PA EE&F Law Blog ="Blawg of the Day"

On April 6, 2007, Thomas L. Mighell, Esq., of Dallas, Texas, noted this PA Elder, Estate & Fiduciary Law Blog as the "Blawg of the Day" on his well-known legal website & blog, "Inter Alia".

Friday, April 6, 2007 -- Blawg of the Day

The PA Elder, Estate and Fiduciary Law Blog is the publication of Neil Hendershot, a practicing and teaching lawyer in Harrisburg, Pennsylvania. He describes the blog best himself: the blog is a resource "for law students, consumers, & professionals about developments affecting Elder Law, long-term care, "End-of-Life" & health care surrogate decision-making, estate & personal planning, fiduciary administrations (by agents under powers of attorney, custodians, guardians, executors/administrators, & trustees), elders' dispute resolution, and Orphans' Court litigation in this Commonwealth, with reference to trends nationally."

Tom has faithfully authored a legal "blawg" (his spelling) since August, 2002; and thereby became a pioneer & leader in this new online activity by lawyers. He described his activities as "dispensing helpful news and tips about Internet legal research as well as technology, legal and otherwise."

In 2004, Dennis Kennedy, Esq. awarded a first runner-up award to Tom's blog under the category "Best Legal Blog".

In January, 2005, Tom commented from his experiences & observations about legal "blogging" & "bloggers" -- listing eleven good ones -- in an article entitled "ABA TECHSHOW Bloggers".

The article was published by the American Bar Association's Law Practice Management Section in its magazine Law Practice Today, in November, 2005.

Blog: it’s Merriam-Webster’s most-searched-for definition of 2004. And yet according to a recent Pew Internet survey, only 38 percent of Internet users know what the term “blog” means.

Most readers of Law Practice Today don’t belong in that group, however. We not only know what blogs are, we appreciate how the better ones inform us and help us in our law practice

Here’s another interesting statistic for you: of the nearly 60 experts scheduled to speak at ABA TECHSHOW 2005, nearly 20 percent of them have law-related weblogs.

To me, that’s no surprise; bloggers are people who “get it.” They embrace new forms of technology, both for themselves and for their practice. Here's a brief (alphabetical) introduction to the ABA TECHSHOW speakers who also happen to be bloggers; if you aren't already reading these blogs on a daily basis, you should start, now. * * *

Tom now reports on his blog that he is co-authoring a book with Dennis Kennedy about internet collaboration tools for practical use by lawyers. Publication by the American Bar Association should occur in early 2008.

The book is tentatively titled "Collaboration Tools for Lawyers: Essential Ways to Work Together with Colleagues, Clients and Even Opposing Counsel". Read his posting about that topic & the book, here.

The book will provide intensely practical advice for lawyers and law firms wanting to take better advantage of these tools and the benefits they bring.

It will take a look at how to use these tools well, focus on both categories of tools and specific individual tools, and provide concrete action steps and techniques so that even the least tech-savvy lawyer can catch up with the early adopters and successful innovators.

It's nice to be noticed by a leader.

Clarifications on PA's New Accounting Formats

Eugene H. Gillin, Esq., an attorney who practices with the Philadelphia law firm Harkins & Harkins, exchanged email with Vincent F. Lackner, Jr., Esq. about Pennsylvania's new model Orphans Court Accounting Forms, to take effect on & after April 30, 2007.

For background & relevant links, see: PA EE&F Law Blog postings "PA's New Orphans' Ct Accounting Forms" (04/02/07), and "Comparison of PA's Old & New Accounting Formats" (04/03/07).
Gene is a member of the same law firm as Mary Jane Barrett, Esq., who serves as the Chair of the Pennsylvania Supreme Court's Orphans' Court Procedural Rules Committee. That Committee had originated, revised, and then recommended the new forms for approval. Gene also conferred with some members of that Committee on points raised.

Along with Vince and Judge Calvin S. Drayer, Jr. (of the Orphans' Court Division, Court of Common Pleas of Montgomery County, PA), Gene had spoken at the Pennsylvania Bar Institute's "Fiduciary Accounting Workshop", held on September 1, 2006.

The book for that course (PBI Publication No. 04565-BK, 108 pages, $69.95), addressed many of the principles involved in fiduciary accounting, and it will remain an important reference.

The audit of fiduciary accounts is often filled with troublesome accounting issues. This manual focuses on the preparation of fiduciary accounts to be filed with the Orphans’ Court and Court procedures involved in the audit of these accounts.

Summary of Contents: Preliminary Observations about Practice in the Orphans’ Court | Jurisdiction in the Orphans’ Court | Petition Practice | Accounting Practice in the Orphans’ Court | Format and Content of Accounts | Fiduciary Accounting Principles | Protocols for Preparing an Account | Difficult Accounting Issues | Model Unitrust Account and Similar Formats | Decedent’s Estate Petition for Adjudication/Statement of Proposed Distribution Pursuant to Rule 6.9 | Model Estate Account | Model Trust Account | Model Unitrust Account

So Gene's observations about the new accounting formats offer insight into some matters not specifically addressed in the AOPC's announcement, the revised Supreme Court Orphans' Court Rule 6.1, or the forms themselves.

Gene first commented about the clear delineation required between principal and income items, the two-part presentation of dividend reinvestment transactions within this structure, and the elimination for practical reasons of a proposed schedule of distribution in the new accounting forms.

The revised estate and trust models were designed to remain simple and consistent with the original models while correcting obvious math errors which persisted for years.

The clear intent of the the revised Rule is to require separate schedules for principal and income.

Thus, if there is a dividend reinvestment program income investments and income capital changes will be required schedules * * *. Any securities acquired in the fashion outlined should appear on the income balance page of the Account.

The reason for eliminating the Proposed Distribution Schedule from the model form was simply recognition of the the fact that the reappraised values for distribution of assets in kind would inevitably be "stale" in the instance of any matter filed with the Court for which a Schedule of Distribution would instead likely be required. Proposed Distribution Schedules offered in most sophisticated software programs remain a useful tool for accounts being settled informally.

As to the presentation of a "mortgage payable" in an accounting, Gene commented further.

Mortgages most commonly must be dealt with in an estate administration setting and typically involve the circumstance in which the decedent's former residence is sold before the estate is settled and the mortgage is satisfied at settlement. In that circumstance all mortgage payments would be listed as principal disbursements on the date(s) paid.

If the mortgage remains on the closing date of the account I do not believe there is any requirement to show mortgage a "payable" as the Account is stated on a cash basis.

On the other hand, there would be nothing improper about a footnote on the balance page listing the principal mortgage balance payable as of the closing date of the Account but the composition of balances and cash on hand is not otherwise affected by the existence of the mortgage.

In other words, the new accounting formats anticipate that any mortgage payment shown as a disbursement would be comprised of two elements -- one portion as a principal repayment against the remaining balance of the original obligation, and another portion as an expense from income for the periodic interest charged on the outstanding principal amount owed. For an accurate allocation, the original amortization schedule (or a reconstructed substitute based on the original obligation's terms) should be followed.
Gene mentioned in his email that he is proud of his business consultant relationship with FASTER System, LLC. He knows that the data treatment & accounting output from that vendor's software is already compliant with the new rules.

"Fear of Falling" & Focus on Falls

What is a "fear of falling"? It is "a lasting concern about falling that can lead to an individual avoiding activities that he/she remains capable of performing." The fear can become self-limiting and destructive.

"Fear of Falling Among Seniors: Needs Assessment and Intervention Strategies" was a lecture, by Susan L. Murphy, which was presented at the World Federation of Occupational Therapists Conference, in Stockholm, Sweden, in June, 2002. In 2003, it was made available online -- in graphics & with speaker's notes -- by the University of Pittsburgh.

Why is harboring such a fear, in itself, unhealthy for seniors? Go through the online lecture's twenty-one , well-done slides here -- right now -- and learn why. (It should take only three minutes; and then you will understand.)

Or, if you would rather read the New York Times instead, then see: "For Elderly, Fear of Falling Is a Risk in Itself", by N. R. Kleinfield, published March 5, 2003.

* * * Studies indicate that 30 to 50 percent of elderly people fear falling. Mr. Howland said that research he engaged in found that fear of falling exceeded other commonplace anxieties like fear of being robbed in the street, fear of forgetting an appointment and fear of financial problems.

Stimulus for this primal fear is everywhere. The elderly not only fall themselves. In their world, they are witnesses to a montage of friends falling, neighbors falling, strangers falling -- last week, yesterday, 10 minutes ago. * * *

An awareness about falls, however, is a rational concern that can lead to better health for oneself or those in one's care.

"Healthy Steps" is the title of a new educational campaign announced by the PA Department of Aging on April 4, 2007, that will promote such an awareness.

The Department's Press Release, entitled "Rendell Administration Unveils Falls Prevention Program for Older Adults -- ‘Healthy Steps’ aims to keep older adults on their feet, out of hospitals", describes the initiative:

Department of Aging Secretary Nora Dowd Eisenhower today announced the launch of “Healthy Steps for Older Adults,” a falls prevention program that is designed to keep older Pennsylvanians on their feet and out of the hospital.

“Falls are the leading cause of injury-related hospital stays for older adults and are often precursors to a nursing home,” Eisenhower said. “Preventing falls is part of Governor Rendell’s strategy to provide older Pennsylvanians with the resources they need to live safely at home, rather than moving into a nursing home or similar institution.”

Healthy Steps for Older Adults will be offered in 34 counties. Intended for adults over age 50, the pair of two-hour workshops address participants’ medications, sensory deficits, home environmental safety, mobility exercise, health and behavioral status, foot care and nutrition hydration. * * *

Years ago, the American Academy of Family Physicians described the causes of falls by elderly persons, and offered practical preventative measures, in an article entitled "What Causes Falls in the Elderly? How Can I Prevent a Fall?", published the April 1, 2000 issue of its journal, the American Family Physician.

The American Medical Association, in its journal article entitled "Falling and the Elderly" (PDF), published May 26, 1999 (reposted online by Penn State University), provided a one-page advisory on the subject.

The Department's Press Release announced that "demonstration" training sessions will be held soon in the Southeast, North Central, & Northwest regions of Pennsylvania. It also announced the availability of an award-winning training manual for the program.

The 64-page Healthy Steps Guidebook, developed by the Department of Aging and the University of California at Berkley, earned first place honors from the American Public Health Association’s public health education and health promotion sections.

The guidebook will be available to participants as well as instruction in three demonstration regions across the state.

Interested persons can call their local Area Agency on Aging or toll free at (866) 286-3636.

Excerpts from the Guidebook are available here.

PA DPW's New Policies under DRA

Effective on March 3, 2007, the Pennsylvania Department of Public Welfare instituted new policies under the federal Deficit Reduction Act of 2005 (DRA) regarding eligibility for financial assistance in provision of long-term care services.

The new Policies were published in the Pennsylvania Bulletin on March 3, 2007 (37 Pa.B. 1043). This notice was accompanied by DPW's publication of revised "Undue Hardship Waiver Guidelines" under the new Policies (37 Pa.B. 1046).

For background about the DRA & its effects, see: PA EE&F Law Blog, "US Dist Ct Dismisses DRA Challenge" (11/15/06); "DRA to be Effective in PA on Feb 1st ... no ... Mar 1st, 2007" (01/03/07); Robert C. Gerhard, III, Esq., "Federal Changes in Medicaid Law" (12/14/06).

