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.

PA Small Estate & Deposit Payment Thresholds Increased

The Pennsylvania Probate, Estates & Fiduciaries Code (Title 20 of PA Consolidated Statutes) was amended in minor, but helpful, ways by Act 35 of 2013, which became effective on August 31, 2013.

The changes in affected sections of Title 20 are noted in the adopted form of House Bill 513, Printer's No. 2169, of the 2013-2014 Legislative Session.  HB 513's History indicates it was adopted by the Legislature on June 29, 2013, and signed by the Governor on July 2, 2013.  It became effective 60 days thereafter.

Under long-standing statutory law regarding "Dispositions Independent of Letters", pursuant to 20 Pa. C.S. § 3102 ("Settlement of small estates upon petition"), a "small estate" -- defined as one with assets less than $25,000 and no real estate -- could be settled by a customized petition presented to the Orphans' Court Division, as an alternative to a formal probate procedure.

Section 3102 provides, in its first sentence, as follows:

When any person dies domiciled in the Commonwealth owning property (exclusive of real estate and of property payable under section 3101 (relating to payments to family and funeral directors), but including personal property claimed as the family exemption) of a gross value not exceeding [$$$ = AMOUNT], the orphans' court division of the county wherein the decedent was domiciled at the time of his death, upon petition of any party in interest, in its discretion, with or without appraisement, and with such notice as the court shall direct, and whether or not letters have been issued or a will probated, may direct distribution of the property (including property not paid under section 3101) to the parties entitled thereto.

The prior law had stated an AMOUNT of $25,000.  The amendment increased the AMOUNT to $50,000, but made no other changes to that Section.

Other, more frequently used dispositions of a decedent's assets of a limited value without a formal probate were provided under 20 Pa. C.S. § 3101  ("Payments to family and funeral directors").  That Section continues to provide for payments directly to certain persons or organizations regarding five different classes of assets up to certain amounts.

Act 35 amended the maximum amounts for two of the five classes of assets, as set forth in subsections (b) and (c) only.

• (a)  Wages, salary or employee benefits (remains at not more than $5,000)
• (b)  Deposit account (previously not more than $3,500, which was increased to $10,000)
• (c)  Patient's care account (previously not more than $4,000, which was increased to $10,000)
• (d)  Life insurance payable to estate (remains at not more than $11,000)
• (e)  Unclaimed property (remains at not more than $11,000)

In two further helpful tweaks to subsection (b), Act 35 clarified that a "credit union" is included as a financial institution holding a "deposit account" and authorized to make such payments directly, without proof of an estate administration.  It also amended the law to be directive, as opposed to optional, for a financial institution to make such payments upon proper application.  The word "may" was replaced with "shall".

Section 3102 (b) now provides:

Deposit account.--Any bank, savings association, savings and loan association, building and loan association, credit union or other savings organization, at any time after the death of a depositor, member or certificate holder, shall pay the amount on deposit or represented by the certificate, when the total standing to the credit of the decedent in that institution does not exceed $10,000, to the spouse, any child, the father or mother or any sister or brother (preference being given in the order named) of the deceased depositor, member or certificate holder, provided that a receipted funeral bill or an affidavit, executed by a licensed funeral director which sets forth that satisfactory arrangements for payment of funeral services have been made, is presented. Any bank, association, credit union or other savings organization making such a payment shall be released to the same extent as if payment had been made to a duly appointed personal representative of the decedent and it shall not be required to see to the application thereof. Any person to whom payment is made shall be answerable therefor to anyone prejudiced by an improper distribution.

Such amendments are helpful to many folks facing an immediate need for money for death-related expenses, or simple collection of stray or remaining assets in a decedent's name, such as a solely-held financial account, a small insurance policy, periodic final wages and benefits, or a balance remaining in a patient's care facility account.  

Likely, these changes will not affect old or stale accounts, due to periodic sweep collections by the Commonwealth since 1998 of inactive assets pursuant to the Unclaimed Property Law and Regulations.  However, subsection (e) of Section 3102 would permit recovery of such collected funds due to a decedent, if less than $11,000.

These sections do not avoid accountability or even tax reporting upon a death, but provide an expedited way for collection and application of funds without formal probate.

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.

PA Supreme Court Appoints New Elder Law Task Force

On April 18, 2013, in a posted press release entitled Supreme Court’s Elder Law Task Force Will Tackle Growing Abuses to Older Pennsylvanians, the Pennsylvania Supreme Court announced creation of a new Elder Law Task Force.  The initial meeting of the group was held on April 16 and 17, 2013, at the Pennsylvania Judicial Center, in Harrisburg, PA.

