Monday, August 21, 2017

Are Witnesses Required on a Will?

[The following article was written by Attorney  Casey Sauerwine of Marshall, Parker and Weber, and is posted with her permission]

Does a Will Need Witnesses to be Valid? Like many estate planning questions the answer is not as simple as yes or no; but more along the lines of “it depends.” While the law varies from state to state, in Pennsylvania a will usually only has to meet two basic requirements: 1) It must be in writing and 2) it must be signed by the testator (the person whose will it is) at the end[i] thereof. See: 20 PA.C.S.A. §2502.  

 These basic requirements do not include witnesses. Normally as long as you meet the writing and signing requirements witnesses are not required when you sign your will. 

However, there are special circumstances where witnesses are required: when the testator cannot sign his name but rather has to make a mark on the will; or, when the testator cannot sign nor mark on his will and another person has to sign for him. When these circumstances arise it is required that the mark or other individual signing for the testator be done in the presence of two witnesses who sign their names. See, 20 PA.C.S.A. §2502 (2) and (3).

Those are the basic requirements. The bigger question is “Should I have witnesses when I sign my will”? The answer to that question is a definite YES. Here’s why. 

Although witnesses are usually not required at the time the will is signed, they are required in some capacity in order for the will to be probated after the testator dies. (Probate is the legal process of authenticating the will and authorizing someone to administer the estate.) The role of the witnesses is essentially to verify that the instrument being offered is indeed the testator’s will.

If there are no witnesses to the signing of the will, people will need to be located who can verify that the will contains the true signature of the deceased. This can cause unnecessary delay and expense and even result in the inability to probate the will.

In the long run it is definitely better to have witnesses sign your will in the beginning rather than having the executor chase down individuals after your passing.

For Pennsylvania residents, the best way to proceed is to follow the procedure for a “self-proving” will.  Self-proving wills simplify the probate process as they allow the Register of Wills to accept a notarized affidavit from the testator and witnesses as proof the will is the testator’s. This notarized affidavit is placed at the end of the testator’s will and signed by the witnesses at the same time as the testator is signing. If the self-proving will procedure is followed, witnesses will not have to come in to the courthouse to verify the will.

In the end, although you do not usually need two witnesses to sign your will, having a self-proving will can be a huge help for your executor and beneficiaries.

Wills are important and complicated documents. Do yourself and your heirs a favor by avoiding the temptation to “do it yourself” or use a cheap online service. (See our earlier article: Don’t Try This at Home: Do-It-Yourself Wills are Dangerous for more on this topic).

Instead, meet with an experienced elder law attorney who can help you avoid the problems and traps that can cost so much lost time, money and distress for your family after you are gone. If you live in Pennsylvania, the lawyers of Marshall, Parker and Weber will be honored to assist you.

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Friday, August 18, 2017

Risks Involved in Giving your Home to your Children

[The following article was written by Attorney Elizabeth White of Marshall, Parker and Weber, and is posted with her permission]

It is common for parents to consider deeding their home to their child or children. The reasons for contemplating a home ownership transfer vary, but typically include the parents thinking that this will allow their estates to avoid probate, inheritance taxes, or to help them qualify for benefits for long-term care. Although it may appear to be a good decision, unfortunately, many times it does not turn out that way.

It is important to understand the risks of transferring your home to your child.

1.)  Your Home Becomes Subject to Your Child’s Life Circumstances

Once you sign a deed transferring title of your property to your child, you are no longer the owner. A loss of control of the property comes with this loss of ownership. If your child has creditors, a lien could be placed on your property by those creditors. If your child is in an accident and does not have sufficient insurance, your home could be subject to a lien or sale.

If your child divorces, the ownership interest of your home may become part of that divorce settlement. If your child passes away before you, the home will be distributed to his or her estate beneficiaries. The beneficiary could be an in-law who you do not get along with and evicts you from the home. While no one wants to think of the worst case scenario, although everything is stable with your child today, we never know what the future may hold. The risk of losing the ability to live in your residence is a large gamble to take.

2.)  Your Transfer is Subject to the Five (5) Year Medicaid Look-Back

Transferring your home to a child is a gift for Medicaid purposes. Medicaid penalizes gifts made within five (5) years of applying for benefits. During a Medicaid penalty, Medicaid will not pay for long-term care services.

