Pennsylvania Elder Law Reference Guide 2023
Meeting With Your Lawyer
Perhaps the most difficult part of the estate planning process is overcoming procrastination and scheduling that initial consultation. For the best results, you need to deal with an attorney who provides estate planning services on a regular basis.
At your first conference, be sure to ask about the cost to have your documents prepared. Some lawyers charge for documents on a flat fee basis, while others bill at an hourly rate. In either case, reputable lawyers always discuss fees up-front at the initial consultation and they should gladly put the agreement in writing. Before you visit your lawyer, you can make the initial meeting more productive by bringing the following information:
- a list of what you own;
- a list of your intended beneficiaries with their names, ages and addresses;
- your choice of executor and an alternate;
- a list of all the questions you have about estate planning.
By being prepared with this information, your lawyer will be able to spend more time developing a plan with you and less time writing down basic information. If you suspect trouble in the family, mention this to your attorney so the issues can be addressed in a way that minimizes future conflict. Remember that anything you discuss with your attorney is confidential client information. After working with you to develop your plan, your lawyer will then prepare the necessary documents. It is very important that you understand all papers you sign. Then, once signed, make sure all your estate planning documents are kept together in a secure, fire-resistant location. Go To Top
Many people think the term “estate planning” applies only to very wealthy people. Nothing is further from the truth. An “estate” is simply what you own. If you own property, you need to plan ahead in order to make sure the desired people or institutions inherit your property after your death. If you die without planning your estate, your home, money and other property will be distributed to various relatives, sometimes distant relatives, according to a rigid formula fixed by Pennsylvania law known as “intestacy law.” This law applies to every person who dies without a will and does not consider the special needs of any individual or family.
Without a will, your property may be inherited by people you do not want to share in your estate. Without a will, individuals in control of your estate may not be the people you prefer and they may not even cooperate with each other. If you have no will, the Commonwealth of Pennsylvania essentially makes a will for you, according to the terms of the intestate law, which controls the distribution of the shares of your estate.
The existence of a well-considered estate plan, most importantly a will (or a trust), can help avoid disputes among your heirs and give you the peace of mind that comes with knowing that your final wishes will be carried out. Go To Top
A will is an important legal document and the cornerstone of most estate plans. In a will, you direct how your property is to be distributed and you also name a personal representative to administer your estate. The personal representative named in a will is commonly referred to as the “executor.” An executor collects the estate assets, pays the estate debts and makes distributions to the beneficiaries you have designated in your will. It is often advisable to nominate one executor and an alternate in your will rather than naming two individuals to serve as your co-executors. Co-executors may disagree on certain actions, and may have difficulty getting paperwork signed in a timely manner. This can delay the estate administration. On the other hand, there are situations where the existence of co-executors is not a problem, and they work together well as a team to share the work.
If you already have a will, take it out and re-read it. Do you understand what it says? Do you agree now with the arrangements you may have made years ago? Update your will if circumstances have changed. Marriage, death, divorce, birth, asset growth, moving to a different state or a change in estate tax laws are events that may trigger the need for you to revise your will. A good rule-of-thumb is to review your will at least once every five years.
Keep your original will in a secure place such as a fire-proof box, a safe deposit box at your bank, or with your attorney. If your lawyer is holding your will for safekeeping, ask whether it is being held in a fire-resistant location, and how access will be assured in the future. If you are afraid that somebody might tamper with or destroy your will if they were to read it, leave it with your lawyer or place it in a safe deposit box where its contents will be kept private. In Pennsylvania, a safe deposit box is accessible upon death of the owner for the limited purposes of retrieving the decedent’s will and cemetery deed. Many children are not able to locate their parents original documents when needed. No matter where they are stored, let somebody know where they are so they can be found at the time of need.
