Pennsylvania Trusts and Estates Blog

Check out this article by Porfessor Katherine Pearson of Penn State Dickinson School of Law:  Evaluating Long-Term Care Insurance in a Troubled Economy

"I'm not going into a nursing home, and I'm not spending my money on nursing home insurance." How many times have I heard that?

If you can comfortably afford $9,000 a month for nursing care maybe you're right. But how many people can do that? And if you're a couple - can you spend $9,000 for one of you and the other stay at home with all of the usual house and living expenses?

"But long-term care insurance is expensive," you say. After you pay the first month's nursing home bill, I'll ask you if you think it's expensive then.

Here is Suze Orman on the subject (Suze Orman, 9 Steps to Financial Freedom, pp. 83-84):

"What if you never use long-term care insurance? It will be wonderful if that's the case. The purpose of insurance is to cover catastrophes. You should always hope you'll never have to use it.

This is the question clients ask me all the time about LTC insurance

Now let me ask you a few questions.

Do you have fire insurance? If you own a home, you have to have it. If you do, have you ever used it? Only 1 out of every 1,200 people ever uses fire insurance. But that doesn't mean it isn't a good idea.

Do you have automobile insurance? If you have a car, you do. If so, have you ever used it? Many of us are afraid to file a claim even when there's a reason to, for what it might do to the cost of our premiums. Only 1 out of every 240 people ever uses car insurance. But most of us still have it.

How many people do you think use long-term care insurance? One out of every three, among those who have it. It is used more than any other kind of insurance, yet it's the kind of policy that way too few of us have.

Why do you think you'd need LTC insurance if you already have health insurance? Because there is not one health insurance policy in existence that covers long-term care.

If the situation were this dire, are you thinking it would be better all around just to dump the bills on Medicare? You couldn't. Because Medicare won't pay them. Medicare will only pay 100 percent for the first twenty days of a LTC stay and will pay only if the facility is a Medicare-approved skilled nursing home. . . . Medicare pays for less than 2 percent of all the people in nursing homes today. If you want to count on being one of those 2%, good luck. Anyway, do you believe that Medicare is going to be thriving by the time you're in your eighties?

Well, what about Medicaid, then? Doesn't Medicaid pay for nursing homes? An agency of last resort, Medicaid currently takes over, at any age, when you're financially destitute. It's welfare. Medicaid is a federal agency but run in each state by the state. Currently, it's true that 40% of people in nursing homes are paid for by Uncle Sam - but Medicaid is not the answer.

For one thing, "financially destitute" is a tricky concept. If you are reading this book, you're reading it so you won't be financially destitute, and I'll tell you what I tell my clients: If your plan is to divest yourself of your assets should a nursing home become inevitable, please turn to another financial adviser. Historically, many people have made themselves poor on paper to qualify for Medicaid by transferring assets and trying to make it look as if their money has disappeared. This is a demeaning process and can be devastating to the spouse, if there is one, who remains at home. The spouse who needs long-term care is then sent to a Medicaid-approved nursing home, which is not necessarily a place where you want to spend your last days. These are often overburdened facilities, and quite simply, our government can no longer afford to fund them."

2008 Tax Offender of the Year

Russ Fox of Taxable Talk tells the story:

"Mr. Beale directed the bookkeeper at his company to first not withhold taxes on the $700,000 and then to pay him through an offshore shell company. He began to file statements with the IRS claiming he didn't have to pay income taxes. In January 2006 he was indicted for tax evasion. Now, if you were indicted for tax evasion you'd get a good attorney, perhaps talk settlement with the IRS, and you'd certainly start planning your defense.

Not Mr. Beale. When his case was called for trial in August 2006 Mr. Beale was nowhere to be found. Mr. Beale told the Minneapolis Star-Tribune that he resided with friends during his fourteen months of being a fugitive. He went to Orlando and made the "dumb mistake" of using the same cellphone for eleven months to call his wife. He was arrested in November 2007 in Orlando.

His case finally came to trial this past April. Again, if you're facing tax evasion and unlawful flight charges it's time to hire a good attorney. Not Mr. Beale. He represented himself during his trial. But there's more, and now we get to the truly Bozo aspect of this case.

Mr. Beale and three confederates decide to arrest the judge. No, I'm not making this up. As Joe Kristan noted (quoting TwinCities.com,

Robert Beale, 65, was charged Monday in federal court with one count of conspiracy to impede an officer and one count of obstruction of justice. Also indicted on the same charges were Frederick Bond, 62, of Champlin; John Pelton, 67, of Stillwater; and Norman Pool, 43, of Blaine.