The Medicaid program in Pennsylvania is generally described by the Pennsylvania Medicaid Policy Center in its "Frequently Asked Questions". Other general information about Medicaid eligibility in Pennsylvania had been posted here two years ago by PA DPW, but that information has not yet been altered to reflect the new Policies.

DPW policies are implemented through the various County Assistance Offices, listed here, which administer the Medicaid program locally in Pennsylvania.

The guidelines for the CAO's administration are set forth by DPW in series of Online Manuals:

• Cash Assistance Handbook
• Food Stamp Handbook
• Medicaid Eligibility Handbook
• Supplemental Handbook
• Long Term Care Handbook

These handbooks guide a CAO worker in determining an applicant’s available benefits, considering income, available resources, & non-financial information, measured against current standards in federal & Pennsylvania laws, regulations, & policies (such as those recently changed).

DPW's change in policies implemented new rules federally-mandated by the DRA, which became law on February 8, 2006. These federal changes limited eligibility for services & benefits in the Medicaid Program, as administered in all states, to accomplish overall "cost containment".

DPW's new Policies apply to applicants/recipients in need of payment for long-term care services, including those offered by nursing facility services or their institutional equivalent, and by home & community-based services furnished under a waiver granted by the Centers for Medicare and Medicaid Services (CMS).

DPW's summary of the new Policies (which I labeled below with headers in brackets, & also re-paragraphed for better readability) highlights the changes:

[Five-Year Ineligibilty Period]

The Department's regulations require that a period of ineligibility for payment of LTC services be imposed on an individual applying for or receiving payment for those services when transfers of assets for less than Fair Market Value (FMV) were made by the individual or the individual's spouse during the look-back period.

The DRA of 2005 amended the asset transfer rules regarding eligibility for payment of LTC services under the Medicaid Program. The look-back period has been extended to 60 months for all transfers of assets made on or after the date of enactment.

[Ineligibility Period Commencement]

The DRA of 2005 changes the determination of the period of ineligibility to be imposed on an applicant or recipient when the applicant or recipient or the spouse of the applicant transfers assets for less than FMV.

Formerly, the beginning date of a period of ineligibility for an applicant who transferred assets for less than FMV was the first day of the month in which assets were transferred. For a recipient, the beginning date of the period of ineligibility was the first day of the month following the month of the transfer.

States are now required to impose periods of ineligibility prospectively in those cases where the applicant or recipient or the spouse of the applicant or recipient has transferred assets for less than FMV. The beginning date of a period of ineligibility for payment of LTC services is the date the applicant would be otherwise eligible for Medical Assistance based on an approved application.

For a recipient, the beginning date of a period of ineligibility for payment of LTC services is the first day of a month immediately following proper advance notification provided to the recipient.

[Resource Level Qualifications]

The DRA of 2005 mandated new requirements that must be applied in evaluating certain resources to qualify for payment of LTC services. Resources that fail to meet these new requirements will be treated as transfers of assets for less than FMV.

[Annuity Disclosure & Qualification]

It is a requirement that an applicant or recipient or spouse of an applicant or recipient disclose any ownership interest in an annuity. A nonqualified annuity is one purchased outright by an individual or a couple that is not part of an employer retirement plan or Roth individual retirement plan. The DRA of 2005 mandates that nonqualified annuities name the Department as the beneficiary for at least the total amount of medical services provided by the Department on behalf of the recipient.

[Income Allocation to the Community Spouse]

States are no longer allowed the option of first looking to the couples' resources to address spousal impoverishment. The DRA of 2005 now requires the allocation of available income from the institutionalized spouse to the community spouse (CS) to meet the Community Spouse Monthly Maintenance Needs Allowance (CSMMNA).

If the CS still needs additional income to fully fund the CSMMNA, resources from the nonprotected share of the couples' resources can be allocated to the CS.

[Limitation on Home Equity]

The DRA of 2005 also instituted a new eligibility requirement regarding the equity value of the home owned by the applicant or recipient who is in need of LTC services under the Medicaid Program.

