PA POA Reform legislation on Governor's Desk

On June 18, 2014, the Pennsylvania House of Representatives adopted (193-0) the amended, compromise version of House Bill 1429, in Printer's No. 3708, regarding power of attorney reform.  The adopted legislation was transmitted to the Governor for signing into law on June 24, 2014. [Update: The Governor signed the legislation into law on July 2, 2014, as Act No. 95 of 2014.  See Update below.]

[Corrections on 06/23 & 24/14: Before going to the Governor, the  legislation required signature in the Senate also, as a formality.  That occurred on Monday June 23, 2014.  Thereafter, the legislation was sent to the Governor on June 24th for consideration and, with his agreement, signature into law.]

This is the formal summary of the legislation:

An Act amending Title 20 (Decedents, Estates and Fiduciaries) of the Pennsylvania Consolidated Statutes, in powers of attorney, further providing for general provisions and for special rules for gifts; providing for agent's duties and for principles of law and equity; further providing for form of power of attorney, for implementation of power of attorney and for liability; providing for liability for refusal to accept power of attorney and for activities through employees; and further providing for validity.

For background, see: PA EE&F Law Blog posting, PA Power of Attorney Reform Legislation Moves (06/17/14).

The legislation was debated for more than a year between the Pennsylvania House and Senate, and among various interest groups, including the Pennsylvania Bar Association, the Pennsylvania Banker's Association, and the Pennsylvania Chapter of the National Association of Elder Law Attorneys, upon proposals offered in two study reports issued by the Joint State Government Commission's Advisory Committee on Decedents Estate Laws.

With compromise and agreement attained by the advocacy groups, as evidenced by the mutual legislative adoptions in the past few days, I assume that the legislation will be signed into law by Governor Corbett.  A House sponsor of HB 1429 also seems positive about the legislation becoming law soon.  See: Keller’s Bill to Amend Power of Attorney Act Heads to Governor’s Desk (06/18/14).

Since his days as Pennsylvania' Attorney General, Tom Corbett has supported measures to curb and prosecute financial elder abuse.  This legislation contributes significantly towards that end.  Though not a gambler, I would bet this legislation will be signed by him, soon, to become law.

If so, the effective date for many provisions involving drafting of a document would be January 1, 2015.  

However, other provisions generally regarding effectiveness, presentment, recognition, or enforcement of a power of attorney document would be effective immediately:  "The amendment or addition of 20 Pa.C.S. §§ 5601(f) , 5608, 5608.1, 5608.2, 5611 and 5612 shall take effect immediately."

Those provisions to become effective immediately include:

• § 5601(f)  Definitions. -- The following words and phrases when used in this chapter shall have the meanings given to them in this subsection unless the context clearly indicates otherwise: 

  "Agent." A person designated by a principal in a power of attorney to act on behalf of that principal.

  "Good faith." Honesty in fact.

• § 5608  Acceptance of and reliance upon power of attorney.

• § 5608.1  Liability for refusal to accept power of attorney.

• § 5608.2. Activities through employees.

• § 5611. Validity.

• § 5612. Principles of law and equity.

Update: 07/07/14:

The Legislature's online bill information service posted an update on Monday, July 7, 2014, indicating that Governor Corbett signed the legislation into law, as Act No. 95 of 2014.

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.

Joint State's Amazing Record and Report

On August 1, 2013, the Pennsylvania Joint State Government Commission posted a Report, dated August, 2013 (PDF, 4.7 MB), entitled The Probate, Estates and Fiduciaries Code and Orphans' Court Matters: Legislation Recommended by the Advisory Committee on Decedents' Estates Laws, which encapsulates -- in 291 pages of history, descriptions, summaries, lists, and tables -- the amazing impact of that organization upon probate, estate, fiduciary, and related statutes, and upon Orphans' Court matters generally, since 1945 in this Commonwealth.

The Joint State Government Commission itself was established on July 1, 1937, to serve as "the primary and central non-partisan, bicameral research and policy development agency for the General Assembly of Pennsylvania."  

Its first appointed advisory committee -- the Advisory Committee on Decedents Estates Laws. (ACDEL) -- was established in 1945.  Since then, the "Advisory Committee has generated more than 40 reports that have served as the basis for legislation introduced during numerous legislative sessions of the General Assembly", which have improved Pennsylvania law in Title 20 of the Pennsylvania Consolidated Statutes (the Probate, Estates and Fiduciaries Code -- "PEF Code") and related statutes.  

The Report provides not only a history of ACDEL, but also a compiled reference of its work products, developed by various JSGC ad hoc study groups, legislative resolution task forces, and the standing ACDEL.  Such groups have analyzed, drafted, reviewed, revised, and recommended statutory law in the Commonwealth for the past sixty-eight years.

This report first recounts the purpose of 1945 Senate Resolution No. 46, which authorized the Joint State Government Commission to form a legislative task force and advisory committee to review decedents’ estates laws.

This is the Report's Summary of its contents:

The section titled The Task Force and Advisory Committee on Decedents’ Estates Laws also discusses the membership and leadership of the Task Force and Advisory Committee and outlines the process used to develop statutory recommendations.  Finally, that section summarizes the projects of the Advisory Committee from 1945 to 1972, the codification of the PEF Code (including the original chapter organization of the PEF Code), and proposed legislation since 1972.

The next section, Advisory Committee Reports, lists all 43 published reports of the Advisory Committee since its creation.  Numerous reports published after the 1972 codification contain proposed omnibus amendments to the PEF Code and, in some instances, to other titles of the Pennsylvania Consolidated Statutes.  Other reports focus on one particular topic, such as guardianships, powers of attorney, or trusts.

The list of Advisory Committee reports is followed by Proposed Legislation Organized by Advisory Committee Report.  This section details the contents of each report and provides the specific section and subsection that is the subject of the proposed amendment or repeal or that is newly proposed.  The reports are listed in reverse chronological order.

The next section, Proposed Legislation Organized by Statutory Section, comprehensively lists each specific section and subsection to which the Advisory Committee has made a recommendation.  It then summarizes the nature of the recommendation (proposed amendment, repeal or addition) and the report containing the recommendation.  Of note is that, in a number of instances, the Advisory Committee has revisited the same provision over the years, and several reports capture the multiple or recurring recommendations.

The section that then follows is Proposed Legislation Organized by Legislative Session.  Listed here are each bill introduced that is based on the recommendations of the Advisory Committee, along with the relevant provisions included in the bill and a summary of the disposition of the bill.  If the bill was enacted, the act number and enactment date is provided.  In two instances, a bill containing the Advisory Committee’s recommendations was vetoed by the Governor, despite having passed both chambers of the General Assembly unanimously.

The next section of this report provides a detailed table of contents for the PEF Code, as it was enacted in 1972.

Finally, this report contains a list of the Advisory Committee Chairs and Advisory Committee members, with dates of service and county of practice.

The Report itself is impressive in its sweep and detail.  But the story of passion and perseverance that it implies -- if you can read between the lines (because this is not pulp fiction) -- is even more impressive.

Consider that, since 1945, only 110 volunteer experts spread over 68 years -- many devoted until only death ceased their efforts -- donated their time, expertise, experiences, intellect, skills, and visions to suggest statutory frameworks that still evolve today.  Presently, the ACDEL has 34 members appointed by the Legislature, in roles either as lawyers or judges, serving pro bono.

Their work addressed the most difficult issues in human experience and the most fundamental laws affecting everyone -- disability, incapacity, death, reproductive technology, surrogate health care management, fiduciary administrations, and end-of-life decisions.

The most recent JSGC-ACDEL comprehensive report was issued in October, 2012, regarding reform of Pennsylvania guardianship law, contained in Chapter 55 of the PEF Code. See: Guardianship Law: Proposed Amendments to the Probate, Estates and Fiduciaries Code, which presently is embodied in Senate Bill 117 of the 2012-13 Session, as reviewed in a Legislative Analysis, dated February 12, 2013.

If that is not enough to impress you, check out the companion report also posted on August 1st -- Domestic Relations Law: Legislation Recommended by the Advisory Committee on Domestic Relations Law 1993-2010 (PDF, 218 pages).

The current supervising Legislative members of JSGC are listed.  All volunteer members of the ACDEL since 1945 were named.  The current supporting staff are listed, but past staff are not.  All were devoted to their craft.

JSGC-ACDEL produces studies and makes recommendations that are non-political, independent, expert, comprehensive, and reliable, in a cost-effective process. In this time of reduced funding and personnel, this organization is beyond special -- it is amazing.

The Joint State Government Commission is a one-of-a-kind blessing to this Commonwealth that, hopefully, will continue its work long into the future.

POA Reform Legislation in PA Senate

On May 7, 2010, State Senator Greenleaf, with five other senators, introduced Senate Bill 1358, in an initial Printers No. 1970, which would implement the Power of Attorney Report issued in mid-March, 2010, by the Advisory Committee on Decedents' Estates Laws of the Joint State Government Commission.

This is the caption and summary of the legislation:

An Act amending Title 20 (Decedents, Estates and Fiduciaries) of the Pennsylvania Consolidated Statutes, in health care, further providing for definitions, for authority of health care agent and for relation of health care agent to court-appointed guardian and other agents; in powers of attorney, further providing for general provisions, for special rules for gifts, for form of power of attorney, for implementation of power of attorney, for durable powers of attorney and for account; and providing for investigation of financial abuse and mismanagement, for jurisdiction and venue and for principles of law and equity.

This legislative proposal was suggested in the 2010 POA Report after an 18-month comparison and reconsideration of Pennsylvania's current Chapter 56 of the Pennsylvania Probate, Estates & Fiduciaries Code [unofficial version posted online] against the most current version of the Uniform Power of Attorney Act, approved by the National Conference of Commissioners on Uniform State Laws on July 13, 2006. See: EE&F Law Blog posting PA 2010 POA Reform Report Issued by JSGC (03/23/10).

The Senate bill offers, identically, the Report's legislative proposals for reform of powers of attorney in Pennsylvania.

I am curious whether a similar proposal will be initiated in the House, since the impetus for the 2010 POA Report issued from a House Resolution -- House Resolution 484, Printers No. 2753.

PA 2010 POA Reform Report Issued by JSGC

On March 23, 2010, after an 18-month study, the Pennsylvania Joint State Government Commission issued its report, dated March, 2010:

POWERS OF ATTORNEY:
PROPOSED AMENDMENTS to the
PROBATE, ESTATES and FIDUCIARIES CODE

REPORT of the ADVISORY COMMITTEE on DECEDENTS’ ESTATES LAWS.

This report was issued today in response to the requirements of House Resolution 484, Printers No. 2753 (introduced 10/26/07), "[d]irecting the Joint State Government Commission to study the Uniform Power of Attorney Act and Pennsylvania's current power of attorney statute to determine whether any amendments should be made to Pennsylvania's current statute."

That Resolution tasked the Joint State Government Commission, acting through its Advisory Committee on Decedents' Estates Laws, as follows:

RESOLVED, That the House of Representatives direct the Joint State Government Commission to have its Advisory Committee on Decedents' Estates Laws study the Uniform Power of Attorney Act and Pennsylvania's current power of attorney statute to determine whether any amendments should be made to Pennsylvania's current statute; and be it further

RESOLVED, That the Joint State Government Commission report its recommendations to the House of Representatives within 18 months of the adoption of this resolution.

The 2010 POA Report, with attachments, is 214 pages long, and includes proposed legislation to amend Chapter 56 of the Pennsylvania Probate, Estates & Fiduciaries Code [unofficial version posted online], which statutorily authorizes and regulates powers of attorney in the Commonwealth.

The Report proffers legislation that, if adopted into law, would significantly change those actions authorized to be conducted by an agent under a power of attorney in Pennsylvania and also expand the ability of the Orphans' Court Divisions to apply remedies for unauthorized conduct by an agent acting under a power of attorney.

The introduction of H.R. 484 was discussed in detail on this Blog upon its introduction by Representative Jesse White. See: PA EE&F Law Blog posting House Reps Propose Further POA Study (11/05/07), which focused on an article by Dennis B. Roddy, entitled "Lawmaker: Tighten rules on power of attorney" published on November 2, 2007, in the Pittsburgh Post-Gazette.

Prior Post-Gazette articles highlighted a need for consideration, in Pennsylvania, of the latest model of a Uniform Power of Attorney Act (2006) (UPAA), approved by the National Conference of Commissioners on Uniform State Laws, on July 13, 2006. See: PA EE&F Law Blog postings: "Powers of Attorney" Investigated in Series (09/04/07); and Final "Courting Trouble" Article on POA Abuse (09/05/07).

The additional issues requested by HR 484 to be addressed were those mentioned in my prior posting entitled "Super Powers" Under Examination (06/05/07). In that posting, I had reflected on an article which appeared on June 4, 2007, in Forbes Magazine entitled "Taming the Superpower", by Ashlea Ebeling.

The "General Observations" section of the 2010 POA Report stated the overall findings of the JSGC-ACDEL in contrasting PEF Code Chapter 56 to the UPAA:

• The Advisory Committee recognized that although the UPAA is better organized and more thorough and specific than Pennsylvania's current power of attorney statute, many of its best principles are already incorporated into 20 Pa.C.S. Chapter 56. The Advisory Committee acknowledged a general sense of satisfaction among practitioners regarding Pennsylvania's current power of attorney statute. Accordingly, it did not favor the wholesale adoption of the uniform act, instead opting to recommend discrete amendments to 20 Pa.C.S. Chapter 56 to address specific concerns or problems encountered by practitioners and others.

• The primary concern evidenced by the court system and commentators regarding durable powers of attorney is the potential for abuse by agents seeking to enrich themselves or benefit those close to them, such as through the altering of the principal's estate plan. Nevertheless, durable powers of attorney are very helpful tools for handling the principal's financial matters as well as for planning purposes; their inexpensive and private nature contrasts with the guardianship alternative. Therefore, the Advisory Committee reasoned that any statutory amendment to 20 Pa.C.S. Chapter 56 should preserve what is best about powers of attorney in Pennsylvania: their privacy, expediency and efficiency.

• The Advisory Committee also reviewed several provisions of 20 Pa.C.S. Chapter 54 regarding health care powers of attorney since 20 Pa.C.S. § 5602(a)(8), (9) and (23) and § 5603(h) and (u.1) currently permit a principal to incorporate by reference in a power of attorney the power to (1) authorize the principal's admission to a facility and enter into agreements for the principal's care, (2) authorize medical and surgical procedures and (3) make an anatomical gift of all or part of the principal's body. The Advisory Committee observed that several amendments to 20 Pa.C.S. Chapters 54 and 56 were appropriate regarding health care decision-making. [Emphasis added]

The 2010 POA Report then summarized the proposed changes to the existing Chapter 56 regarding powers of attorney in Pennsylvania [Emphasis added]:

§ 5601. Subsection (b) is amended to provide that two witnesses are required when any power of attorney is executed, thereby changing current law, which provides that two witnesses are only required when the power of attorney is executed by mark or by another individual. The amendment makes the execution of a power of attorney under Chapter 56 consistent with the execution of a health care power of attorney under Chapter 54. However, an agent appointed under a Chapter 56 power of attorney may not be a witness. Notarization, where the specific circumstances permit, is good practice but is not required. Subsection (b) is also amended to specify that a power of attorney “shall be dated and signed by the principal,” thereby replacing “signed and dated by the principal.

Subsections (d) and (e) are amended to provide statutory language regarding the preservation of the estate plan of the principal, including the effect of intestacy if the principal does not have a will.

Subsection (e.3) is new and provides that an agent and a recipient of a gift or other financial benefit, during the principal's life or at the principal's death, arising from the action of the agent is liable as equity and justice may require to the extent that the court determines that the action of the agent was inconsistent with (1) prudent estate planning or financial management for the principal or (2) the known or probable intent of the principal with respect to the disposition of the principal's property. An agent who in good faith exercises reasonable caution and prudence shall not be personally liable.

§ 5601.2. The title of § 5601.2 and subsection (a) are amended to specify that, similar to the gift provisions, a principal may empower an agent to make changes to the principal's estate plan only in specific circumstances. A power to make a gift or make changes to the principal's estate plan may not be inferred from a grant of another power or from a general grant of authority to do anything that the principal could do, except to the extent that a principal expressly grants the agent the power to provide for personal and family maintenance.

Subsection (b) is amended to clarify that limited gifts authorized in compliance with this subsection do not require court approval.

Subsection (c) is amended to change the title from “unlimited gifts” to “other gifts specifically authorized and not requiring court approval” and to clarify that other gifts specifically authorized in compliance with this subsection do not require court approval. The amendments permit a principal to authorize an agent to make a gift, which is not a limited gift under subsection (b), only by specifically identifying the donee and the gifted property or cash amounts. In addition, subsection (c)(1) specifies that the phrase “any donee” or other language showing a similar intent is not permitted.

Subsection (c.1) is new and provides that an agent may act without court approval if the agent's action is otherwise authorized by the power of attorney (e.g., to make a beneficiary designation or create a joint account) and maintains and is consistent with the preservation of the principal's estate plan, including the effect of intestacy if the principal has no will. An action may not be taken if the interest of any beneficiary under the principal's existing estate plan, including an intestacy if the principal has no will, is prejudiced thereby.

Subsection (c.2) is new and provides that an agent may make gifts or change the principal's estate plan (such as by creating or changing rights of survivorship or a beneficiary designation; by creating an inter vivos trust or amending, revoking or terminating an existing trust; or by waiving the principal's right to be a beneficiary of a joint and survivor annuity) only if the power of attorney expressly grants the agent the authority and the court approves the agent's action, in the manner set forth in new subsection (g), after finding that the action is consistent with (1) prudent estate planning or financial management and (2) the known or probable intent of the principal with respect to the disposition of the principal's property. If an agent complies with the grant of authority for gifts, the agent does not need to follow the procedures under Chapter 55 (incapacitated persons) so as to implement estate planning changes. Conversely, if the agent does not so comply, a guardianship proceeding would need to occur.

Subsection (d)(1), in defining the nature of a limited gift, is amended to add that the agent may make a gift to each donee to a tuition savings account or prepaid tuition plan.

Subsection (e), concerning equity and justice with respect to gifts, is repealed and replaced by § 5601(e.3) to make the concept of equity and justice applicable to all actions of an agent under Chapter 56.

Subsection (g) is new and provides for procedures concerning court proceedings for subsection (c.2).

§ 5602. Subsection (a) is amended to repeal paragraph (8) (“To authorize my admission to a medical, nursing, residential or similar facility and to enter into agreements for my care”), paragraph (9) (“To authorize medical and surgical procedures”) and paragraph (23) (“To make an anatomical gift of all or part of my body”). The substance of these paragraphs is being moved to Chapter 54.

Subsection (a) is amended to broaden paragraph (17) to include annuity transactions.

Subsection (a) is amended to add new paragraphs (24) (“To operate a business or entity”) and (25) (“To provide for personal and family maintenance”).

Subsection (c) is amended to change the reference from “executed copy of the power of attorney” to “originally executed power of attorney.”

Subsection (d) is new and specifies that, except for the purpose of filing at the courthouse, a photocopy or electronically transmitted copy of an originally executed power of attorney has the same effect as the original.

