Lancaster Law Blog : Lancaster PA Lawyer & Attorney : Russell Krafft & Gruber Law Firm : Pennsylvania : Lancaster's Legal Link

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Who makes your medical decision for you if you are unable? The answer to this question is even more difficult if the decision involves the removal of ventilators, feeding and water tubes. In these situations, friends and family of the patient have become engaged in bitter disputes over (1) who gets to make those decisions and (2) what your wishes regarding treatment would have been? 

A valid Living Will answers both of those question. Living Wills are governed by Act 169 of 2006 (the "Act"), where they generally become effective when the subject of the living will is deemed to be in an "End-Stage Medical Condition". The Act goes on to describe such a condition as an ". . . incurable and irreversible medical condition . . . that will . . . in the opinion of the attending physician to a reasonable degree of medical certainty result in death, despite the introduction or continuation of medical treatment." Examples include brain-death, irreversible comas or other vegetative states where there are no curative treatments to make you better, but only palliative treatments (such as ventilators and feeding tubes) that prolong the process of dying but have no curative properties. With a valid Living Will, you have already declared what your wishes are regarding treatment and named who should carry out your wishes.

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Many of you may remember that back in 2001, Congress enacted legislation that was supposed to have repealed the Federal Estate Tax (the "FET"). However, anyone familiar with the Tax Reconciliation Act of 2001 (the "Act") knows differently.

In general, estates are only subject to FET if they exceed the Applicable Exclusion Amount (the "Exclusion"). Instead of permanently repealing the FET, the Act gradually increased the Exclusion from $1 million in 2002 to $3.5 million in 2009. In addition, the maximum FET rate was lowered from 50% to 45% over the same period. The Act is then scheduled to repeal the FET, but only for 2010. Starting in 2011, the FET reverts to pre-2001 levels with a $1 million Exclusion and a maximum rate of 55%.

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At tax time, many people consider their financial status. Many of us are looking at broker statements for the first time because we have been unwilling to face the bad news. Regardless of how difficult the year has been financially, however, this is an appropriate time to consider looking at your estate planning documents to see whether those documents are up-to-date. For example, are the persons that you have appointed as your executors or trustees still the best choices for those jobs?

The fact that your estate may be less than it was last year at this time does not make the proper choice of persons any less important. Indeed, shrinkage in estates makes it all the more important to select the right people for these important positions of trust and responsibility, so called fiduciary positions, who will be careful and able to adapt to changing market conditions.

Do you have a current power of attorney? Stockbrokers, banks and transfer agents are becoming more insistent that these documents be current. Are the persons you have appointed as your agents or powers of attorney still the ones who are best suited for those positions to manage your assets if you became incapacitated? 

Are the persons that you have appointed as agents on your living wills or health care powers of attorneys able to cope with what can be difficult medical decisions, especially in light of insurance carriers that can be unwilling to pay for unnecessary tests and procedures. Are these the people who would act as your advocates in the face of an insurance carrier that would want to save money at the expense of your health care.

If you have a family business, you may want to provide for the succession of management because any disruption in a smooth transition of the operation of the business could be disastrous in an era of tight margins and challenging business conditions.

Perhaps most important, if somewhat elementary, can you locate your documents in the event of an emergency? The best drafted documents are of little use if they cannot be located.  Our office provides clients an Estate Planning Document Checklist which can be invaluable to an agent or executor who may need to locate documents and contact brokers, bankers, insurance agents, etc.   

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A Power of Attorney is a document in which a principal appoints an agent to transact a variety of duties. The "principal" makes the appointment. The "agent" is the person appointed (also called an "attorney-in-fact" or "power of attorney").

The agent has a fiduciary duty to the principal which means that he or she owes the principal a high standard of loyalty and care. That fiduciary relationship includes the following duties: 

• Exercising the powers for the benefit of the principal.
• Keeping separate the assets of the principal from those of the agent.
• Exercising reasonable caution and prudence.
• Keeping a full and accurate record of all actions, receipts and disbursements on behalf of the principal.

The most useful powers of attorney give the agent broad authority so that the agent can do virtually any kind of business transaction on behalf of the principal. For that reason, the person whom you select as your agent is of utmost importance.

In years past, persons who did not know of another person whom they wanted to entrust such authority would appoint a bank. For many people, that is no longer possible. Many of the larger, regional banks will not serve as attorneys-in-fact. They will serve as agents under agency agreements but generally the authority under those agency agreements is not as broad as under a general power of attorney.

Your selection of a capable agent should be someone who is scrupulously honest, maintains good records, understands his or her responsibilities, is wise enough to know his or her limits and is able to rely on competent persons for advice (e.g. investment advice).

Without the power of attorney (or revocable living trust), in the event of incapacity, you will be at the mercy of whomever the court appoints as guardian of your estate after an incapacity proceeding in court that can be long, expensive and emotionally draining for those involved. 

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Joint bank accounts created after a decedent makes a will can leave executors to face problems when it comes time to administer the estate. Often these accounts beg the question, "What was the decedent's intention?" More specifically, did the decedent want to give the surviving party to the account ownership in the balance in the account or merely use of the account during life for convenience purposes? Under the Pennsylvania Multiple Parties Account Act, generally the surviving party or parties to the account own the balance after the decedent's death. If there is clear and convincing evidence, however, the executor could show that the account was only a convenience account and that the balance should be turned over to the executor for deposit in the estate rather than be paid to the surviving party to the account. 

Now, even that predictability has ended. In a case known as In Re Estate of Amelia J. Piet, the Pennsylvania Superior Court ruled that if a joint account is created after a Will has been executed, the surviving owner does not receive the account if registration of the account is contrary to the disposition of assets under the Will. Suddenly, there is less predictability as to the disposition of multiple party accounts.   At the moment, the only solution is to document one's intentions very carefully if a joint account is created after the execution of a Will. It's generally advisable to review your Will or Estate Plan every few years to make sure your assets are properly distributed.