"God wants me to destroy the judge," Beale is accused of saying in court records...

The men issued fake warrants for Montgomery's arrest, filed fraudulent liens, planned to disrupt court proceedings and planned to arrest Montgomery. The plans were concocted at meetings of their "common law court" in Little Canada and in phone calls from Beale, after he was jailed.

Going after a federal judge is an excellent way to make sure that you reside in ClubFed for a long, long time. And using prison telephones to threaten a judge is really Bozo given that calls are routinely monitored."

A will can be revoked by operation of law, by some physical act performed on the will with intent to revoke, or by a subsequent written instrument, meeting the statutory requirements.

Revocation or modification by operation of law refers to statutory provisions that modify or revoke will provisions in the event of marriage, divorce, birth or adoption of children, and the like.

In some states, marriage revokes a will. In Pennsylvania, marriage does not revoke a will. However, if marriage occurs after the will is made, unless the will is made in contemplation of the marriage, the surviving spouse is entitled to receive the share of the estate to which the surviving spouse would have been entitled if the deceased spouse had died intestate (unless the will gave the surviving spouse a greater share).

In Pennsylvania, divorce modifies a will. If a person becomes divorced after making a will, any provisions in the will for the former spouse are void and without effect.

A child born to or adopted by a testator after the execution of the will is entitled to receive an intestate share of all property not passing to the surviving spouse.

The law makes these "modifications" to wills because of the presumed change in the testator's intentions resulting from a fundamental change in the testator's situation. All of these provisions can be overcome by specific direction in a will. The law attempts to salvage the situation when the testator has neglected to change his or her will after a fundamental change in his or her circumstances.

A will can be revoked by physical act--by being burnt, torn, canceled, obliterated, or destroyed with the intention of revocation. The act must be done by the testator himself or by another person in his presence and by his express direction. If the act of revocation is done by any person other than the testator, it must be proved by the oaths of two witnesses.

Unfortunately, laypersons seem to have a propensity to perform physical acts on their wills. Numerous questions arise as to whether the intention to revoke was present and whether the act was done by the testator. Often, it is the import of the act itself that is questioned. If there is a large cross mark or "X" on one of the pages, or on the cover of the will, is this a revocation? Is a will "burned" if its edges are singed? What if some of the dispositive provisions are lined out? Was the intention to revoke the whole will or only the mutilated provisions? The cases are numerous and the results vary widely. You should NEVER write on your will. If you want to change your will, it must be done by making a new will or by an amendment to your will called a codicil. The new will or codicil must be signed with the same formalities as the original will. If you write on your will, or cross out provisions, you will either revoke it or you will do nothing. The one thing you will not do by writing on your will is modify it. Courts have held that the interlineation of one provision operates as a revocation of the entire will. I cannot stress this strongly enough. Do not attempt to change your will by writing on it or drawing lines through any of its provisions. Initialing the change does nothing.

If an original will cannot be found when a person dies, the question arises as to whether or not the will is simply misplaced or if it was destroyed with the intention to revoke it. The law in most states provides that there is a strong presumption that if the will cannot be found, it has been destroyed with the intention to revoke. If this presumption of revocation is successfully rebutted by testimony, then a copy of the will may be submitted for probate, or the will's provisions can be proved by testimony.

A will can be revoked by a subsequent will or codicil. Making a new will that revokes all prior wills is the method most often used to revoke prior wills. But suppose the new will is invalid. There is a principal called dependent relative revocation which holds that the old will is revoked only if the new will is valid. If a will is denied probate for any reason, such as incompetence, undue influence, fraud, or a deficiency in form or attestation, then the court must decide how to distribute the decedent's property. The choices of disposition are the next-to-last will, or the state's intestacy statute. The law presumes that the testator would prefer the provisions of the previous will. That presumption is open to rebuttal by an interested party, but the burden of proof is on that party. Thus, revocation by a new will only works if the new will survives.

I recommend that clients keep their old wills with the new ones they execute. One never knows what challenges may be made successfully to any will in the future. Usually, a testator would rather have his next to last will probated rather than relying on the state intestacy statute. Also, having the old wills is useful to show the pattern of disposition. This can be very important in cases of undue influence or incompetency.

