Changes to the Pa. Probate, Estates & Fiduciaries Code: Health Care; Release and Disclaimer of Powers and Interests; Trusts and Trustees; Charitable Instruments

On July 8, 2016, a number of changes were made to the PEF Code, as SB 1104 became Act 79. This is the last in a series of blog entries on Act 79 by Mr. Upright.

Amendments to Chapter 54 of the Probate Code.

Chapter 54 – Health Care.

Section 5422.  Definitions.

“…health care decision.”  The definition of “health care decision” is amended by adding to the definition of decisions regarding an individual’s health care, which includes, but is not limited to:

  1. Selection and discharge of a health care provider.
  2. Approval or disapproval of a diagnostic test, surgical procedure or  program of medication.
  3. Directions to initiate, continue, withhold or withdraw all forms of life sustaining treatment, including instructions not to resuscitate.

To which is added:

  1. Admission to a medical, nursing or residential or similar facility, or entering into agreements for the individual’s care.
  1. Making anatomical gifts, or after the death of the individual, disposing of the remains or consenting to autopsies.

Section 5454.  When Health Care Power of Attorney is Operative.

            The duration of a health care power of attorney will continue notwithstanding the lapse of time from the execution of the health care power of attorney, unless the health care power of attorney specifically states a time of termination or is revoked by:

  1. The principal.
  2. The court.
  3. The principal’s guardian of the person, if authorized by the court.

Section 5456.  Authority of Health Care Agent.

            Consistent with the changes to Section 5422 and Section 5456, providing that a health care agent shall have the authority to make any health care decision and to exercise any right and power regarding the principal’s care, custody and health care treatment, this section is amended by adding a provision specifically including in the health care agent’s powers, the power to authorize admission to a medical, nursing, residential or similar facility, or to enter into agreements for the principal’s care.

Section 5460.  Relation of Health Care Agent to Court Appointed Guardian and Others.

            Previously, the guardian had the same power to revoke or amend the appointment of a health care agent that the principal would have had if the principal were not incapacitated.  This power of the guardian is removed and in place thereof is added that the court shall determine the extent to which the health care agent’s authority to act remains in effect upon the appointment of a guardian, which authority shall be included in the court’s guardianship order.

Chapter 61 – Estates Section 6103.1.  Release of Powers and Interests and Disclaimer of  Powers.

            Added as an additional section of Chapter 61 is the power in the beneficiary to release an interest even if that power has been previously accepted.  In the event that that interest is an income interest in a spendthrift trust, the interest may be released only if the released income passes to one or more of the releaser’s descendants.  In the instance of a release of an interest, the release shall be treated as having taken effect at the time of the release for purposes of determining and accelerating the interests of the other parties in the subject property.

The release of a power or interest or the disclaimer of a power may be (a) absolute or conditional; (b) made with respect to the whole or any part of the property subject to the power or interest; (c) reduce or limit those in whose favor the power or interest would be exercisable.

Chapter 77 – Trust.

Section 7722.  Representation of Parties in Interest in General.

A court order will bind all persons represented by the trustee if the trustee (a) notifies the representative and the representative does not decline the representation; (b) any petitioner, trustee or otherwise, avers the existence of the representation in the petition and the respondent to the petition does not decline the representation in a responsive pleading; or (c) the representative has signed a certificate of representation which certificate has not been rescinded.

The above amendments pertaining to the existence of the representation of other parties will also apply as such applies to non-judicial resolution to the representative’s non-declining of the representation, or the representative having signed a certification of representation which has not, subsequently, been rescinded.

The certification of representation may be filed (a) with the court; or (b) the trustee in the instance of a non-judicial resolution.

Section 7765.  Resignation of Trustee; Filing Resignation.

            The provisions for the resignation of a trustee have been changed.  The trustee may resign (a) with court approval; (b) if authorized to resign by the trust instrument (without court approval); or (c) pursuant to a non-judicial settlement agreement.

Section 7780.3.  Duty to Inform and Report.

This section is amended to add the ability of a current beneficiary to nominate and assign another person to receive required notices.  The trustee will be deemed to have satisfied the notice requirements by giving notice to the beneficiary’s nominee if (a) the trustee notifies the nominee that the notice is being given to the nominee as representative of the beneficiary; and (b) the nominee does not decline to receive the notices within 60 days of receipt of the notice.

Further, the trustee may rely upon the current beneficiary’s nomination of a nominee and the nominee’s presumed acceptance until such time as the trustee receives a written rescission of the nomination.

Section 7785.  Limitation of Action Against Trustee.

Consistent with the foregoing changes to Section 7780.3, Section 7785 is amended by adding similar language regarding a beneficiary’s nomination of a nominee to receive the trustee reports; the ability of the trustee to rely on that nomination; and the nominee’s opportunity to decline to receive trustee reports.

Chapter 79 – Charitable Instruments.

An entirely new chapter of the Probate, Estates and Fiduciaries Code is added in regard to the creation of charitable documents.

A “charitable organization” within the meaning of the Chapter includes an incorporation, trust or other instrumentality governed by Pennsylvania law and treated as a private foundation or a pooled income fund as these terms are defined in the Internal Revenue Code.


Section 7903.  Deemed Provisions of Governing Instrument. 

            The governing instrument of a charitable organization is deemed to include provisions that:

  1. Require distributions in such amounts and on such a timely, annual basis as to not  subject the organization to taxation as a private foundation;
  2. Prohibits the organization from engaging in self-dealing, retaining excess business holdings, making an investment in such a manner as to subject the organization to tax as a private foundation; and
  3. Prohibiting the organization from making taxable expenditures.

(As each of these terms are defined in the Internal Revenue Code.)

Note:  These deemed provisions supersede any contrary provisions of the governing charitable instrument.  In this regard, this section of the Probate Code applies only to the extent that the charitable organization is subject to the provisions of the Internal Revenue Code.

Section 7904.  Power to Amend Governing Instrument.

            The trustees or directors of the charitable organization have the power to amend the governing instrument for the sole purpose of ensuring that gifts and bequests to charitable organizations qualify for charitable deductions under the Internal Revenue Code and that the charitable organization qualifies for tax exemption under the Internal Revenue Code.

Section 7905.  Court Authority.

A court of competent jurisdiction may authorize a deviation from the expressed terms of the document governing the charitable organization.

Section 7906.  Applicability.

Chapter 79 shall apply to all charitable organizations created after December 31, 1969, and shall apply to all charitable organizations created prior to this date unless a court of competent jurisdiction, in a proceeding instituted before January 1, 1972, explicitly decided that the operation of this Chapter would substantially impair the accomplishment of the purposes of the charitable organization in that proceeding.

Upright_Kirby G_08

Kirby G. Upright
King, Spry, Herman, Freund & Faul, LLC, Bethlehem

By | 2017-05-19T22:51:20+00:00 August 9th, 2016|Categories: Estate Planning and Administration|Tags: , , , , |Comments Off on Changes to the Pa. Probate, Estates & Fiduciaries Code: Health Care; Release and Disclaimer of Powers and Interests; Trusts and Trustees; Charitable Instruments

About the Author:

The Pennsylvania Bar Institute is PA's premier provider of continuing legal education and reference materials. Our mission is to provide Pennsylvania lawyers with information that is timely, practical, cost effective, and of the highest possible quality. We are the nonprofit arm of the Pennsylvania Bar Association.