Guardianship is the legal process where an individual is determined (adjudicated) to be incapacited under Pennsylvania law. Conservatorship is a word used in other states to describe the same process. Once a person is determined by the court to be incapacited (unable to manage their personal, medical or financial affairs), the judge will determine who should be appointed to make those decisions for the incapacitated individual. One can have a guardian of the person to make personal and medical decisions or a guardian of the estate to manage the finances. A guardian can have limited powers or total oversight over an individual’s affairs. While a variety of powers are given to the guardian without needing to seek court approval, a guardian does need to see approval for certain tasks (such as selling the incapacitated person’s home).
A guardianship is necessary when it is determined that someone can no longer responsibly and safely manage their affairs and there are no other alternatives in place. Pennsylvania law always prefers the least restrictive alternative. For those people who have a properly prepared and executed durable power of attorney in place, and the individual is cooperative, a power of attorney is less restrictive and preferred tool to ensure proper management of someone’s affairs. If there is no power of attorney or the individual is acting irresponsibly, dangerously or is vulnerable to being exploited, a guardianship is needed to protect their interests.
If you are seeking to be appointed guardian of someone or do appropriate competent estate planning, it would be most beneficial to engage an experienced estate planning or elder law attorney to file the guardianship or help you plan ahead by asking the right questions. The documents are important, but the experience of the attorney and the questions the attorney asks in helping you make the right choices is a far more important part of the overall plan.
This is a formal legal proceeding. In pennsylvania, you need to prepare and file a well drafted petition seeking to have the alleged incapacitated person adjudicated as an incapacitated person. It needs to be filed in the correct form along with the required exhibits. There will be a hearing in court where medical testimony of incapacity will be presented to meet your legal burden. Then you need to also show the judge that the proposed guardians are appropriate and capable of doing the job. There are several moving parts and if you do not prepare and present the case properly the petition will be denied.
After appointment, a guardian (if plenary) essentially steps into the legal shoes of the incapacitated person. The guardian would have final say on all decisions within the court decree. Under Pennsylvania law, the guardian is compelled to consider the wishes of the incapacitated person, and honor them, if they are safe and reasonable. A guardian is a fiduciary under Pennsylvania law so they are held to a higher standard of conduct. They are not expected to be experts in every area but they are expected to consider the resources of the incapacitated person and act responsibly.
A financial power of attorney is a written instrument that appoints someone else (the “agent”) to make financial decisions for you (the “principal”). The authority you grant is listed in the power of attorney document. It can be quite restrictive or very broad in what you allow them to do for you. In most cases, it is best to be as broad as possible if it is a tool for estate or eldercare planning. In the event you leave something out they need to do for you (like managing an investment property) and you are later incapacited (no longer possessing the capacity to execute a new power of attorney), a guardianship will be needed. A guardianship is less desirable than a power of attorney due to the court oversight, cost, and restrictions on the guardian’s ability to manage the affairs of the principal. As long as the principal can articulate his or her wishes an agent cannot overrule the wishes of the principal. When choosing a financial agent, blood relation is less important than choosing someone whose judgment you trust. An agent is a fiduciary under Pennsylvania law and is held to a higher standard of trust and scrutiny. A financial power of attorney can be revoked at any time until someone has been declared incapacitated by a court of competent jurisdiction. So even if the principal is impaired and exhibiting poor judgment, he or she can revoke the power of attorney.
A health care power of attorney is a written instrument that appoints someone (the “agent”) to make general medical and personal care decisions for you in the event you (the “principal”) are unable to make them yourself. In addition, most healthcare powers of attorney have a HIPPA release so that your agent can access protected medical information to assist in making the best decisions possible. As long as the principal can articulate his or her wishes an agent cannot overrule the wishes of the principal. This is different from an advance directive or living will which focuses on care at the end of life. When choosing a healthcare agent, blood relation is less important than choosing someone whose judgment you trust and will honor your wishes. An agent is a fiduciary under Pennsylvania law and is held to a higher standard of trust and scrutiny. A healthcare power of attorney can be revoked at any time until someone has been declared incapacitated by a court of competent jurisdiction. So even if the principal is impaired and exhibiting poor judgment, he or she can revoke the power of attorney.