The Press Release announced that "The Supreme Court of Pennsylvania has formed an Elder Law Task Force, chaired by Justice Debra Todd, to study the growing problems involved in guardianship, abuse and neglect, and access to justice. The task force has been charged by Chief Justice of Pennsylvania Ronald D. Castille with recommending solutions that include court rules, legislation, education and best practices."

The task force is made up of 38 elder law experts, including judges, lawyers and social workers.

The task force will have three subcommittees, one devoted to appointment and qualifications of guardians and attorneys, a second on guardianship monitoring and data collection, and a third on elder abuse and powers of attorney.  The work of the group will take approximately one year.  

“As a society, we have increased concentration on child abuse, but the issue of elder abuse has not kept pace,” said Justice Todd.

“This task force is the judiciary’s attempt to study the issues under its purview and make adjustments now, before the numbers of older Pennsylvanians and the commensurate jump in abuse, occurs." * * *

"The U.S. Administration of Aging’s National Center on Elder Abuse estimates that for every one case of elder abuse reported, five more go unreported. This is shameful, and we need to do better.” * * *

The appointed members of the Task Force met in Harrisburg on Tuesday, April 16th and Wednesday, April 17th, for introductions, initiation, presentations, and  discussions, and then for organizational activities within the three subcommittees.  During a break, a group photo was taken (reposted above).  I stand in the back row, behind the pretty lady in the red dress, Prof. Katherine Pearson, of Penn State / Dickinson School of Law.

Simultaneously with the announcement, the Administrative Office of Pennsylvania Courts posted "a variety of resources" on the UJS website, including high-definition video footage of an interview with Justice Debra Todd, the convener and Chair of the Task Force  (the first time such form of media content was posted on that website), an audio clip of the interview, and a graphic, all of which can be used or distributed freely.

Great opportunities for change -- some in study and development for five years or more -- are now presented by the Legislative branch and within the Judicial system in Pennsylvania, even as programs operated by the Executive branch are refined.  These proposals and changes would affect positively the Commonwealth's senior and disabled populations: 

• The Report and Recommendations of the Joint State Government Commission (JSGC), through its Advisory Committee on Decedents' Estate Laws (ACDEL), issued October, 2012, entitled Guardianship Law: Proposed Amendments to the Probate, Estates and Fiduciaries Code, which is now in the form of Senate Bill 117 of the 2013-14 Legislative Session, according to its legislative history.  

• The Report and Recommendations of the JSGC-ACDEL, issued June, 2011, entitled Powers of Attorney and Health Care Decision Making: Proposed Amendments to the Probate, Estates and Fiduciaries Code, which is now in the form of Senate Bill 620 of the 2013-14 Legislative Session, according to its legislative history. 

• Pending, proposed new Pennsylvania Orphans' Court Rules, published for comment in the Pennsylvania Bulletin on Saturday, April 13, 2013, which were the subject of my PA EE&F Law Blog posting PA Orphans' Court Rules Proposed for Sweeping Changes (04/04/13).

• Other proposed and pending legislative measures on similar subjects, but with different approaches.

I applaud and thank the Pennsylvania Supreme Court Justices, particularly the Chief Justice and Justice Debra Todd, for this initiative.

Another PA Inheritance Tax Exemption Engrafted?

On January 23, 2013, the Central Pennsylvania Business Journal reported in an article entitled Pa. House committee passes bill to end 'death tax', that the Finance Committee of the Pennsylvania House approved a bill Tuesday for further consideration by the full House that would eliminate Pennsylvania inheritance tax on family-owned businesses.

Cumberland County Republican Rep. Stephen Bloom introduced the measure, which also came up last legislative session.

"The death tax hits businesses during a time when they are most economically vulnerable, crippling our next generation of job creators," Bloom said in a statement. "This is an unnecessary loss to our economy and to the businesses that create 65 percent of Pennsylvania jobs."

House Bill 48 has 70 co-sponsors in the House and is backed by the National Federation of Independent Business in Pennsylvania, the Pennsylvania Retailers' Association and the Americans for Prosperity-Pennsylvania, among others. * * *

In a prior article by Alex Nixon, entitled Proposal would exempt family businesses from Pennsylvania inheritance tax (01/16/13), the reasons for the proposed changes were discussed from the sponsors' and beneficiaries' viewpoints.

The state‘s inheritance tax can leave heirs scrambling to cover a tax bill. And many end up selling the business or taking out costly loans.