Individuals with equity value in their home in excess of $500,000 are not eligible for payment of LTC services except when there is a spouse, a child under 21 years of age or a blind or permanently and totally disabled child residing in the home.

The excess equity value in the home disqualifies the applicant or recipient for payment of LTC services.

A good, brief summary of the changes in regulations was posted by Elder Law Answers on March 12, 2007, here.

These policy changes were the subject of an article entitled "Rules for nursing home aid tighten -- New federal regulations make it riskier for the elderly to give money to relatives", by Gary Rotstein, published in the Pittsburgh Post-Gazette on April 02, 2007.

The changes published by the state Department of Public Welfare have been little noticed beyond elder law attorneys and nursing home officials, and some of them are concerned that families innocently passing on money as gifts will be forced to regret it later.

If a senior's assets have eroded by the time he needs nursing home care, and he gave away part of his wealth within the prior five years, he could be ineligible for government coverage for weeks or months of costs that typically run more than $200 per day. Before the changes, the "lookback" period was three years.

Lawyers suggest the tightened restrictions create a scenario where an older person may have to ask for money back from a relative who received it a few years earlier, or a nursing home may be uncompensated for weeks of care it gives that person.

"There may be more difficulty getting a loved one into a nursing home if they made gifts," cautioned Robert C. Gerhard III, a Montgomery County attorney who wrote a book on the state's Medical Assistance rules. "It's riskier for seniors to make gifts to kids, even for seemingly acceptable reasons -- say, to help a child going through divorce or help a child buy a house, or a wedding present.

"These are things we typically help family members with, but if you do so now and need nursing home care, you may find yourself denied," he said. * * *

The article is the only newspaper commentary that I have encountered to date in my reading or searches about the new DPW Policies under the DRA. It is well-written with a broad view, citing experts. For those interested in this topic, it should be read.

Another excellent set of resources on these topics was produced & posted by elder law attorney Jeffrey A. Marshall, Esq., founder of Marshall & Associates, for a symposium held March 27, 2007, in Camp Hill, PA. Those materials are found here; and his outline is found here.

Comparison of PA's Old & New Accounting Formats

What are the differences between Pennsylvania's "old" suggested format for fiduciary accounting, versus the "new" (post-Apr. 30, 2007) mandatory model fiduciary accounting formats?

The "old" suggested format was permitted for use in the Commonwealth's courts since January 1, 1974. The "new" model formats, which were announced on March 29, 2007, soon will be mandatory in Pennsylvania to present fund accountings in our courts. Absent specific permission by a court, the new formats must be applied as to filings made on & after April 30, 2007.

For background, see: PA EE&F Law Blog posting "PA's New Orphans' Ct Accounting Forms" (April 2, 2007).

Vincent F. Lackner, Jr., Esq., founder & President of The Lackner Group, Inc., of Pittsburgh, PA, just posted on the Pennsylvania Bar Association's "Probate & Trust" Law Division Listserv, his detailed comparison of the two sets of fiduciary accounting formats.

Vince's analysis can be relied upon. In the mid-1980s, he became nationally prominent for his leadership in the automation of fiduciary administrations, including forms management, "one-write" data entry, template correspondence, death & fiduciary tax preparation, and court accountings. Since 1986 (about the time when I first met him), his company has provided estate & trust software to hundreds of law firms, banks, and accounting firms located in approximately thirteen states, including Pennsylvania, where he began & maintains his efforts.

Vince recently teamed up with another nationally-known Pennsylvania fiduciary expert, Stephen R. Leimberg, Esq., to offer a new software program that calculates the effects of "decoupling" of state death taxes under the revised federal estate tax law, now fully in effect -- a very complicated subject.

They unveiled it at the 41st Annual Heckerling Institute on Estate Planning, in Miami, Florida, which I described previously here. Their presentation on Wednesday, January 10th, 2007, was reported here under the heading "Report on the Vendors":

Vince Lackner and Steve Leimberg, both well-known experts in the estate planning technology field, have created a new tool known as DecoupleCruncher.