Whereas a healthcare power of attorney focuses on general medical decisions, the living will (also called advanced directive) focuses on decisions made at the end of life when heroic measures may be considered. This is where you consider your priorities on quality of life and make decisions if you want aggressive treatment if it is determined aggressive care may be unable to return you to the quality of life you feel is important.
A mental health power of attorney is a written power of attorney that appoints someone (the “agent”) to make mental health decisions for them (the “principal”) when mental health treatment is being considered. Unlike other powers of attorney, this document needs to be renewed every two years. It can address preferred treatment locations, preferred medications (or ones that are not preferred), and other issues related to mental health. Probably the biggest concern and what limits their use in Pennsylvania is that they, like other powers of attorney, can be revoked at any time until someone has been declared incapacitated by a court of competent jurisdiction. So even if the principal is impaired and exhibiting poor judgment, he or she can revoke the power of attorney. Someone who suffers from a long term, chronic mental health condition often lacks the judgment and consistent behavior to take full advantage of such a document.
A last will and testament is a written document that details how you would like property in your probate estate to be distributed after you die. It also names an executor who is responsible for carrying out the provisions of the will. A will has no effect while you are alive.
A will does not control non-probate assets. Those are assets that have a beneficiary listed or are jointly owned with another person. They pass directly to the named beneficiaries or the co-owners instantly upon death. A will can include protective provisions like a trust for a minor child or an incapacitated person. A will is an integral part of any comprehensive estate plan.
A revocable trust (often called a living trust or a family trust) is a separate legal entity designed to hold property. That property can include bank accounts, investments, real estate, and other property. It is often used as a will substitute and have provisions for the management of the property during life and where the property will go after you die. The person creating and funding the trust (grantor or settlor) can amend the provisions of the trust or remove property from it at any time. Living trusts do not save either income or inheritance taxes over a conventional estate plan without a revocable trust. There are other trust instruments that may have tax benefits, but not a revocable trust.
If a medicaid/medical assistance application for long term care benefits is filed, a revocable trust could be detrimental. Certain assets that may be protected if owned individually would be exposed to long term care costs if owned by a revocable trust.
Revocable trusts have been used more frequently in the last 20 years in the mistaken belief that probate is a very long, onerous and expensive process. In some states that may be true. Pennsylvania’s probate is not nearly as time consuming, costly or intrusive as some other states and therefore there is less need for a revocable trust than in some other states.
Most people would benefit from a will. First, no one knows what the future has in store for them. Second, no one knows what the future has in store for their beneficiaries. A will addresses several contingencies that can occur and can avoid problems from immature or otherwise troubled beneficiaries.
No law requires you to use an attorney to create a will. However, an experienced estate planning attorney provides value. The will document is only one small piece of a proper estate plan. The questions that an experienced and competent estate planning lawyer asks is just as if not more important than the documents he or she drafts. It is also more likely an experienced attorney’s documents are going to be state-specific and better tailored to your needs than something from the internet.
Yes. In Pennsylvania, one can create a will that it handwritten as long as it otherwise complies with Pennsylvania law.
It is a good rule of thumb to discuss your will, at least in a brief call with your attorney, every 5 years or if anyone significant changes in your life (birth or death of a loved one, partner, retirement, inheritance, etc).
It depends on your specific estate planning needs. First, you need to consider your personal situation. Trusts have additional costs and responsibilities compared to a simpler estate plan. Trusts are usually recommended to achieve a particular goal. There are many types of trusts that have different purposes (protecting an heir from bad decision making, protecting a disabled heir from losing public benefits, tax avoidance, avoiding probate on out of state real estate, etc.). A competent estate planning or elder law attorney can assess your personal situation and determine with you if a trust is to your benefit.