“If something were to happen suddenly to my father, there would have been tens of thousands of dollars of estate taxes owed,” said Dave Cranston Jr., president of Cranston Material Handling Equipment Corp. in Robinson. “None of us have that (money) sitting around waiting.”

Cranston owns 80 percent of the business founded by his grandfather in 1957, and his father is alive and well.

But a bill before Harrisburg lawmakers could end the worry for other family-owned companies across the state.* * *

Such relief is proposed in a fashion generally paralleling that which took effect on July 1, 2012, to exempt family farms from such taxation.  See: PA EE&F Law Blog, Family Farms Exempted from PA Inheritance Tax (07/03/12).

Reporter Melissa Daniels, of the Pennsylvania Independent, had interviewed me earlier this year as she prepared her article entitled Family owned businesses could see ‘death tax’ exemption (01/02/13).

Some Pennsylvania lawmakers say the state’s inheritance tax is inherently unfair.
While those lawmakers succeeded in eliminating the tax for family owned farms last year, this session marks round two, with family owned businesses possibly getting a break.

State Rep. Steve Bloom, R-Cumberland, will soon introduce legislation to eliminate the inheritance tax on business assets, including real estate, for children, siblings or other relatives of a decedent.

He led similar legislation last year that exempts family owned farms from paying the tax.

Bloom’s proposal chips away at the tax, rather than eliminating it altogether. But whether another exemption happens will depend on whether lawmakers can stand losing state revenue. * * *

She quoted my concerns about additional changes to Pennsylvania's Inheritance Tax law motivated by one constituency without regard to the effect upon other taxpayers.  I believe that reforms should consider the entire scope of the tax, particularly in view of the transitional and uncertain nature of the federal estate, gift, and generation-skipping tax systems.

But creating parsed-out exemptions in tax codes can create an extra layer of confusion, despite the intent, said Neil Hendershot, a Harrisburg-area attorney who specializes in estate planning.

The inheritance tax is convoluted on its face, he said, with different rates for different situations, and various reporting requirements that may or may not apply to all situations.

“It bears a review but doing it on an ad hoc basis is going to make it more and more complicated,” Hendershot said.

Hendershot said he would prefer to see the law streamlined for all asset classes, or perhaps revamped with advice from a panel of experts. Issues surround the tax, such as privacy concerns on making asset values public information, that could be part of the discussion, he said.

Pennsylvania's Inheritance Tax Laws derive from roots planted in 1826.  Pennsylvania was the first state to apply an inheritance tax, and has done so continuously since.  

Like a tree long-grown and mature, Pennsylvania's Inheritance Tax laws and administrative system may require pruning -- but not just the one low-hanging branch on one side which bothers some nearby.  It is time to examine the living purpose of, and the shadow cast by, that tree in its entirety, thoughtfully and skillfully.  

The Legislature, instead, should constitute a qualified study group to do just that, with the interests of all Pennsylvanians in mind.

Family Farms Exempted from PA Inheritance Tax

On July 2, 2012, Governor Tom Corbett signed legislation that, effective after June 30, 2012, exempts working farms and some related agricultural commodities from Pennsylvania Inheritance Tax.  

The Governor's Press Release was posted by PR Newswire under the title Pennsylvania Governor Tom Corbett Ends Burden for Farmers by Eliminating Inheritance Tax (07/01/12):

Pennsylvania farmers can now pass their farms on to their heirs without worrying they will have to pay steep "death taxes" to keep them in the family.

"The death tax has forced too many families to sell their legacy, their land and their way of life," said Governor Corbett. "This tax has put too many farms out of business because it was too expensive for farmers to pass them down to their children. This will happen no more. We intend to save our farms."

Previously when a landowner died, heirs to their farm property had to pay an inheritance tax of 4.5 percent if they were adult children and 12 percent if they were siblings of the deceased.

"The inheritance tax has been a burden on farm families for decades," said Agriculture Secretary George Greig. "By eliminating this tax, Governor Corbett solidified his commitment to Pennsylvania farm families, and to keeping farmers farming for generations. This law provides farmers the opportunity to save thousands of dollars in inheritance tax, allowing them to reinvest in their agricultural operations." * * *

There was some confusion whether the bill was signed into law on June 30th, when first announced, or later as a part of the budget bill signed by the Governor on July 2nd.  A Press Release by the Governor's Office issued on July 3, 2012, confirms that the relevant bill was signed on July 2nd.  However, the provisions related to this new exemption "shall apply to the estates of decedents dying after June 30, 2012."

The tax relief originally was introduced in the House as House Bill 1864, PN 2401, by Representative Stephen Bloom, of Cumberland County, PA, as sponsored by many other representatives.  That bill provided, simply:

Section 2111.  Transfers Not Subject to Tax.‑‑* * *

(s)  A transfer of an agricultural commodity, agricultural conservation easement, agricultural reserve, agricultural use property or a forest reserve, as those terms are defined in section 2122(a), to lineal descendants or siblings is exempt from inheritance tax.

The objectives of HB 1864 were supported by the Pennsylvania Farm Bureau, which provided testimony on October 17, 2011 to the PA House Finance Committee in support of Inheritance Tax reduction or elimination, including the proposed exemptions provided in HB 1864.  See: Testimony (PDF, 6 pages).

That Bill's objectives became incorporated into the omnibus budget bill, HB 761, PN 3894.  

This lineage was described by the House Republican Caucus in a posted article, Inheritance Tax Relief Measure Heads to Governor’s Desk (06/30/12):

A measure to end the financial burden of Pennsylvania’s inheritance tax on surviving farm family members has become part of the 2012-13 state budget package, which was sent to the governor tonight, said Rep. Stephen Bloom (R-Cumberland).

Bloom’s original bill, House Bill 1864, would exempt transfers of agricultural assets from the Pennsylvania inheritance tax when the receiving heir is a sibling or child of the deceased farmer. The exemption was incorporated into the omnibus Pennsylvania Tax Code bill (House Bill 761) by the Senate this week and passed finally by the House today.

“This measure will prevent the state from continuing to penalize farm families in Pennsylvania during a time when they are most economically vulnerable,” said Bloom. “By eliminating the death tax on transfers of ag assets, we can help farm families keep farming successfully in future generations.”

In addition, Bloom’s initiative would extend the new inheritance tax exemption to farm commodities, such as livestock and crops. It would also exempt from the death tax forest reserves that are passed along from a parent to a child or the parent’s brother or sister.

“This measure is a huge win for Pennsylvania farm families,” said Bloom. “Too many family farms have been divided up and sold when a loved one dies, because surviving family members are unable to pay the burdensome inheritance tax on their farm property.”

The House originally approved Bloom’s measure in December, on a 190-1 bipartisan vote. Companion legislation introduced by Sen. Dominic Pileggi (R-Chester/Delaware) was also amended into the Pennsylvania Tax Code, which was sent to the governor as part of the 2012-13 budget package tonight. * * *

Section 23 of HB 761, PN 3894, which became Act No. 85 of 2012, effective as of June 30, 2012, now provides, in part:

Section 2111 of the act is amended by adding subsections to read:

Section 2111.  Transfers Not Subject to Tax.‑‑* * *

(s)  A transfer of real estate devoted to the business of agriculture between members of the same family, provided that after the transfer the real estate continues to be devoted to the business of agriculture for a period of seven years beyond the transferor's date of death and the real estate derives a yearly gross income of at least two thousand dollars ($2,000), provided that:

(1)  Any tract of land under this article which is no longer devoted to the business of agriculture within seven years beyond the transferor's date of death shall be subject to inheritance tax due the Commonwealth under section 2107, in the amount that would have been paid or payable on the basis of valuation authorized under section 2121 for nonexempt transfers of property, plus interest thereon accruing as of the transferor's date of death, at the rate established in section 2143.

(2)  Any tax imposed under section 2107 shall be a lien in favor of the Commonwealth upon the property no longer being devoted to agricultural use, collectible in the manner provided for by law for the collection of delinquent real estate taxes, as well as the personal obligation of the owner of the property at the time of the change of use.

(3)  Every owner of real estate exempt under this subsection shall certify to the department on an annual basis that the land qualifies for this exemption and shall notify the department within thirty days of any transaction or occurrence causing the real estate to fail to qualify for the exemption. Each year the department shall inform all owners of their obligation to provide an annual certification under this subclause. This certification and notification shall be completed in the form and manner as provided by the department.

(s.1)  A transfer of an agricultural commodity, agricultural conservation easement, agricultural reserve, agricultural use property or a forest reserve, as those terms are defined in section 2122(a), to lineal descendants or siblings is exempt from inheritance tax. [Emphasis added.]