Some parents explain that the deed states that they sold the house to their child for “one dollar”, and therefore it is not a gift. However, Medicaid treats any amount over the fair market value of the property as a gift. Unless your house was actually only worth one dollar, the full value of the home is going to be considered a gift for Medicaid purposes for five years from the date of the transfer. This could significantly impact your ability to pay for long-term care and in certain circumstances could create a situation where your children become responsible for your nursing home bill under Pennsylvania’s filial support law.

3.)  Your Child May Have Future Tax Gain Issues

Generally, when you gift property, the person that receives the gift receives a tax basis in the property that is the same as the donor’s. Many times the parents’ basis is the amount for which they purchased the property. For example, if the parents’ basis in a property is $100,000 and it is transferred to their son, the son’s basis in that property is $100,000. If the parents both die years later (assuming the son did not make the property his primary residence) and the son sells the property for $250,000.00, under today’s tax rules the son is responsible for paying capital gains tax on the difference between his basis ($100,000.00) and what he sells it for ($250,000.00). In this case, the son would have to report the $150,000.00 of gain on his personal income tax return.

In contrast, if you retain ownership or certain powers in your real estate during lifetime, your beneficiaries get a stepped-up basis. This means that your child inherits the property at its value as of your date of death. Many times the capital gains due by a child because of a transfer by parents during lifetime outweigh the inheritance tax that would be due if the parents would pass away with the property in their estate or trust.

The encouraging news is that you can protect against these dangers. There are options, such as irrevocable trusts and life estates, which can alleviate the risks. A properly drafted irrevocable asset protection trust can serve to safeguard and secure your home from a majority of the risks associated with a transfer.