A proper estate plan requires several considerations. The estate planning that an attorney does is one part of an overall plan. You need to consider your documents, who should serve in certain important roles (executor, poa, etc), how assets should be distributed, whether you can afford to retire (done with your financial/tax advisor) if asset protection and long term care costs have been addressed. You need to consult with all of your advisors to effectively change your estate plan.
This is the law that controls the disposition of your property if you die without a will. Essentially the state in which you reside makes a will for you, which may not carry out your wishes. It is strongly recommended you do not leave this to chance and execute a will, trust, or both to ensure your wishes are carried out.
This is the person who is appointed in your will to carry out the provisions of the will. It is an important job and the choice of who you appoint should be given strong consideration. This person is answerable to the court for being responsible and following the provisions of the will and cannot change the distribution listed in the will.
Probate is required when you have assets in your name alone that are not distributed upon your death by another method. For instance, if you have a bank account owned as joint tenants with someone else, the account will be inherited automatically by operation of law by the other joint owner upon your death. Therefore it would not be part of your probate estate and probate would not be needed for that asset. The same result occurs if you name a death beneficiary on a bank account or investment account. While real estate can be owned jointly there is disagreement in Pennsylvania if someone can name a beneficiary on a piece of real estate. To avoid probate for real estate many people use a revocable trust (also called a living trust) as an estate planning tool. Understand that while using joint ownership and beneficiary designations are quick and do avoid probate, they do not alter any obligations to pay inheritance taxes. Further, the use of joint ownership potentially exposes the property and the beneficiaries to additional risks that can be avoided by the use of a properly drafted will or trust.
This depends on the nature of the estate and the beneficiaries. If the estate is simple (one house, few investments, cash, family unity), most of the work can be complete in 6-9 months with advance distributions made once the executor feels comfortable creditors have been addressed. However, most estate lawyers recommend keeping the estate open with a reasonable financial cushion for at least a year as creditors can have at least that long to present their claims and you do not want to have distributed the funds and have to try to get them back. More complex estates (disabled beneficiaries, minor beneficiaries, complex assets like businesses, investment real estate, etc.) are likely to take longer to complete administration.
A revocable trust (often called a living trust or a family trust) is a separate legal entity designed to hold property. That property can include bank accounts, investments, real estate, and other property. It is often used as a will substitute and have provisions for the management of the property during life and where the property will go after you die. The person creating and funding the trust (grantor or settlor) can amend the provisions of the trust or remove property from it at any time. Living trusts do not save either income or inheritance taxes over a conventional estate plan without a revocable trust. There are other trust instruments that may have tax benefits, but not a revocable trust.
If a medicaid/medical assistance application for long term care benefits is filed, a revocable trust could be detrimental. Certain assets that may be protected if owned individually would be exposed to long term care costs if owned by a revocable trust.
Revocable trusts have been used more frequently in the last 20 years in the mistaken belief that probate is a very long, onerous and expensive process. In some states that may be true. Pennsylvania’s probate is not nearly as time consuming, costly or intrusive as some other states and therefore there is less need for a revocable trust than in some other states.
In Pennsylvania there are several possible taxes than can apply to one’s estate. The first is Pennsylvania inheritance tax. There are almost no credits against that tax (although there are deductions on the return). This is a transfer tax and not an income tax. The rates are based on relationships. Spouses and charities enjoy a 0% rate. Transfers to children or stepchildren are taxed at 4.5%. The sibling rate is 12% and the rate for transfers to all others is 15%.
An estate is also subject to income taxes on income earned by estate assets and or capital gains realized by the estate. If an ira or annuity is payable to the estate there will be both inheritance and income taxes on any previously non-taxed income in the account.
Federal estate tax applies to estates above $11.7 million or double that for a married couple who take advantage of both credits. This does not affect most families but for those affected, the tax rates on amounts above those numbers are substantial.
For most Pennsylvania residents who do not have very large estates, trying to avoid inheritance or income taxes can require assets to be transferred to others more than one year before death. There are a lot of different considerations and it is important to consider them when discussing tax reduction. It should only be discussed in the context of an overall estate plan.