Revocation by other writing means that the testator does not make a new will, but does make another document which revokes all prior wills and codicils. The writing must have all the formality of a will including witnesses. A handwritten document signed by the testator alone (called a holographic document) is another form of revocation accepted in some states, including Pennsylvania and New Jersey, but not any of our other neighbors. The entire document must be in the testator's handwriting, and the signature must come at the end of the document.

In the case of Thompson vs. Royall, Mrs. Kroll of Virginia told her lawyer she wanted to revoke her will. Her lawyer said she should keep the will as a basis for making a new one, so he (not Mrs. Kroll) made the following notation on the back of the document: "This will null and void and to be only held by H. P. Brittain instead of being destroyed as a memorandum for another will if I desire to make same. This 19 Sept., 1932." Mrs. Kroll then signed the statement. The same procedure was performed on the codicil to that will.

Mrs. Kroll died before a new will was executed. The court held that since the handwritten note did not obliterate any writing of the will (it was on the cover), and that it was not a holographic disposition (remember, she did not write the entire note, she only signed it), neither the will nor the codicil was revoked.

When I graduated from law school, I had little insight into the business of running a law practice. Don't get me wrong; I had great knowledge about the law. But I did not know how to actually build a client roster, create and deliver services, administer an office, and get paid a fair fee for work performed.

Susan Cartier Leibel has provided a way for today's sole practitioners to learn all of these things, and more. She has founded Solo Practice University™. SPU is a web-based legal learning and networking community for lawyers and law students. I am very flattered to be included among this distinguished faculty of progressive lawyers, marketing professionals, technology consultants, and other legal business giants. 

I will be teaching, talking and blogging about wills, trusts, estates, and taxes. The much ballyhooed inter-generational wealth transfer from the baby boomers is upon us and this practice area will be going strong. I will help you to use the SPU community to pull together the knowledge of tax, property law, future interests, contracts, litigation, and legal writing you need in today's complex trust and estate practice environment.

I will be teaching a course on Trusts and Estates Practice as well as being available for online office hours where you can get your technical questions answered and find answers to how to run your law business and give your clients top notch service.

Lawyers who take on trust and estate matters without the necessary skills and tax experience may find themselves facing unexpected fiduciary liability. As a frequent expert witness on trust and estate matters, I will work to help you avoid common mistakes that can undermine your legal career.

Working along with SPU, I will teach you how to use the Internet more effectively to access the necessary information, forms, advice, and research you need for your trust and estates work. You will find that access to information is no longer prohibitively expensive for the solo practitioner.

Technology has made it possible for solo practitioners like you to be just as prepared, just as smart, and even more nimble than their big law competitors. Add to this the advantage of the SPU community to share tactics, solutions, and ideas. As a solo practitioner, you now have the unparalleled opportunity to expand your network, learn new skills, find the best technology, and build your practice.

Can't wait to get started!

A little boy asked his father, "Daddy, how much does it cost to get married?"

And the father replied, "I don't know, son, I'm still paying for it."

Should you have a marriage contract? It's a misleading question, as pointed out by the National Resource Center for Consumers of Legal Services. The fact is, if you're married, you already have a marriage contract. Your marriage contract consists of the obligations imposed on married couples by the inheritance and domestic relations laws of the state where you reside. Romantic or not, there is a marriage contract. The only question is whether you like the "one size fits all" marriage contract provided by the state or whether you want to substitute your own contract.

People routinely change the state law provisions for inheritance rights for married couples - they write wills, often giving the entire estate to the surviving sposue. This is common, socially acceptable, and even encouraged. Marriage contracts and pre-nuptial agreements settling other property rights, however, are still uncommon.

Not that marriage contracts haven't been around for thousands of years, mind you. Just imagine the tribal chief striking a deal with the neighboring chieftain over the dowry to be given with the bride.

My personal favorite is the Jewish marriage contract or Ketubah which has been in use for centuries B.C.E. to the present day. "Be my wife in accordance with the law of Moses and Israel. I will work for you; I will honor, support and maintain you, as it becomes Jewish husbands who work for their wives, honoring and supporting them faithfully...." Additionally, the Ketubah (1) outlines the obligations that a husband must fulfill in marriage -- to honor his wife, to provide the necessities in life, such as food, clothing, and shelter, and to fulfill his wife's sexual needs; and (2) it specifies that he will pay his wife a particular sum of money in the event of death or divorce. Not bad.

Continue reading "Should you have a Marriage Contract?" »