Sunday, July 16, 2017

How to Protect Yourself when Signing Nursing Home Admission Agreements

Placing a family member in a nursing home is a difficult and traumatic event. One of the obstacles to be overcome is reviewing and signing the facility’s admission paperwork. This typically involves many pages of complicated provisions and jargon. There is a temptation to just sign wherever directed without even trying to read and understand the terms.
It’s best to try to overcome the urge to get this onerous task over with as quickly as possible. This paperwork is important. And by signing the admissions paperwork you may be agreeing to be personally responsible for the costs of your family member’s care.
Of course it would be ideal to have a lawyer review the paperwork and explain it to you before you sign. But, that may be unrealistic given the demanding and stressful circumstances. You may be pretty much on your own.
The law does provide some protections for caregivers who find themselves confronted with nursing home admissions paperwork. The Nursing Home Reform Act prohibits certain types of conduct by skilled nursing facilities that participate in Medicare and/or Medicaid.
Unfortunately, the reality is that some nursing facilities include illegal provisions in their admission contracts. I recently encountered an otherwise respected nursing facility that was attempting to have a family member sign as a “co-signer guarantor” to personally guarantee the payment of all charges incurred by the resident. The guaranty read in part: “If the resident does not or cannot pay, I will pay the amount owed to [nursing facility] for residency charges, services, equipment, supplies, medication, and other charges.”
It didn’t matter that this type of third party guarantee provision has been prohibited since the Nursing Home Reform Act was implement more than 25 years ago. There it was – in this nursing home contract in 2017. When the family member questioned this provision he was told that signing it was required. It wasn’t until an elder law attorney (me) spoke with the facility’s chief financial officer that the facility backed off with an apology.
The prohibition of third party guarantee agreements is not a hidden or ambiguous part of the law. I’ve reproduced the relevant section of the regulation below.
The bottom line is – take care to review nursing home admission paperwork and know what you are signing. It is a legal agreement that could put you on the hook for tens of thousands of dollars.
Get the paperwork reviewed by your lawyer if you possibly can do so. If not, try to educate yourself as best you can ahead of time. Strike out and initial provisions to which you do not want to agree. Sign the paperwork as the representative of the resident only and try not to take on personal liability. For example, you can sign the line for the signature of the applicant/resident in a way that shows you are signing only in the capacity of being the agent of the resident: “John Resident by Family Member, his agent.” Try to avoid signing as “responsible party” or “guarantor.”
Be aware that if the resident has already been admitted to the facility and moved in, there are only a few reasons that can cause them to be discharged. (I’ve reproduced the regulation stating the 6 reasons for discharge below). A family member’s refusal to sign an agreement to become personally responsible for the cost of care is not one of those reasons.
The Regulations
The federal requirements for skilled nursing facilities can be found at 42 CFR Part 483, Subpart B. Section 483.15 of these regulations lays out the requirements regarding admission policies. I’ve highlighted subsection 3 which prohibits facilities from requesting or requiring a third party guarantee of payment.
(a)Admissions policy.
(1) The facility must establish and implement an admissions policy.
(2) The facility must -
(i) Not request or require residents or potential residents to waive their rights as set forth in this subpart and in applicable state, federal or local licensing or certification laws, including but not limited to their rights to Medicare or Medicaid; and
(ii) Not request or require oral or written assurance that residents or potential residents are not eligible for, or will not apply for, Medicare or Medicaid benefits.
(iii) Not request or require residents or potential residents to waive potential facility liability for losses of personal property
(3) The facility must not request or require a third party guarantee of payment to the facility as a condition of admission or expedited admission, or continued stay in the facility. However, the facility may request and require a resident representative who has legal access to a resident's income or resources available to pay for facility care to sign a contract, without incurring personal financial liability, to provide facility payment from the resident's income or resources. [emphasis added]
(4) In the case of a person eligible for Medicaid, a nursing facility must not charge, solicit, accept, or receive, in addition to any amount otherwise required to be paid under the State plan, any gift, money, donation, or other consideration as a precondition of admission, expedited admission or continued stay in the facility. However, -
(i) A nursing facility may charge a resident who is eligible for Medicaid for items and services the resident has requested and received, and that are not specified in the State plan as included in the term “nursing facility services” so long as the facility gives proper notice of the availability and cost of these services to residents and does not condition the resident's admission or continued stay on the request for and receipt of such additional services; and
(ii) A nursing facility may solicit, accept, or receive a charitable, religious, or philanthropic contribution from an organization or from a person unrelated to a Medicaid eligible resident or potential resident, but only to the extent that the contribution is not a condition of admission, expedited admission, or continued stay in the facility for a Medicaid eligible resident.
(5) States or political subdivisions may apply stricter admissions standards under State or local laws than are specified in this section, to prohibit discrimination against individuals entitled to Medicaid.
(6) A nursing facility must disclose and provide to a resident or potential resident prior to time of admission, notice of special characteristics or service limitations of the facility.
(7) A nursing facility that is a composite distinct part as defined in § 483.5 must disclose in its admission agreement its physical configuration, including the various locations that comprise the composite distinct part, and must specify the policies that apply to room changes between its different locations under paragraph (b)(10) of this section.
---------------------------------
The rules for discharging a resident are found at 42 CFR Part 483, Subpart B, Section 483.15(c):
(c)Transfer and discharge -
(1)Facility requirements - (i) The facility must permit each resident to remain in the facility, and nottransfer or discharge the resident from the facility unless -
(A) The transfer or discharge is necessary for the resident's welfare and the resident's needs cannot be met in the facility;
(B) The transfer or discharge is appropriate because the resident's health has improved sufficiently so the resident no longer needs the services provided by the facility;
(C) The safety of individuals in the facility is endangered due to the clinical or behavioral status of the resident;
(D) The health of individuals in the facility would otherwise be endangered;
(E) The resident has failed, after reasonable and appropriate notice, to pay for (or to have paid under Medicare or Medicaid) a stay at the facility. Non-payment applies if the resident does not submit the necessary paperwork for third party payment or after the third party, including Medicareor Medicaid, denies the claim and the resident refuses to pay for his or her stay. For a resident who becomes eligible for Medicaid after admission to a facility, the facility may charge a resident only allowable charges under Medicaid; or
(F) The facility ceases to operate.
Further Reading
An excellent online resource for learning about the rights of nursing home residents and their families is the website of the National Consumer Voice.

Be aware that in some states, including Pennsylvania, family members can become liable for a parent or child’s unpaid cost of care under what are known as filial support laws. See my article on this subject: Law can require children to pay support for aging parents. It’s a good idea to meet with an experienced elder law attorney as soon as possible if your parent or spouse r needs nursing home care.

Thursday, July 13, 2017

Pennsylvania's New Notary Law

Pennsylvania has adopted a version of the Revised Uniform Law on Notarial Acts. The new law, which takes effect on October 26, 2017, codifies provisions relating to notaries in Title 57 and repeals existing laws relating to notaries.
The new law will be of interest not only to notaries but to lawyers and anyone who employs notaries.
A copy of the law (57 Pa.C.S. §301-331) is available here. An overview of its major changes to prior law is available here.  The National Notary Association has a useful compendium of various PA statutes that are related to the notary process: https://tinyurl.com/y6vuvlfp  
Further information on the regulation of notaries in Pennsylvania is available on the PA Department of State website: www.dos.pa.gov/OtherServices/Notaries
Further Reading: