Petitions for Allowance and Estate Planning in Pennsylvania: What Guardians Should Know

As legal practitioners, we often encounter situations where a guardian seeks to utilize an incapacitated person’s assets to provide for their well-being, security, or estate planning purposes. Under Pennsylvania law, specifically 20 Pa.C.S. §5536, Petition for Allowance and a Petition for Estate Planning are critical tools to facilitate the management of an incapacitated person’s estate.

Legal Foundation of 20 Pa.C.S. §5536

20 Pa.C.S. §5536 provides the statutory authority for a court-appointed guardian to seek approval from the Orphans’ Court to make expenditures from the incapacitated person’s estate. Unlike some other jurisdictions, in Pennsylvania, obtaining guardianship does not empower the guardian to spend their ward’s principal assets.

In fact, by law, and absent any further court orders, a guardian may only expend an incapacitated person’s income for their care and support needs. The law is designed to protect the interests of the incapacitated individual while allowing necessary financial decisions that align with their best interests and intended estate planning objectives. Courts desire to maintain oversight over an incapacitated person’s estate.

Petition for Allowance

A Petition for Allowance is typically filed when a guardian seeks to use the incapacitated person’s assets for their care, support, maintenance, or other necessary expenses. This petition is crucial in situations where the incapacitated person requires additional care beyond what their income covers, such as:

• Medical and healthcare expenses, including long-term care
• Housing and living costs
• Special needs accommodations
• General maintenance and lifestyle support

Petition for Estate Planning

A Petition for Estate Planning under §5536 is used to structure the estate of the incapacitated person to benefit them, their spouse or dependents, and even their heirs, while minimizing unnecessary financial burdens such as taxes and probate complications. This petition can involve:

• Establishing or funding a trust
• Engaging in Medicaid Planning
• Making gifts to family members or charities
• Adjusting beneficiary designations
• Exercising a Power of Appointment
• Tax planning strategies to preserve the estate’s value

Why These Petitions Are Important

Ensuring the Incapacitated Person’s Well-being: By obtaining court approval for financial decisions, guardians can provide for the incapacitated person’s needs without the risk of improper asset use.

Compliance with Legal and Ethical Standards: These petitions ensure that the guardian’s actions comply with Pennsylvania law and uphold fiduciary responsibilities.

Estate Preservation and Tax Efficiency: Thoughtful estate planning can reduce estate taxes, preserve assets for heirs, and avoid unnecessary legal complications upon the incapacitated person’s passing.

Avoiding Personal Liability for Guardians: Seeking court approval protects guardians from potential disputes or allegations of mismanaging funds.

Key Considerations When Filing

When preparing a Petition for Allowance or a Petition for Estate Planning under 20 Pa.C.S. §5536, attorneys must consider multiple aspects. The attorney and guardians must always keep the incapacitated person’s best interests in mind. The desired actions should align with the philosophy and prior actions taken by the incapacitated person. At the same time, they still had capacity: what actions would they have taken if they still had capacity?

It is critical to always remember prior written directives, like Wills, Powers of Attorney, trusts, or plans put into place during a time of capacity. Guardians may seek outside advice from experts, such as accountants, financial advisors, or care managers, on how the desired plan will impact the incapacitated person. Practitioners and their clients should consider the likelihood that a plan will be opposed by family members, creditors, or even public benefits agencies (Department of Human Services or Social Security Administration).

Lastly, lawyers must never forget that the burden of proof in these cases is heightened. Not only must the proposed plans make sense, but sufficient documentation and testimony must be available to the court to prove why the action is necessary and how the plan will be effectuated. Being familiar with the outcomes in similar cases before local judges is always helpful.

The provisions of 20 Pa.C.S. §5536 offer a structured legal mechanism for guardians to manage an incapacitated person’s estate responsibly. A well-prepared Petition for Allowance and Petition for Estate Planning ensures compliance with the law and safeguards the financial well-being of the incapacitated person and their intended beneficiaries. Legal professionals must approach these petitions with diligence, ensuring that all actions align with fiduciary duties and the incapacitated individual’s best interests.

For attorneys navigating these legal processes, understanding the nuances of 20 Pa.C.S. §5536 is essential in providing sound legal counsel and advocating for the protection and proper administration of an incapacitated person’s estate. Contact our attorneys to learn more now.