You have the right to request your original estate planning documents from your attorney at any time. The documents belong to you, not your lawyer. You also have the right to revoke your will and write a new one at any time you choose, providing you are lucid and have the legal capacity to do so. Go To Top
Your attorney might recommend a “trust” in larger estates, estates with young beneficiaries and in other situations with special circumstances. What is a trust? Many estate planners explain that a trust is like a box where you can place your property. A person places money in the box, the trust, and designates a manager, known as the “trustee,” to safeguard the contents of the box. The trustee then distributes trust assets to the beneficiaries you select, in such amounts and at such times as you direct. Of course the money is not really put in a box. The “box” is usually a brokerage account or a bank account where the funds are invested by your trustee. For example, a grandparent may wish to set aside money for a disabled grandchild, but may be afraid to do so for fear of disqualifying that grandchild from certain government benefits. A grandparent could place the money in a carefully drafted trust, designate a trustee to invest and safeguard the funds and enable the disabled child to benefit from the trust while maintaining eligibility for government benefits such as Medicaid or Supplemental Security Income (SSI) payments. There are many other types of trusts. Credit shelter trusts, also called “by-pass trusts,” are commonly used to help protect large estates from federal estate taxes. Trusts can also be used to set aside money for designated purposes, such as for education. Discretionary trusts and “income only trusts” can be written to protect spendthrift beneficiaries from squandering their inheritance through wasteful spending habits.
Trusts usually cost more money to create because they are more complicated and must be customized for each particular situation. In addition to the costs of drafting a trust, there are continuing attorneys’ fees and trustees’ commissions over the years as a trust is administered. Many trusts require the filing of fiduciary income tax returns, so an accountant’s services are often needed to help prepare and file these tax returns. Obviously you need to consider the ongoing administrative costs as you decide whether it makes sense to create a trust. Go To Top
Revocable Living Trusts
Before preparing a living trust, you must determine whether it will be useful for your situation. Living trusts can be helpful, for example, when you own out of- state real estate and wish to avoid probate outside Pennsylvania. Some people are confused by the complexity of revocable trusts and may experience or feel a loss of control over the assets in the trust. Moreover, many people feel the benefits of a costly trust can be obtained through less expensive alternatives, such as through the use of a general durable power of attorney.
Living trusts are clearly not for everybody. Consumers should approach sales pitches for “revocable living trusts” with a high degree of caution. In recent years a number of older consumers have been defrauded by salespeople who push the supposed benefits of living trusts in “free” seminars and mail solicitations. Some of these salespeople are really pushing annuities.
You should know that there are sometimes costs involved in the re-titling of your assets into the trust, such as deed preparation costs and filing fees. Revocable trusts do not avoid Pennsylvania inheritance tax, and do not protect assets from nursing home costs or accelerate eligibility for Medicaid long-term care benefits. Living trusts have their place, but are generally more expensive than wills to create. If a salesperson is pushing a revocable trust, a consultation with an estate-planning attorney is likely make you aware of options not mentioned by the individual who is marketing the trust. Go To Top
Just as you need to review your will periodically, you should check the beneficiary designations on your life insurance and retirement accounts to make sure they are up-to-date. Many people select beneficiaries when purchasing a life insurance policy or opening their accounts but never revisit these decisions. It is particularly important to do so as families change over the years. These days many types financial accounts permit you to designate beneficiaries, so be sure to look at all of your accounts.
Special attention should be given to designating contingent beneficiary designations. For example, if one of your primary beneficiaries were to predecease you, does that person’s share go to his or her children, or does it lapse and pass to the other primary beneficiaries?
You also need to be aware that jointly-held property, accounts held in trust for (ITF) and annuities do not pass according to the provisions of your will. Rather, these assets generally pass by law to designated beneficiaries or to the survivor listed on the account. Be sure these beneficiary designations are carefully reviewed when developing your estate plan. Go To Top
Inheritance, Estate and Gift Taxes
Over the years, senior citizens have watched tax regulations at all levels grow more and more complicated. General information is offered, but be certain to consult with a tax professional if you have questions. Go To Top
Pennsylvania Inheritance Tax
This death tax must be paid by the estate within nine months of death to avoid a penalties and interest. To the extent that the inheritance tax is paid within three months after the date of death, a discount of 5% is deducted from the tax due. The inheritance tax rates currently in effect are as follows:
- The tax rate for transfers to a parent, child, stepchild, or grandchild (or spouse of such beneficiary) is 4 1/2%.
- The tax rate for transfers to a spouse is zero %.