DecoupleCruncher will handle a wide range of calculations in order to determine estate or inheritance taxes due in a single state or in multiple states.

The program handles deductions, including an optimized marital deduction (or the option to elect to pay estate taxes if desired), and allows you to reallocate assets among two or more states as well as to "Show or Refine Calculations." Vince and Steve have also included all relevant federal and state tables to assist you in understanding some of these rather odd results under various state regimes.

Vince and Steve held a lunch session to illustrate their new tool, which is based on the solid FileMaker Pro database platform that Vince uses for his 6-in-1 Estate Administration System.

Vince's analysis must be more than a merely academic exercise; it must be a practical implementation into a software product utilized by many professionals.

Following, then, is Vince's detailed comparison of the old suggested format of accounting, versus the new mandated formats of accounting. I appreciate his grant of permission for me to post his comments.

I have compared the revised Model Estate Account and Model Trust Account (released last Thursday, March 29, 2007) with the versions that have been attached to Rule 6.1(g) since January 1, 1974. Note: old Rule 6.1(g) has been re-lettered as 6.1(f).

Some of the changes are pointed out in (a) the Press Release, (b) Order No. 414, and (c) new Rule 6.1. All can be accessed from [this] link. By the way, it appears that the No. 441 on that page (as of [April 2, 2007]) should read No. 414 (this is the actual Order Number).

Note that the new Rule adds a Model Charitable Remainder Unitrust Account (not present in the prior Rule). This e-mail does not address that new format.

I would like to summarize key changes that were made to the Model Estate and Model Trust Account formats:

1) Form Name. As stated in the Order, the one account is now called "Model Estate Account" (instead of Model Executor's Account), and the other is now called "Model Trust Account" (instead of Model Trustee's Account).

2) Now The Only Format Approved for Filing in PA Courts. Unlike the previous rule, which allowed accounts to be filed in substantial conformity with rules prescribed or forms approved by the local Court, the new Model Accounts are now the only formats that may be filed. There is one exception: "Except where otherwise provided by a special order of the local Court in a particular case..." [Rule 6.1(e)].

Rule 6.1 does not apply to Accountings that are not filed with the Court but instead are provided to beneficiaries in connection with Receipt and Release, Family Settlement, or other non-judicial procedures. Thus, while practitioners who have been preparing simplified accountings will need to use the new format for filing with the Court, it appears that they may continue to use the simpler formats for informal (non-judicial) accountings.

3) Changes in Holdings. The new format eliminates the word "Investment" in "Changes in Investment Holdings". This seems appropriate because the word "Investment" unduly narrowed the scope of that section.

This section should include non-commercial real estate, tangible personal property, and other non-investment property that has been acquired, sold, distributed, or otherwise disposed of during the accounting period.

4) Principal and Income. Unlike the formats accepted for years in many counties throughout the Commonwealth, the new format requires that "principal and income shall be accounted for separately within the account" [Rule 6.1(b)]. Thus, principal and income may no longer be collapsed into single categories for receipts, gains/losses, disbursements, and distribution.

Somewhat curiously, the new formats (just like the old formats) don't have lines in the Income section of the Summary Page for "Investments Made" or "Changes in [Investment] Holdings" (as they do in the Principal section).

There is an age-old debate about whether assets purchased with income (through dividend reinvestment plans, etc.) should be tracked separately on the income side of the fence, but that is a topic for another day. I believe that adding distinctions (such as this one) not contained in the new model formats result in accounts that are still in "substantial conformity" with new Rule 6.1.

5) Disbursement Category: Federal, State & Local Taxes. The words "& Local" were added to this category.

6) "Verification" instead of "Affidavit". A notary seal is no longer required on the Affidavit Page, which has been appropriately renamed to "Verification". Instead, the personal representative signs that page "subject to the penalties of 18 Pa. C.S.A. Section 4904 relating to unsworn falsification to authorities."

This is consistent with the change made by the Court to the form of Inventory (Form RW-09) on October 16, 2006 (the date when standardized probate forms released for use throughout Pennsylvania).

7) Summary of Account: Line for Verification (and page number) added. A reference to the Verification page must now appear at the bottom of the Summary of Account.

The Verification is attached to the end of the Account, and will normally bear the last page number of the entire packet.

8) Combined Balance on Hand. Although there has been no change in this line near the bottom of the Summary of Account, we have been somewhat surprised at the popularity of including (in our software) a schedule that supports this Combined Balance number.

In effect, this Combined Balance on Hand schedule represents a collapsing of the separate schedules for Principal and Income Balances on Hand (which are still included in the Account). This appears to address the slight complexity inherent in the separate tracking of principal and income assets.

9) Proposed Distribution to Beneficiaries. This schedule has been eliminated as an attachment to the Model Accounts and as the first line of the Summary of Account. Apparently, the Court concluded that this information should appear more appropriately with the Petition for Adjudication [Distribution].

Again, on the theory that keeping a schedule that is no longer required still represents "substantial conformity", we still provide users with a checkbox option that will display that line on the Summary of Account and include it among the printed schedules.

10) Starting Point for Pagination. Because the prior Model Accounts attached to Rule 6.1(f) appeared (among other places) in the Pennsylvania Rules of Court, the internal pagination of the Accounts did not match the pages of the larger Pennsylvania Rules of Court book.

In the Model Accounts, however, pagination starts with the Cover Page, so that the Summary Page is page 2, and the schedules start with page 3. For the past 20+ years, our accounting format has left the Cover Page and Summary Page unpaginated, and has numbered the first schedule as page 1. If there is a hue and a cry for numbering the Cover Page as page 1 and the Summary Page as page 2, we will make that change.

11) Certain Liabilities Not Specifically Addressed. There is stated manner to display a mortgage or note liability on the new Model Accounts.

[Update -- 04/04/07: Eugene H. Gillin, Esq., exchanged email with Vince Lackner (with copies to me) about presentation in an accounting of an ongoing liability involving both principal repayments and interest on the obligation. Gene consented for me to post his comments, which I will do later this week.]

[Update -- 04/06/07: For my posting of Mr. Gillin's comments, see: PA EE&F Law Blog, "Clarifications on PA's New Accounting Formats" (04/06/07).]

Vince noted that his company's software was updated online on April 1, 2007, to be compliant with the new rules. Other vendors must do likewise for those accounts to be filed by their users on or after Monday, April 30, 2007, in Pennsylvania.

PA's New Orphans' Ct Accounting Forms

On March 29, 2007, the Pennsylvania Supreme Court issued an Order approving the final form of new model account forms for use by estates, trusts, & charitable unitrusts, and placing the previously-approved Uniform Fiduciary Accounting Principles as an appendix to an applicable Orphans' Court Rule.

For background about the previously-approved Principles, and the then-proposed model forms of accounting, see: PA EE&F Law Blog posting "PA SC OC Rls Cte Proposes Revised Model Fiduciary Accounts" (November 3, 2006).

The PA Supreme Court acted upon the recommendations of its Orphans' Court Procedural Rules Committee, which had "spent the last 18 months reviewing and developing proposed revisions and forms." On October 31, 2006, that Committee had issued a Publication Notice in the Pennsylvania Bulletin, the Commonwealth's official gazette for information and rulemaking. The Committee requested comments about the proposed model forms from interested persons by December 15, 2006.

The Administrative Office of Pennsylvania Courts (AOPC) issued a Press Release, also dated March 29, 2007, announcing the approved new model accounting forms and providing links for reference:

A more uniform and understandable way for people or institutions appointed by a judge to administer a trust fund, or the dealings of someone who's deceased, was put into effect today by the Supreme Court of Pennsylvania.