§ 5603. Subsection (a)(2)(ii), regarding gift splitting, is amended to (1) clarify that an agent can make a gift of the principal's assets up to twice the amount of the annual exclusion if the principal's spouse indicates a willingness to “split” gifts and (2) add a provision that limited gifts to a “family unit” (which is a child and a child's descendants) can be equalized even if this means exceeding the available annual exclusions and thus using a portion of the principal's cumulative lifetime gift exemption or paying gift tax if there is an insufficient amount of such exemption remaining.

Subsections (d) (power to claim an elective share) and (e) (power to disclaim any interest in property) are amended to eliminate as unnecessary the references to adjudication, since 20 Pa.C.S. § 102 defines an incapacitated person as “a person determined to be an incapacitated person under the provisions of Chapter 55 (relating to incapacitated person).” The determination under Chapter 55 necessarily involves an adjudication.

Subsection (h) (power to authorize admission to medical facility and power to authorize medical procedures) is repealed, in light of Chapter 54.

Subsection (k)(4) (power to engage in stock, bond and other securities transactions) is amended to specify that the agent may also join in any consolidation, dissolution or liquidation, thereby making the provision more parallel to 20 Pa.C.S. § 7780.6(a)(13), concerning the illustrative powers of a trustee under the Pennsylvania Uniform Trust Act.

Subsection (p) (power to engage in insurance transactions) is amended to include annuity transactions. Paragraph (3) is amended to give an agent the authority to change a beneficiary designation but only as permitted under § 5601.2(c.1) and (c.2), which concerns actions that change an estate plan and that may or may not require court approval.

Subsection (q) (power to engage in retirement plan transactions) is amended to give an agent the authority to change a beneficiary designation but only as permitted under § 5601.2(c.1) and (c.2), which concerns actions that change an estate plan and that may or may not require court approval.

Subsection (u.1) (power to make anatomical gift) is repealed, in light of Chapter 54.

Subsection (u.2) is new and defines the power to operate a business or entity.

Subsection (u.3) is new and defines the power to provide for personal and family maintenance.

§ 5604. Subsection (c)(1) is amended to delete the word “adjudicated” (with respect to an incapacitated principal) in the first sentence and to delete the second sentence, which provides that the guardian has the same power to revoke or amend the power of attorney that the principal would have if the principal were not incapacitated.

Subsection (c)(3) is new and requires the court to determine whether, and the extent to which, the incapacitated person's durable power of attorney remains in effect and include that determination in its guardianship order.

Subsection (d.1) is new and specifies that except as otherwise provided in the power of attorney, an agent is not required to disclose receipts, disbursements or transactions conducted on behalf of the principal unless ordered by a court or requested by the principal, the principal's guardian, another fiduciary acting for the principal, a governmental agency having authority to protect the welfare of the principal, or (upon the death of the principal) the personal representative or successor in interest of the principal's estate.

§ 5610. A third sentence is added clarifying that the court may assess the costs of the accounting proceeding as it deems appropriate, including the costs of preparing and filing the account.

§ 5612. This new section authorizes the court to order an investigation, appoint a guardian ad litem, make a referral to an appropriate agency or take any other appropriate action regarding allegations of financial abuse or mismanagement against a principal by his or her agent under a power of attorney. Any such order is made upon petition by an appropriate party and a reasonable showing of the financial abuse or mismanagement. However, the court may consider information not only from the formal petition but from other sources (such as from a report by a social service agency or from other communications).

§ 5613. This new section provides that venue of any matter pertaining to the exercise of a power by an agent acting under a power of attorney is in the county where the principal is domiciled, a resident or residing in a long-term care facility. A court may decline to exercise jurisdiction if it determines that a court of another county or state is a more appropriate forum, in which case the court shall either dismiss the proceeding or stay the proceeding upon the condition that a proceeding be promptly commenced in another county or state. The court may impose other conditions as well. This new section provides the court with maximum flexibility regarding the relevant and important factors to be used in determining whether to exercise jurisdiction.

§ 5614. This new section supplements Chapter 56 with the common law and principles of equity.

The 2010 POA Report also contains the following proposed amendments to 20 Pa.C.S. Chapter 54 (health care):

§ 5422. The definition of “health care decision” is amended to include decisions regarding (1) an individual's admission to a facility or entering into agreements for the individual's care and (2) after the individual's death, making anatomical gifts, disposing of the remains or consenting to autopsies.

§ 5456. Subsection (a) is amended to specify that the health care agent's power includes the power to authorize admission to a facility or enter into agreements for the principal's care.

§ 5460. Subsection (a) is amended to repeal the last sentence, which provides that the guardian has the same power to revoke or amend the appointment of a health care agent that the principal would have if the principal were not incapacitated, but the guardian may not revoke or amend other instructions in an advance health directive absent judicial authorization. Subsection (a) is also amended to add statutory language providing that in its guardianship order and determination of a person's incapacity, the court shall determine the extent to which the health care agent's authority to act remains in effect.

I was privileged to be a member of the drafting committee (the "Subcommittee on Guardianships and Powers of Attorney"), chaired by John J. Lombard, Jr., Esq., Chair, which included: William R. Cooper, Esq.; Jay C. Glickman, Esq.; Neil E. Hendershot, Esq.; The Honorable Anne E. Lazarus; James F. Mannion, Esq.; John F. Meck, Esq.; Michael J. Mullaugh, Esq.; The Honorable Paula Francisco Ott; William Campbell Ries, Esq. and Robert B. Wolf, Esq. In addition, The Honorable Calvin S. Drayer, Jr. and The Honorable Stanley R. Ott were invited to participate in the subcommittee's review and discussion process.

Update: 03/26/10:

On Friday, March 26, 2010, the Pittsburgh Post-Gazette published an article by Dennis B. Roddy entitled Reforms aimed at power-of-attorney abuses: State commission proposes changes to curb cheating, which noted issuance of the 2010 POA Report and a legislator's intention to introduce legislation based upon its recommendations:

A Pennsylvania government study commission has proposed legal reforms to curtail power-of-attorney abuses that have cheated the elderly, the disabled and their heirs.

The 222-page report includes draft legislation and is the result of an 18-month study ordered by the state House after a 2007 series of articles in the Post-Gazette. The articles revealed gaps in the law that had allowed attorneys and family members to divert savings and pension benefits to their advantage.

"The majority of powers of attorney work very well, but when they don't work they cause tremendous problems," said Superior Court Judge Anne Lazarus, a member of the advisory committee on estate law that proposed the reforms to the Joint State Government Commission.

The study was ordered after the House passed a resolution by State Rep. Jesse White, D-Washington County, who said he was incensed by reports of POA abuses detailed in the newspaper during 2007.

"I will almost certainly be introducing some sort of legislation for comprehensive power of attorney reform," Mr. White said. Initially, Mr. White and several others had suggested the commission explore adopting a nationwide standard called the Uniform Power of Attorney Act.

The committee did a side-by-side comparison of Pennsylvania law with the proposed uniform act.

"We found that our structure was sound and that we addressed most issues already," said Neil Hendershot, a Harrisburg estate lawyer and expert on POA.

Instead, the committee opted for alterations of the current Pennsylvania law. * * *

OC Judges Run for Superior Court on Nov 3rd

In Pennsylvania's 2009 Municipal Election to be held on Tuesday, November 3, 2009, voters interested in elder, estate, trust or other fiduciary matters should note (and hopefully vote for) two highly qualified Common Pleas judges with extensive Orphans' Court experience who are candidates for Superior Court -- Judge Anne E. Lazarus and Judge Paula Ott.

Judge Anne E. Lazarus, of Philadelphia, is running as a Democrat for Superior Court. Her biography (also found on the State Democratic Committee website) is impressive, and includes a brief mention of her Orphans' Court Division activities:

As a Common Pleas Judge, she has overseen a wide range of cases, having served previously on the Criminal and Civil divisions of the Common Pleas Bench and currently on the Orphans’ Court. She was also the first female judge in Philadelphia to handle the “Rocket Docket,” arguably the most rigorous docket in the court system. Prior to joining the Court, Judge Lazarus worked for fifteen years as an attorney.

In addition to her work with the Court of Common Pleas, Judge Lazarus chairs the Ethics Committee of the Pennsylvania Conference of State Trial Judges and was appointed to the Governor’s Commission on Crime and Delinquency. Lazarus was also the first Chancellor of the Louis D. Brandeis Law Society, a society for Jewish lawyers and judges.

Having served as the chairperson of both the First Judicial District of Pennsylvania Judges’ Pro Bono Committee and the First Judicial District of Pennsylvania’s Merit Selection Committee, Judge Lazarus is well-known for her commitment to the community and the legal profession. She is also a member of the board of the Philadelphia Volunteers for the Indigent Program, an organization committed to providing pro bono services to those unable to afford legal assistance.

Among countless awards over the years, she is most proud of her recognition by the Pennsylvania Bar Association as the first-ever recipient of the Judicial Pro Bono Award.

Judge Lazarus serves as an adjunct professor at the Widener University School of Law, the National Judicial College, and the National Institute of Trial Advocacy. Over the years, she has also mentored law students and young lawyers, advocating pro bono service and encouraging her peers to participate in pro bono programs. * * *

I was surprised that her biography made no mention of her extensive involvement with the Joint State Government Commission's Advisory Committee on Decedents' Estate Laws involving Orphans' Court matters, or her participation on its drafting subcommittees regarding powers of attorney, and transfers without probate.

Somehow, among all her other activities, she has managed to attend and participate meaningfully at the Advisory Committee meetings and in the work sessions of at least these two drafting committees.

I became acquainted with Judge Lazarus in these activities. I spoke with her once in a presentation to the Pennsylvania Bar Association's Real Property, Probate & Trust Law Section, about the role of the Orphans' Court Division. In my view, she is a bright, authentic, and caring person, who, as a trial judge, has acted as a protector of funds and people through the Orphans Court Division.

Judge Paula Ott, of Chester County, is running as a Republican for Superior Court. Her biography (also found on the State Republican Committee website), is equally impressive, and likewise highlights her role in Orphans' Court Division activities:

Paula Ott was elected the first woman judge in Chester County in 1991 and was retained in 2001. In more than 17 years as a judge, she has presided over all types of cases, including death penalty cases.

In 2005, Paula Ott was elected President Judge by her fellow judges. During her term as President Judge, her most challenging project has been the completion and occupation of a new Justice Center, which now houses nearly 700 employees. * * *

Paula Ott can bring to the Superior Court her expertise in Orphans' Court litigation. Orphans' Court is a separate division that handles adoptions, guardianships for incapacitated persons, will contests and trust and estate administration. She practiced in this area before becoming a judge and has presided in Orphans' Court since 1992. She also serves on the Pennsylvania Supreme Court Orphans' Court Rules Committee and the Joint State Government Commission Advisory Committee on Decedents' Estates Laws.

Judge Ott was President of the Pennsylvania Conference of State Trial Judges (2003-2004) and has co-chaired the President Judges' Committee for the past four years. Judge Ott has served on committees that promote best practices in the judicial system, such as the Pennsylvania Bar Association's Commission for Justice Initiatives, the Supreme Court's Advisory Committee on Court Reporting and Transcripts and the Implementation Committee of the Interbranch Commission for Gender, Racial and Ethnic Fairness.* * *

Judge Ott's biography mentions her work through the Joint State Government Commission's Advisory Committee on Decedents' Estate Laws, and also through another crucial group influencing Orphans' Court practice -- the Pennsylvania Supreme Court Orphans' Court Rules Committee. I met Judge Paula Ott during meetings of both these groups.

In my view, she is unpretentious, considerate, intelligent, decisive, and grounded.

The Superior Court needs judges with Orphans' Court experience to decide cases through its panels and in its full court considerations of appeals from that Division.

Beyond their dedication to the constituencies of the Orphans' Court Division, I respect both these candidates for their community involvement, legal skills, good judgment, and personal tenacity.

I will vote for Judge Anne E. Lazarus and for Judge Paula Ott on Tuesday, November 3rd; and I urge others to do so too.

Update: 11/02/09:

Voters should consult the Voters Guide (PDF, 3 pages) posted by the League of Women Voters of Pennsylvania regarding statewide candidates, including those for judicial positions, to be elected on November 3rd.

Update: 11/11/09:

Paula Ott won a seat on the Superior Court, and Anne Lazarus may do so, whether by acceptance or recount. See: Recount possible for 4th Pa. Superior Court seat an Associated Press report published in The Philadelphia Inquirer on November 11, 2009:

A recount for a tight Pennsylvania Superior Court election could begin Monday, but a waiver of the right to a recount by one more candidate could stop the expensive process, state officials said yesterday. * * *

Voters last week were to choose four Superior Court judges. A tally released last night based on unofficial returns from all 67 counties showed Judy Olson, Sallie Mundy, and Paula Ott got the three highest vote totals. They are elected.

The race for the fourth seat, however, was close, with Anne Lazarus leading three other candidates who trailed her by less than half of 1 percent.

A recount is automatic under Pennsylvania law unless all three trailing candidates give up that right. Two of the trailing candidates, Robert Colville and Kevin Francis McCarthy, have indicated that they would waive a recount if the others do as well. The remaining candidate, Temp Smith, could not be reached last night. The Department of State said a total of 6,314,250 votes were cast. Lazarus received 723,954 votes; Colville, 721,948; Smith, 720,624, and McCarthy, 711,240.

JSGC's Final Report on Assisted Reproductive Technologies

In May, 2008, the Pennsylvania Joint State Government Commission, through its Subcommittee on Assisted Reproductive Technologies, issued its final study & complete recommendation report entitled "The Proposed Assisted Reproductive Technologies Act, 2008" (PDF, 77 pages).

The ART Subcommittee functioned from April 2005, until May 2008. It was comprised of representatives from:

• JSGC's Advisory Committee on Adoption Law
• JSGC's Advisory Committee on Decedents’ Estates Laws
• JSGC's Advisory Committee on Domestic Relations Law
• Experienced private practitioners familiar with "assisted reproductive technologies"
• Consultants from the Pennsylvania Department of Health
  

These members included: Lawrence A. Kalikow, Esq. (Chair), Craig B. Bluestein, Esq., Frank P. Cervone, Esq., Mitchell E. Chadrow, Esq., Lisa W. Clark, Esq., Mary Cushing Doherty, Esq., Neil E. Hendershot, Esq., Albert Momjian, Esq., and Prof. Robert Rains.

For two years, the Subcommittee reviewed the proposed model Uniform Parentage Act (2002 Version) approved by the National Conference of Commissioners on Uniform State Laws), current Pennsylvania statutes, Pennsylvania court decisions (which further developed even while under study), present Pennsylvania court practices in counties, and current statewide procedures of the Department of Health, Vital Statistics.

Its Initial Report, issued in May 2007, proposed and explained a partial statutory framework for assisted reproductive technologies (ART).