Act 85 includes some new definitions relevant to the exemptions:

Section 2102.  Definitions.‑‑The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning:

* * *

"Business of agriculture."  The term shall include the leasing to members of the same family or the leasing to a corporation or association owned by members of the same family of property which is directly and principally used for agricultural purposes. The business of agriculture shall not be deemed to include:

(1)  recreational activities such as, but not limited to, hunting, fishing, camping, skiing, show competition or racing;

(2)  the raising, breeding or training of game animals or game birds, fish, cats, dogs or pets or animals intended for use in sporting or recreational activities;

(3)  fur farming;

(4)  stockyard and slaughterhouse operations; or

(5)  manufacturing or processing operations of any kind.

* * *

"Members of the same family."  Any individual, such individual's brothers and sisters, the brothers and sisters of such individual's parents and grandparents, the ancestors and lineal descendents of any of the foregoing, a spouse of any of the foregoing and the estate of any of the foregoing. Individuals related by the half blood or legal adoption shall be treated as if they were related by the whole blood.

The effective date of the act is stated as follows in Section 30 (7) of the Act:  "The amendment or addition of sections 2102 and 2111(s) and (s.1) of the act shall apply to the estates of decedents dying after June 30, 2012."

Note: Thanks to Kathleen B. Murren, Esq., Professor, Legal Studies Chair, Legal Studies Department, Harrisburg Area Community College, for providing an initial inquiry to me, which led to my blog posting.

"Granny Snatching" Prohibition Pending in PA

Would you remember what "UAGPPJA" means, or what it could do in Pennsylvania, without an association to "granny snatching"?  Maybe that's why such a Scrabble of title letters is linked to a simple, silly phrase.  The serious and unremedied abuse situations involving transport of incapacitated elderly persons must be corrected by a dry, but effective, proposed model statute.

[Note:  See last Update below as to enactment of the proposal on July 5, 2012, effective sixty days thereafter.]

The term "granny snatching" was referenced in a November 12, 2007 article in The National Law Journal entitled, Dealing with 'Granny snatching' -- Model law aims to untangle adult guardianship, by Peter Page.  That article addressed the final version of the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA), which received approval at the 2007 annual meeting of the National Conference of Commissioners for Uniform State Laws (NCCUSL).   See also:  Uniform Laws Needed to Deal With Interstate 'Granny Snatching' (03/22/06), posted by the Senior Journal.

UAGPPJA deals primarily with jurisdictional, transfer and enforcement issues relating to adult guardianships and protective proceedings.

NCCUSL explains, on its website, Why States Should Adopt UAGPPJA:

• Provides procedures to resolve interstate jurisdiction controversies. 

• Facilitates transfers of guardianship cases among jurisdictions.

• Provides for recognition and enforcement of a guardianship or protective proceeding order.

• Facilitates communication and cooperation between Courts of different jurisdictions.

• Addresses emergency situations and other special cases.

Since 2007, the UAGPPJA has been adopted by more than half the states, with many considering it this year.  All states should adopt this law to prevent forum shopping and transport of persons with weakened mental condition.

Pennsylvania is considering it now.

On September 28, 2011, the Pennsylvania House of Representatives' Aging and Older Adult Services Committee, chaired by Rep. Tim Hennessey, held an informational session (videotaped by the Pennsylvania Cable Network) on House Bill No. 1720, which had been introduced into the House previously on June 22, 2011.

This is a second initiative this year that would upgrade and improve guardianship laws.  The first initiative remains before in the Legislature only in the form of two reports with recommendations, not in pending legislation.  See: PA EE&F Law Blog posting Proposed Amendments of PA POA, Guardianship & Health Care Directive Laws (06/14/11).

I understand that HB 1720 was widely and strongly supported by those at that session and within the House.  It is promoted by AARP-Pennsylvania (offices in Harrisburg & Philadelphia).  [Note:  It is also championed by the Pennsylvania Bar Association -- See Update below.]

Nationally, UAGPPJA is supported by the American Bar Association ("Guardianship Jurisdiction"), the Alzheimer's Association ("UAGPPJA Fact Sheet"), the National Guardianship Association, Inc. ("UAGPPJA Links"), the National Academy of Elder Law Attorneys ("Endorsement"), AARP ("Radio Report"), and the Conference of Chief Justices and Conference of State Court Administrators ("Endorsement").

As a practitioner, I too support it.  Unfortunately, present law in Pennsylvania will confound a court as to jurisdiction, can disconnect a local Area Agency on Aging as to protective services, and can create litigation in both home and foreign jurisdictions among family members at great cost and inconvenience.

The federal Elder Justice Act (effective March 2010) is not yet funded in the area of conflict of laws or interstate transport of elderly persons.  See:  The Elder Justice Act: What It Says, What It Means, And When Will It Be Implemented? (10/26/10), by Bill Benson and Bob Blancato.  Furthermore, the EJA does not codify state laws on the issue of state jurisdiction, so there is no framework of uniform state laws other than this proposal. 

NCCUSL's final model UAGPPJA must bear a few minor tweaks to conform it with existing Pennsylvania law in Chapter 55 ("Guardianship") of the PA Probate, Estates & Fiduciaries Code, for example, on matters such as emergency guardianship and also its use of the term "conservatorship" (not used in our law).  Also, it would need cross-referencing if it would become a new Chapter 59 of the PEF Code. 

WHYY's Newsworks posted an article on October 7, 2011, entitled Pa. plan aims to alleviate 'granny-snatching', which reflected both the need for, and growing momentum of, HB 1720:

Stories of elderly parents being fought over by their children or relatives who want to be the sole guardians are familiar to Rep. Tim Hennessey of Chester County.

"Somebody dies, and then someone else comes in and tries to assume control and the other siblings don't like it. And it could be county to county or it could be state to state," Hennessey said. "You know enough of these stories circulate that you think, oh, geez, somebody, here's a problem, we have to solve it."

When a group called the Uniform Law Commission approached him with legislation to clear up the murky legal issue, Hennessey agreed to sponsor it.
His proposal sets up rules to follow when multiple courts are involved in a dispute over who's responsible for an incapacitated adult. * * *

See also: New court rules proposal aims to prevent so-called "granny snatching"  (10/12/11), by Mary Wilson, posted by WITF. 

HB 1720 appears to be moving quickly in the House.  Today (October 25, 2011), it received second consideration and was referred to the Appropriations Committee.

This bill should be adopted by the House, and then by the Senate; and then it should be signed by the Governor into law.

And, while doing so, the Legislature should address that still-pending first initiative too, so that Pennsylvania's guardianship laws can be more effective and fair.

Update: 10/26/11:

On October 26, 2011, I received in the mail a copy of the Pennsylvania Bar Association's Bar News.

On the first page, under the heading PBA President and Elder Law Section Officers Take Part in State House Roundtable on Adult Guardianship Bill, and below a color photograph taken at the September 28, 2011, informational session, was this text:

PBA President Matthew J. Creme, Jr. and PBA Elder Law Section officers Sally Schoffstall and Jacqueline Shafer participate in a roundtable discussion Sept. 28 in Harrisburg with members of the state House Aging & Older Adult Services Committee about House Bill 1720.

The bill would amend Title 20 by adding the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act to provide a uniform mechanism for addressing multijurisdictional adult guardianship issues.  The PBA supports the bill.

In a prior Bar News issue (09/05/11), I found a report of the PBA's action authorizing such an appearance:

The PBA Board of Governors met July 28, at Rocky Gap Lodge & Golf Resort and took the following actions:  * * *

Unanimously approved the resolution of the PBA Elder Law Section that the PBA support the addition of a new §5503 to the existing Probate, Estates and Fiduciaries Code at 20 Pa. C.S. Chapter 55, also known as the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA).

The UAGPPJA provides a uniform mechanism for addressing multijurisdictional adult guardianship issues that have become time consuming and costs for courts and families.  Because the PBA had been asked to testify at a legislative hearing on this issue in September, the Board took action on behalf of the House of Delegates.

Update: 11/08/11:

Today's emailed update to PBA members noted recent approval by the House of HB 1720, as follows:

House Bill 1720, sponsored by Rep. Tim Hennessey (R-Chester), passed the House 196-0 on Oct. 26 and was referred to the Senate Aging and Youth Committee.

The bill amends Title 20 (Decedents, Estates and Fiduciaries) adding the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act, which provides for uniform adult guardianship and protective proceedings jurisdiction.

Update:  01/09/12:

HB 1720's legislative history indicates that it has not moved beyond the Pennsylvania Senate's Aging & Youth Committee.  That is unexplained, and unfortunate.  It should be a priority.

It remains a priority for the Pennsylvania Chapter of the Alzheimer's Association, which states on its "Advocate" web page, as follows:

The Alzheimer's Association strongly supports the adoption of UAGPPJA in Pennsylvania and across the country. Due to the impact of dementia on a person's ability to make decisions, individuals living with Alzheimer's disease may need the assistance of a legal guardian. The process of appointing a guardian is handled in state courts. Complications with appointing a legal guardian for an adult may arise when the guardian lives in a different state than the individual with Alzheimer's disease or a related dementia.

If we adopt UAGPPJA, we make it easier for families across the country to help their loved ones state to state without the hassle of re-filing for guardianship.
 * * *

Update: 07/02/12:

The Pennsylvania Bar Association reported today that the Legislature approved HB 1720, PN 2589 and sent it to the Governor for consideration of signature into law:

H.B. 1720, sponsored by Rep. Tim Hennessey (R-Chester), is on the Governor’s desk. The legislation amends Title 20 (Decedents, Estates and Fiduciaries) by adding the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act (UAGPPJA). UAGPPJA provides a mechanism for addressing multi-jurisdictional adult guardianship issues.

The Legislative History of HB 1720 indicates that it was adopted by the House on October 26, 2011 by a vote of 196-0, and then by the Senate on June 26, 2012, by a vote of 49-0.  It was presented to the Governor on June 28, 2012.

Update: 07/06/12:

House Bill 1720 (Printer's No. 2589) was signed by the Governor on July 5, 2012.  In sixty days, it will become law in Pennsylvania.  See: PA Elder, Estate & Fiduciary Law post, New "Granny Snatching" Law in PA (07/06/12).

As Charlie "Tremendous" Jones, late of Harrisburg, PA was known for saying, TREMENDOUS!!!

Proposed Amendments of PA POA, Guardianship & Health Care Directive Laws

On June 14, 2011, the Pennsylvania Joint State Government Commission posted the latest report (June, 2011) of the Advisory Committee on Decedents' Estates Laws regarding proposed amendments to the Probate, Estates, and Fiduciaries Code (PEF Code), which is available here.

This latest report (June 2011; PDF, 85 pages) alters and updates a prior report (June 2010; PDF, 87 pages) of the same organization regarding the PEF Code.

The two reports are the product of Subcommittee study and drafting, Advisory Committee review and revision, and JSGC approval, for submission to the Pennsylvania Legislature:

Over the years, the Advisory Committee has formed various subcommittees to assist in reviewing specific topics and developing statutory recommendations involving the Probate, Estates and Fiduciaries Code for consideration by the Advisory Committee.

The Subcommittee on Guardianships and Powers of Attorney was formed to review, among other things, 20 Pa.C.S. Chapters 54 (health care), 55 (incapacitated persons) and 56 (powers of attorney).

The subcommittee consists of John F. Meck, Esq., Chair; Robert Clofine, Esq.; William R. Cooper, Esq.; The Honorable Calvin S. Drayer, Jr.; Jay C. Glickman, Esq.; Neil E. Hendershot, Esq.; The Honorable Anne E. Lazarus; John J. Lombard, Jr., Esq.; James F. Mannion, Esq.; Michael J. Mullaugh, Esq.; R. Thomas Murphy, Esq.; The Honorable Paula Francisco Ott; The Honorable Stanley R. Ott; William Campbell Ries, Esq. and Robert B. Wolf, Esq.

After reaching consensus on its legislative recommendations, the Advisory Committee presents its recommendations to the Task Force on Decedents’ Estates Laws, which is a bicameral and bipartisan panel of legislators. The Task Force authorizes the Joint State Government Commission to publish a report containing the recommendations, which serve as a basis for legislation. * * * [Paragraphs rearranged]

What is in the June 2011 Report?  Its proposed legislation would reverse one Pennsylvania Supreme Court decision (Vine, December 21, 2010) regarding financial powers of attorney, and clarify the guardianship and healthcare decision-making statutes after another Pennsylvania Supreme Court decision (D.L.H., August 17, 2011) regarding medical decision-making.

In response to the Vine [v. Commonwealth, 9 A.3d 1150 (Pa. 2010)] and [In Re] D.L.H. [2 A.3d 505 (Pa. 2010)] rulings of the Pennsylvania Supreme Court, the Subcommittee on Guardianships and Powers of Attorney reviewed the topics of powers of attorney and health care decision-making and presented its recommendations at the 2011 annual meeting of the Advisory Committee.

The Advisory Committee reached consensus on the recommendations, and the Subcommittee subsequently finalized specific statutory amendments to the Probate, Estates and Fiduciaries Code, which are contained in this report.

The major statutory amendments that form the basis of this report concern the following:

(1) Third party liability and immunity regarding powers of attorney under 20 Pa.C.S.  Chapter 56, in light of the Vine ruling.
(2) An acknowledgment by the principal and affidavits of the two witnesses for powers of attorney.
(3) Health care decision-making by guardians under 20 Pa.C.S. Chapters 54 and 55, in light of the D.L.H. ruling.

Proposed legislative reversal of the Vine holding was explained in a Memo, dated April 4, 2011, from Senator Stewart J. Greenleaf to all Pennsylvania Senators:

[The Court's opinion appears to remove the immunity third parties have had for decades in relying on facially valid power of attorney.

Third parties will now be put in a position of having to investigate the circumstances surrounding the execution of a power of attorney.

Instead of routinely relying on the validity of a power of attorney, they may have to seek the principal's ratification before acting. And, in turn, if the third party questions the power of attorney and does not comply with the instructions of the attorney-in-fact, the third party could find itself subject to liability for failing to comply with an agent's instructions. * * *

The need for remedial legislation after the Vine decision was highlighted by a Pennsylvania Bar Association Recommendation, dated April 11, 2011.  That Recommendation concluded:

These amendments are vital to restore commercial viability of Powers of Attorney following the decision in Vine v. Commonwealth, 9 A.3d 1150 (Pa. 2010), while still adopting appropriate new safeguards for potentially vulnerable principals. In expressing our support for prompt action by the Pennsylvania State Legislature, we have carefully considered the proposals by the Joint State Government Commission and we support the Commission’s approach to the necessary amendments of existing statutes.

As a means of strengthening the original execution of powers of attorney in Pennsylvania, the most recent proposal would require notarization of the maker's signature and affidavits by two witnesses, which requirements parallel those of a self-proving last will.  Other amendments would allow for use of facsimile copies of documents.

The other proposal in the June 2011 Report would clarify points made in the D.L.H. case, where the PA Supreme Court considered, "[W]hether plenary guardians can refuse life-preserving medical treatment on behalf of a person who lacks -- and has always lacked -- the capacity to make personal healthcare decisions, where the person is neither suffering from an end-stage medical condition nor permanently unconscious."

Careful study of that decision revealed areas of the Guardianship statute and the Health Care Decision Making statute that should address long-term and end-of-life medical decision making by a court-appointed guardian.  The result would be these amendments:

• § 5521. Subsection (d.1)(1) is added to provide that a guardian of the person for an incapacitated person shall have the same authority to make health care decisions on behalf of the incapacitated person as a health care representative, and a decision shall be effective without court approval, subject to (1) any limitations and conditions set forth in the order of appointment; (2) the same health care decision-making process as prescribed in the statutory provisions regarding the authority of a health care agent in making health care decisions; (3) the same limitations regarding pregnancy and regarding the duties of an attending physician and health care provider under Chapter 54; (4) the statutory provisions regarding powers and duties only granted by the court and regarding powers and duties not granted to a guardian; and (5) any other provision regarding health care representatives as set forth in Chapter 54, except the statutory provisions regarding who may act as a health care representative.

• Subsection (d.1)(2) is added to specify that, to the extent practicable, a guardian of the person must consult with close family members of the incapacitated person in making a health care decision, particularly one involving end-of-life decision-making.

• Subsection (d.1)(3) is added to require that a petition that is filed for the appointment of a guardian of the person on or after the effective date of the act must state whether it is proposed that the guardian of the person shall have the power to make health care decisions and, if so, whether the guardian shall have all the powers of a health care representative to make such decisions, and any limitation of those powers.

• Subsection (d.1)(4) is added to require that the notice of a petition or hearing must contain the information under the previous paragraph.

• Subsection (d.1)(5) is added to require that an order of appointment of a guardian of the person that is issued on or after the effective date of the act must specify whether the guardian of the person shall have the power to make health care decisions and, if so, whether the guardian shall have all the powers of a health care representative to make such decisions, and any limitation of those powers.

• Subsection (d.1)(6) is added to specify that a guardian of the person appointed before the effective date of the act shall have the same powers as a health care representative unless (1) a prior court order has limited the power of the guardian to make health care decisions or (2) a health care representative is available and assumes authority to act by agreement between the health care representative and the guardian, in which case the guardian thereafter has no health care decision-making powers.

I serve as a Guardianship/POA Subcommittee member and as an Advisory Committee member, and I worked on the reports and recommendations.

I strongly advocate for the Legislature's adoption of the recommendations contained in the June 2010 Report, as modified by the June 2011 Report.

Update:  10/27/11:

In searching bill information on the website of the Pennsylvania General Assembly, I do not find any legislation pending that derives from the two reports.

However, a guardianship-related bill, House Bill 1720, was introduced recently and finds support.  See: PA EE&F Law Blog posting "Granny Snatching" Prohibition Pending in PA (10/25/11).