- The tax rate for transfers from a child age 21 or younger to a natural parent, an adoptive parent or a stepparent is also at the zero % tax rate.
- The tax rate for transfers from a decedent to a brother or sister is 12 %.
The Inheritance Tax Act defines a sibling as “an individual who has at least one parent in common with the decedent, whether by birth or adoption.” This includes a sibling by birth, a stepsibling by birth as well as a sibling by adoption.
- The tax rate for transfers to all other collateral beneficiaries (nephews, nieces, aunts, uncles, cousins, other relatives, friends, etc.) is 15 %.
- Charitable gifts are tax-exempt. Go To Top
Federal Estate and Gift Taxes
There is an exemption amount which will permit most estates to pass to heirs free of federal estate taxes. This exemption amount is revised periodically. The 2021 federal estate tax exemption is $11,700,000. The exemption is “portable” between spouses, so federal estate tax exemption that is unused by the estate of the first spouse to die can be preserved for the surviving spouse – if the proper paperwork is timely filed by you and your lawyer. As a result, a married couple can protect up to $23,400,000 from federal estate tax.
The 2023 gift tax exclusion is $17,000 per person, per calendar year. Thus a husband and wife, combined, may transfer up to $34,000 to each recipient (eg., $34,000 to each of their children) per year, without the need to file a federal gift tax return. Note, they may need to file Form 709 to “split” the gift, depending on how the transfer is accomplished. Go To Top
Power of Attorney A power of attorney (POA) is an important estate planning document for everybody, not just senior citizens. A power of attorney designates an agent to act on your behalf. The document is most commonly used when a person is disabled, either physically or mentally, and can no longer conduct business independently.
The person who creates the document is known as the “principal” and the person designated to transact business is called the “agent.” Powers of attorney are created for both healthcare and financial matters. A general durable power of attorney can allow your agent to do anything that you could do yourself, but you can limit what authority is granted. You especially want to make sure the document specifically states whether gifting is permitted or prohibited.
If you do not feel comfortable granting such broad powers, you can limit the powers in the POA or name “co-agents” and require two signatures in order to conduct business. Because the document is so powerful, the exact provisions should be professionally drafted by an elder law attorney and custom-tailored to your situation. Pennsylvania has its own provisions that must be on the financial POA form, notably a “notice page” and “agent’s acknowledgment page.” A new form became effective for all financial POA documents signed on or after January 1, 2015. It is recommended that you update forms signed before this date in order to make it easier for the agents to use them with third parties such as banks. Old forms do not lose their validity, but power of attorney forms will be more easily accepted by some financial institutions if they comply with the current law. Go To Top
Health Care Provisions in a Power of Attorney
A power of attorney usually deals with financial matters but can include authority to make medical decisions. The law allows an agent, appointed by you in your power of attorney, to authorize your admission to a medical, nursing, residential or similar facility, and to enter into agreements for your care if you so state. The agent may, with respect to your admission to a facility, execute consent or admission forms required by the facility and enter into agreements for your care by a facility or elsewhere. The law also allows you to authorize your agent to arrange for and give consent for medical, therapeutic, and surgical procedures, including the administration of medications. If one person is to act as your agent for your financial affairs and another as agent for your health care, you may wish to create two separate documents. Go To Top
Living Will (Advance Healthcare Declaration or Advance Medical Directive)
The living will is also known as an “Advance Healthcare Declaration” or “Advance Medical Directive” and states your wishes regarding the refusal of certain life-sustaining treatments when you are in a terminal condition or permanently unconscious; as determined by two physicians.
A living will should name a “surrogate” decision-maker to implement your end-of-life wishes. Hospitals and nursing homes provide patients with information concerning living wills but cannot legally force you to sign one. The living will may be tailored to meet your specific desires and can express your wishes to (or not to) make an anatomical gift. It is a good idea to speak with your doctor about the kinds of medical treatment you may wish to withhold and the effects that doing so would have on your body. One copy of your living will should be given to your primary care physician who will place it in your medical records. Go To Top
Community-Based Long-Term Care Services
Montgomery County Aging and Adult Services provides an alternative to people who need nursing facility care by assisting them in receiving community-based long term care services. Specifically, Aging Waiver Program provides community services to qualifying seniors who would otherwise require nursing facility care, but can be safely cared for at home.
Community-based services can include adult day care, personal care, home delivered meals, respite care, home health care and home support. A medically eligible senior may qualify for home and community based services if that senior is age 60 or older, has gross income of $2,742 or less per month, has assets below $8,000 ($2,000 + $6,000 asset disregard resource limit), and can be safely cared for at home even though clinically eligible for services in a nursing facility. Those with income over the cap can “spend-down” income to qualify for the Aging Waiver in some cases. The application process is initiated by contacting the independent enrollment broker, currently a company by the name of Maximus. Your elder law attorney will provide advice on how to qualify.
Assisted Living and Personal Care Facilities
Assisted living is housing for older individuals who need some assistance with the activities and needs of daily living and perhaps some medical help, but who do not need the degree of skilled care provided in a nursing home. The goal of an assisted living facility is to help people live as independently as possible. An important benefit of residency in an assisted living facility is help with medication. A resident can be reminded when to take medication and a nurse can assist the resident in taking medications. Payment for residency in an assisted living facility is almost exclusively through private arrangements with the resident. Neither Medicare nor Medicaid covers residency in an assisted living facility in Pennsylvania. Long term care insurance will pay benefits for residency in an assisted living facility if the policy’s “benefit triggers” requirements are met by a resident’s need for assistance with activities of daily living or by a resident’s cognitive impairment. Most long term care insurance policies define “activities of daily living” as including dressing, eating, bathing, toileting and transferring from a bed to a chair, and usually require that an individual needs assistance with a certain number of these activities of daily living. A prospective resident of an assisted living facility should carefully review the admission contract. Significant issues to consider in evaluating an admission contract include:
- What personal care services are to be provided? Who delivers these services? Is the service provider licensed or certified?
- What are the monthly or other charges for such services? Are housekeeping services included?
- How can fees be increased and what happens if fees are increased and a resident cannot afford the higher fee?
- In the case of a married couple, what happens upon the death of a spouse? Is a change of living unit required? How would fees be affected?
- What happens if the resident depletes all funds while still in need of assisted living arrangements?
A nursing home is a facility where residents receive around-the-clock nursing care designed to help an individual with the activities and needs of daily living and health care. These residents do not need the kind of acute health care provided in a hospital. A person usually enters a nursing home after all other long term care options, such as an assisted living facility or living at home with supportive services, are found to be inadequate.
Medicare does not provide substantial coverage for long term nursing home care. Medicare may pay for a portion of the cost for the first 100 days of a nursing home stay, under very limited circumstances. Those circumstances are:
- Skilled nursing or rehabilitation services are provided within 30 days of a an acute care hospital stay of at least 3 consecutive days;
- A doctor certifies the resident’s need for skilled care on a daily basis;
- The facility is Medicare-approved.
If these requirements are met, Medicare will fully cover the first 20 days of skilled care and a portion of the cost for the next 80 days of skilled care. Note that Medicare does not cover custodial care. Medicaid is the only public benefit program that covers intermediate or skilled care provided in a nursing home after Medicare benefits are exhausted.
In order to be eligible for Medicaid, an individual must not have “countable” assets of more than $2,400. Individuals with income under in certain income guidelines (gross income under $2,742/month in 2023) can qualify with up to $8,000 in assets; a $2,000 limit combined with a $6,000 disregard. Generally speaking, “Countable” assets are all assets available to the individual, except for:
- the individual’s residence;
- one motor vehicle;
- an irrevocable burial reserve;
- a limited amount of life insurance
- many less common exceptions apply. Consult an elder law attorney for details.
When a nursing home resident’s countable assets are below the applicable limit, Medicaid long-term care benefits will cover the resident’s stay in the nursing home. Keep in mind that, once eligible for Medicaid long-term care benefits, the resident’s income is considered available to pay for their nursing home care while Medicaid pays the rest of the bill not covered by the recipient’s income. The resident may keep $45 per month of their income for personal needs and can pay Medicare and supplemental health insurance premiums. In the case of a married couple, the spouse remaining at home is allowed to keep one-half of the combined countable assets, up to a maximum of $148,620 of the couple’s countable assets and a minimum of $29,724 in 2023. There are very complicated Medicaid rules that are used to calculate the amount of income and the amount of the couple’s countable assets which the spouse remaining at home is allowed to keep.