An ART statute would be placed into Chapter 59 of the Domestic Relations Code (Title 23 of PA Consolidated Statutes), as Subchapters A, B, & C. It would cover "gestational agreements", also known as "surrogacy arrangements". See: PA EE&F Law Blog posting "Assisted Reproductive Tech Act Proposed in PA" (05/27/07).

But more work remained, as outlined in that Initial Report:

• The Subcommittee recommended that the Pennsylvania Supreme Court consider conforming Orphans’ Court rules to the provisions of the proposed new 23 Pa.C.S. Chapter 59 (if adopted into law).
• The Subcommittee further recommended review of the report issued by the President’s Council on Bioethics, entitled Reproduction and Responsibility: The Regulation of New Biotechnologies (March 2004).
• The Subcommittee announced its intention to continue studying provisions relating to children of assisted reproduction and to records, which would be added as Subchapters D & E of the proposed act in a subsequent report.
  

After concluding its additional work in Spring 2008, the Subcommittee published its entire proposed Assisted Reproductive Technologies Act (Subchapters A-E) Report, with a recommended new statutory Chapter, which begins at Page 23 of the Final Report.

This report, therefore, reflects the latest recommendations of the subcommittee -- a fully integrated proposed Assisted Reproductive Technologies Act.

As was the case in the May 2007 report, notes and comments follow the statutory provisions. Official comments may be used to construe a statute and determine the intent of the General Assembly.

This report also contains a summary of the statutory recommendations and a detailed table of contents for the statutory provisions.

Following the proposed statutory provisions are conforming amendments to §§ 711 and 713 of the Probate, Estates and Fiduciaries Code * * * and transitional language (applicability and effective date provisions). * * *

Thus, its Final Report superseded its Initial Report, expanding and further annotating a complete proposal for an Assisted Reproductive Technologies Act for Pennsylvania.

The Final Report addresses some issues affecting the estate & trust area, where inheritance or beneficiary rights might arise in the context of births provided by assisted reproductive technology. See: Proposed Section 5932 ("Legal parentage") and Section 5935 ("Parental status of deceased individual").

The Final Report's summary regarding the "Parental status of a deceased individual" (Pages 11 & 12), explains one interface between the Domestic Relations law and the Probate Code, and offers a customized approach for resolution:

A decedent is not a parent of a child conceived as a result of assisted reproduction after the decedent’s death unless consent is given pursuant to § 5935. In addition, for the decedent to be a parent of the child in this case, the placement of eggs, sperm or embryos must occur within 18 months of the decedent’s death and the decedent’s surviving spouse must file the consent with the clerk of the court and serve notice on the executor or administrator within six months after the decedent’s death.

Section 5935 could cause a result that is contrary to the decedent’s intent, as in the case of an individual who intends the embryos to be implanted but who then dies unexpectedly before consenting in a dated, signed writing.

Absent written consent, the death of an individual whose genetic material is subsequently used either in conceiving an embryo or in implanting an already existing embryo into a womb ends the potential legal parenthood of the deceased. Section 5935 is designed primarily to avoid the problems of intestate succession which could arise if the posthumous use of a person's genetic material leads to the deceased being determined to be a parent. Of course, an individual who wants to explicitly provide for such children in his or her will may do so.

Section 5935 eliminates the possibility of having a deceased individual’s estate open indefinitely. It balances the interest of effectuating the decedent’s intent to be a parent (and have an heir) and the practical need to close the decedent’s estate after a reasonable amount of time.

The section is to be broadly construed to effectuate the purposes of the Probate, Estates and Fiduciaries Code, including provisions concerning inheritance, succession and notice requirements.

Although Subchapter D contemplates that a woman who may be the genetic mother of the child will give birth to the child, a situation may occur where that is not the case, thereby implicating § 5935.

For example, the surviving husband of a deceased woman may use his deceased wife’s eggs to create a child. If the requirements of § 5935 are satisfied and the surviving husband uses his deceased wife’s eggs and enters into an agreement regarding assisted reproduction with a carrier, who will carry the child, his deceased wife would be the parent of the resulting child. In this circumstance, parentage would be determined under § 5904(b), since neither § 5932(b) nor Subchapters B or C are instructive in resolving the parentage issues regarding the mother of the child. To wit, § 5932(b) provides that the woman giving birth to a child is a legal parent of the child, and Subchapters B and C concern gestational agreements, a term specifically defined in § 5902.

In this case, the agreement executed by the surviving husband and the carrier would not be a “gestational agreement” as defined in § 5902 because the deceased wife would not have executed the agreement.

In addition, in this case, the Division of Vital Records of the Department of Health would need some type of order determining that the deceased wife, instead of the carrier, is to be listed as the mother of the child. * * *

The proposed legislation would provide guidance on these complex substantive and procedural issues that develop in the context of new, more frequently-employed medical technologies resulting in planned births.

As one who served on the Subcommittee, I now encourage careful consideration of its Final Report by the Legislature regarding these important matters.