The Supreme Court amended Orphans' Court Procedural Rule 6.1, revised several existing forms, and created a new one for use by fiduciaries, or those who are required to regularly provide a history of the transactions of a trust or estate.

Though models of such accountings are an integral part of Orphans' Court proceedings and have long been used as guides, today's Supreme Court order requires statewide use of forms of account that are consistent with the model forms - except upon special order of the court. Standardization assists the Orphans' Court when there is a need to review multiple accounts, and it also enhances a beneficiary's understanding of how a fiduciary is handling the affairs of a trust or estate. * * *

The 2-page Court Order provides, as follows:

(1) Pennsylvania Orphans’ Court Rule 6.1 is amended as follows;

(2) The Model Executor’s Account and Model Trustee’s Account previously attached to the Uniform Fiduciary Accounting Principles, approved pursuant to Rule 6.1(g) and included in an Appendix following Rule 6.1 are rescinded and the revised model accounts (renamed “Model Estate Account” and “Model Trust Account” respectively) are approved and included in the Forms Appendix following the Pennsylvania Orphans’ Court Rules;

(3) A Model Charitable Unitrust Account is approved and is set forth in the Forms Appendix following the Pennsylvania Orphans’ Court Rules;

(4) The Uniform Fiduciary Accounting Principles previously approved pursuant to Rule 6.1(g) and included in an Appendix following Rule 6.1(g) are relocated to the Forms Appendix following the Pennsylvania Orphans’ Court Rules; and

(5) The Index to Appendix is amended as follows.

Paragraph 5. of the Order references the Index to Appendix of the Orphans' Court and Administrative Forms, which is now updated. All forms listed in the Index are available online, in a "fill-in" format, under the heading Orphans' Court Forms. On that webpage, these forms are marked "NEW":

Model Forms of Account

National Fiduciary Accounting Standards Project - 1983 Report of Fiduciary Accounting Standards Committee

Model Estate Account

Model Trust Account

Model Charitable Remainder Unitrust Account

The rulemaking actions are reflected in the mark-up of amended Supreme Court Orphans' Court Rule 6.1, which shows additions & deletions.

The Press Release mentioned the recent activity of the Committee and the Supreme Court's reliance upon its work:

Today's action marks the Supreme Court's third significant Orphans' Court rule improvement within a year.

The Supreme Court adopted new rules last fall to ease the burden of people who adopt children from another country by creating a standardized registration process and making those forms available online.

Another enhancement was the approval of new statewide forms - which also are available for the first time online - that fell into four defined categories: audit and administration; guardianship; abortion control act and register of wills. * * *

[See: PA EE&F Law Blog posting New Uniform Orphans' Court Forms in PA (October 18, 2006).]

According to the Supreme Court's Order, these changes "shall become effective thirty days from the date of entry". This Order is unlike some other orders amending procedural rules that state an effective date.

So, we are left, again, to count the days to an effective date, just as for the effective date of the PA UTA in 2006 and the effective date of Act 169 in 2007.

Dan Evans, Esq., of Philadelphia -- who first drew the attention of the Bar to these published changes last Friday -- calculated the effective date as follows: "These changes are effective in 30 days, which should be April 28th (if my calendar math is correct)."

But, April 28th is a Saturday. (Dan told me, he knew that; and he figured that someone who needed to file an account would too.)

Since Monday, April 30th will be the first business day after the weekend, the changes will certainly be in effect by then. So the changes will be effectively "effective" on & after April 30, 2007.

* * *

Update: 04/03/07:

Vince F. Lackner, Jr., Esq. provided a comparison of the old suggested format (1974), to the new mandatory formats (2007). See: PA EE&F Law Blog, "Comparison of PA's Old & New Accounting Formats" (04/03/07).

Update: 04/06/07:

For my posting of Mr. Gillin's comments, see: PA EE&F Law Blog, "Clarifications on PA's New Accounting Formats" (04/06/07).