Because of the extremely complex rules governing Medicaid eligibility, it is advisable to seek the counsel of an elder law attorney to guide you through this maze. Your particular situation may lend itself to legitimate and legal ways to “spend down” your countable assets to the applicable resource limit while preserving a substantial portion of such assets for your spouse staying at home or for other family members. Also, under certain circumstances, Medicaid rules allow for asset protection planning designed to let the spouse staying at home retain more than $148,620 of the couple’s countable assets. These amounts normally change each year to reflect inflation. Relevant laws are extremely complicated so Medicaid planning should not be attempted without the assistance of an elder law attorney. Go To Top
Upon admission to a nursing home, a resident or his/her family will be required to sign an admission contract. A prospective resident or the family member or members responsible for the resident might feel pressure under emergency circumstances to sign a nursing home admission contract without a careful review of its terms. Do not be pressured.
Read the contract and have it reviewed by an elder law attorney before signing. Federal and state laws have been enacted to protect individuals entering nursing homes and an experienced eldercare lawyer can make sure that you get the benefit of these protections. For example:
- A nursing home cannot require a resident to waive his/her right to apply for Medicaid. Furthermore, a nursing home cannot discriminate against a resident who is receiving Medicaid. Nursing homes must establish and maintain identical policies and practices regarding transfer, discharge and covered services for all residents regardless of source of payment.
- A nursing home cannot require a third party guarantor of payment as a condition of admission or continued stay. A nursing home is allowed to require that an individual having legal access to a resident’s income and assets, such as an agent under a power of attorney, sign a contract, without the agent incurring any personal liability, promising to pay for a resident’s care from the resident’s funds.
- A nursing home cannot require a resident to agree to pay privately for a specified period of time before the nursing home will “allow” the resident to convert to Medicaid. Once admitted to a nursing home, a resident enjoys certain rights mandated by both federal and Pennsylvania law.
- A nursing home must conduct a comprehensive assessment of every resident’s functional capacity within 14 days of admission. This assessment must be used to develop, review and periodically revise, as necessary, an individualized plan of care for each resident. The resident, the resident’s family and, if desired, the resident’s legal representative must be given full opportunity to participate in the development of the plan of care.
- A resident has the right to choose a personal attending physician and to be kept fully informed about care and treatment.
- A resident has the right to remain free of physical and chemical restraints which are not required to treat the resident’s medical condition.
- A resident has the right to privacy with regard to communications in writing and by telephone and with regard to visits of family and meetings of resident groups. A resident must be provided with reasonable access to the use of a telephone where calls can be made without being overheard.
- A resident has the right to access to clinical records upon request by the resident or the resident’s legal representative.
- A resident has the right to voice grievances with respect to treatment or care without fear of reprisal.
- A resident can only be transferred or discharged from a nursing home under limited circumstances which are spelled out in the law, upon 30 days advance written notice.
A nursing home must inform every resident of his/her legal rights, orally and in writing, at the time of admission. Pennsylvania maintains an ombudsman program to investigate and resolve complaints made by or on behalf of residents of nursing homes and other long term care facilities. The Pennsylvania Department of Aging has designated the Area Agency on Aging for each county to be the local providers of these ombudsman services. The Long Term Care Ombudsperson for Montgomery County can be contacted at 610-278-3600. Go To Top
Handicap Parking Placard
If you are disabled and need a special parking placard or parking space, you should obtain Form MV-145A from a local auto tag establishment or your state representative’s office. The form is free but needs to be notarized and requires your doctor’s signature. Depending on the situation you can obtain a six (6) month temporary tag or a placard which is good for five (5) years. Once completed the form is mailed to Pennsylvania Department of Transportation, Bureau of Motor Vehicles, Riverfront Office Center, 1101 South Front Street, Harrisburg, PA 17104. The telephone number to call is 800-932-4600 and according to their representative the turnaround time is only one day from the day they receive the paperwork. Go To Top