the founder & President of The Lackner Group, Inc., of Pittsburgh, PA, which produces professional-level software supporting estate and trust administration in Pennsylvania and many other states. See: PA EE&F Law Blog posting "Fiduciary Administration Software" (12/14/07).

With his permission, I repost his message to lawyers, as edited & reformatted by me.

Clarification of Notices
Required under the PA Uniform Trust Act
by Vincent F. Lackner, Jr., Esq.

I have recently received some clarification relating to Section 7780.3 of the Pennsylvania Uniform Trust Act, 20 Pa.C.S. §7701 et seq. ("Duty to Inform and Report").

This act was effective November 6, 2006, but some notice provisions were effective two years thereafter. That date now approaches.

Since the enactment of the PA UTA, an omnibus amendment, in the form of Senate Bill 1203 ("SB 1203"), would correct and amend Section 7780.3 (and other sections) in several important respects. Section 7780.3(l)(2) in particular (see below) would be retroactive to November 6, 2006, if and when passed.

Section 7780.3 requires that trustees provide a specific notice, as spelled out in 7780.3(i), to certain people within a certain period of time, depending on:

• whether the trust is revocable or irrevocable,

• whether the settlor of the trust has died or been adjudicated incapacitated, and

• when the settlor died or was adjudicated incapacitated (before 11/06/2006 or on/after 11/06/2006).

There was a two-year grace period under the original PA UTA, however, for trusts where the settlor died (or was adjudicated incapacitated) before November 6, 2006. In these cases, the deadline to give notice will be November 6, 2008 (just two days after next week's election!).

The dilemma is that SB 1203 would affect compliance with this deadline of November 6, 2008, but will clearly not be effective until after November 6, 2008.

During the past few days I have been in contact with lawyers involved in either drafting the Pennsylvania Uniform Trust Act or lecturing on this topic for the Pennsylvania Bar Institute during the past two years.

The subject is inherently complex, and there are some ambiguities that are largely unavoidable. Based on my recent conversations, however, I've tried to draw some "bright lines" that may help others who are trying to comply with the November 6, 2008 deadline (and beyond).

Interestingly, Section 7780.3(i) does not give a name to the required "notice". The consensus seems to be that "Notice of Trust Administration" would work as well as anything else. It would provide symmetry with the PA Supreme Court Orphans' Court Rule 5.6(a) requirement for a "Notice of Estate Administration". Also, it is generic enough to encompass recipients of all classes (not just "current beneficiaries").

The potential recipients of this notice include the following. All relationships are to the settlor's estate (#1), the settlor (#2, 3, 5), or the trust (#4):

• #1 Personal Representative

• #2 Spouse (or Spouse's Guardian*)

• #3 Children (if at least 18 years of age) or Children's Guardian*, if any

• #4 Current Beneficiary: "A person 18 years of age or older to or for whom income or principal of a trust must be distributed currently or a person 25 years of age or older to or for whom income or principal of a trust may, in the trustee's discretion, be distributed currently" (emphasis added).

• #5 Guardian*

* Guardian is defined in Section 7703 as "[a] person other than a guardian ad litem who is appointed by the court to make decisions regarding the property of an individual."

Note: If a child is not yet 18 and has no court-appointed guardian, then no notice is required in connection with that child.

So, here is my attempt at some "bright lines" in areas that are not explicit under the UTA:

• A. Inter Vivos Revocable Trust: Even after the decedent has died, the rules for "Revocable Trusts" continue to apply.

• B. Inter Vivos Irrevocable Trust: Any inter vivos trust that is not "Revocable" as defined under the PA UTA.

• C. Testamentary Trust: Does not exist until funded. Thus, for purposes of notice, it is treated as equivalent to an "Irrevocable Trust".

Dependent upon the types of trusts, these are the notices required for each:

Inter Vivos Revocable Trust	Event	Recipients	Deadline
Settlor Adjudicated Incapacitated	Before 11/06/06	#5	11/6/2008
	On/after 11/06/06	#5	W/i 30 days after trustee learns of adjudication
Settlor Died	Before 11/06/06 **	#4	11/6/2008
	On/after 11/06/06	#1, 2, 3, 4	W/i 30 days after trustee learns of death
Inter Vivos Irrevocable Trust
Settlor Adjudicated Incapacitated	Before 11/06/06	#4	11/6/2008
	On/after 11/06/06	#4	W/i 30 days after trustee learns of adjudication
Settlor Died	Before 11/06/06	#4	11/6/2008
	On/after 11/06/06	#4	W/i 30 days after trustee learns of death
Testamentary Trust
Settlor Died	Before 11/06/06	#4	11/6/2008
	On/after 11/06/06	#4	W/i 30 days after the trust is first funded

** Existing Section 7780.3(l)(2) has a cross-reference in it to 7780.3(c) (inter vivos Revocable Trusts). This cross-reference was apparently an error. It is safe to proceed as if that error has already been corrected (via the still-pending SB 1203). Section 6(a)(2) of SB 1203 explicitly states that this change shall be "retroactive back to November 6, 2006."

When, under proposed SB 1203, the reference to 7780.3(c) would be removed from 7780.3(l)(2), then the time period for Revocable Trusts for pre-11/06/2006 decedents would be covered by a combination of the following:

• 7780.3(f) (catch-all provision) (notice only to current beneficiaries)

• 7780.3(l)(3) (specifies that the notice under 7780.3(f) need not be completed until 11/06/2008).

Two further notes:

• Beneficiary Ages. Trustees need to monitor the ages of beneficiaries, so that required notices can be sent to beneficiaries once they become "current" (i.e., turn 18 or 25).

• Change of Trustee. Under Section 7780.3(g) (as proposed to be revised under SB 1203), when there is a change in trusteeship, the trustee must provide written notice of this change to: (a) the current beneficiaries (if the Settlor has died or been adjudicated incapacitated) or (b) the Settlor (otherwise). This notice must include the trustee's name, address, and telephone number.

Vince's article adds to the guidance provided in a recent online course (No. OL-1088) offered by the Pennsylvania Bar Institute entitled "Uniform Trust Act Notices: Only Five Months To Go!" See also: Posting by Patti Spencer, Esq., "PA UTA - Required Trust Notices Deadline Approaches" (09/01/08).