Probate of after-discovered will was properly denied based on evidence of undue influence. Weakened intellect was found in evidence of progressive dementia, and confidential relationship was found in son-proponent’s involvement in the testator’s personal and business affairs. Trustee of inter vivos trust named as beneficiary of previous will had standing to oppose petition for probate, and issue was waived by failure to raise the issue before the trial court. In re: Estate of Schumacher, 2016 PA Super 17 (1/29/2016).
The IRS has released the new Form 8971 (and its instructions) for executors to use to report federal estate tax values as required by new IRC section 6035. The Form 8971 is filed with the IRS, and a separate Schedule A is provided to each beneficiary receiving property from the estate.
The new reporting requirements apply to federal estate tax returns filed after July 31, 2015, and the due date for filing (and notice to beneficiaries) is normally 30 days after the federal estate tax return is required to be filed (including extensions). Under Notice 2015-57, 2015-36 I.R.B. 294, the date for filing returns (and notices to beneficiaries) required before February 29, 2016, was extended to February 29, 2016.
The Orphans’ Court Procedural Rules Committee has proposed new rules for adoption proceedings. Proposed Rescission of Rules 15.1 through 15.9 and Replacement with the New Rules of Chapter XV, 46 Pa.B. 332 (1/16/2016).
(The recently adopted Orphans’ Court rules did not include any changes to adoption rules.)
Surcharge imposed against trustee for more than $600,000 for “reimbursements” to herself, but surcharge for failure to properly invest funds denied because the testimony of the expert witness was speculative and simplistic and lacked a solid foundation. In addition, punitive damages of more than $300,000 imposed for conduct the court found to be intentional and reckless. Simple interest imposed at the legal rate of 6% from the date of each “distribution” the trustee made to herself. Gansky Trust, 4 Fid.Rep.3d 330 (O.C. Montg. 2015) (opinion by Ott, J.)
On exceptions, the surcharge was recalculated, simple interest at 6% was affirmed, punitive damages were denied, and attorney fees for the objectants were denied. Gansky Trust, 6 Fid.Rep.3d 27 (O.C. Montg. 2015) (opinion by Murphy and Ott, JJ.).
Claims allowed for expenses paid by friends of the decedent (one of whom was a cousin of the decedent) for taxes on property of the decedent, as well as insurance and utilities, for hospice care for the decedent before death, and for the funerals and burials of both the decedent and her husband, who had died a few months before, and whose burial was therefore an obligation of the decedent. Miller Estate, 6 Fid.Rep.3d 23 (O.C. Allegh. 2015).
Executors surcharged for sale of estate property to a son of one executor, for expenses paid to the purchaser of the property for “cleanup” of the property 20 days before the sale, for distributions of automobiles contrary to the provisions of the will, for the value of assets shown on the inheritance tax return but not the account, for a discrepancy between the difference between the amounts shown as receipts and disbursements in the account and the amounts actually distributed, and for executor commissions paid in the face of acts of self-dealing, but surcharges denied for payments for utilities after decedent’s death, for a partial payment on a debt for which the decedent co-signed, and for distributions of personal property in the absence of evidence as to the nature and value of the property distributed. Attorney fees for the objectant were not awarded, and removal of executors was denied. Rehrig Estate, 6 Fid.Rep.3d 13 (O.C. Northampt. 2015).
A beneficiary may revoke an assignment of undistributed interests in a spendthrift trust, and so summary judgment on a petition for declaratory relief is appropriate. Middleton Trust, 6 Fid.Rep.3 1 (O.C. Montg. 2015) (opinion by Murphy, J.)
The following is a chart of the federal estate tax exclusions. the bottom and top tax rates that have been in effect since 1977 (assuming no taxable gifts before 1977), and the federal gift tax annual exclusions. The federal gift tax lifetime exclusion amounts were the same as the estate tax exclusions, except for the years 2004 through 2010, when the federal gift tax exclusion amount was limited to $1,000,000.
Year | Estate Tax Exclusion | Estate Tax Initial Rate (Above Exclusion) | Estate Tax Maximum Rate | Gift Tax Annual Exclusion |
|---|---|---|---|---|
1977 | $120,667 | 30% | 70% | $3,000 |
1978 | $134,000 | 30% | 70% | $3,000 |
1979 | $147,333 | 30% | 70% | $3,000 |
1980 | $161,563 | 32% | 70% | $3,000 |
1981 | $175,625 | 32% | 70% | $3,000 |
1982 | $225,000 | 32% | 65% | $10,000 |
1983 | $275,000 | 34% | 60% | $10,000 |
1984 | $325,000 | 34% | 55% | $10,000 |
1985 | $400,000 | 34% | 55% | $10,000 |
1986 | $500,000 | 37% | 55% | $10,000 |
1987-1996 | $600,000 | 37% | 55% | $10,000 |
1997 | $600,000 | 37% | 60%[1] | $10,000 |
1998 | $625,000 | 37% | 60%[1] | $10,000 |
1999 | $650,000 | 37% | 60%[1] | $10,000 |
2000-2001 | $675,000 | 37% | 60%[1] | $10,000 |
2002 | $1,000,000 | 41% | 50% | $11,000 |
2003 | $1,000,000 | 41% | 49% | $11,000 |
2004 | $1,500,000 | 45% | 48% | $11,000 |
2005 | $1,500,000 | 45% | 47% | $11,000 |
2006 | $2,000,000 | 46% | 46% | $12,000 |
2007-2008 | $2,000,000 | 45% | 45% | $12,000 |
2009 | $3,500,000 | 45% | 45% | $13,000 |
2010[2]-2011 | $5,000,000 | 35% | 35% | $13,000 |
2012 | $5,120,000 | 35% | 35% | $13,000 |
2013 | $5,250,000 | 40% | 40% | $14,000 |
2014 | $5,340,000 | 40% | 40% | $14,000 |
2015 | $5,430,000 | 40% | 40% | $14,000 |
2016 | $5,450,000 | 40% | 40% | $14,000 |
2017 | $5,490,000 | 40% | 40% | $14,000 |
2018 | $11,180,000 [3] | 40% | 40% | $15,000 |
2019 | $11,400,000 | 40% | 40% | $15,000 |
2020 | $11,580,000 | 40% | 40% | $15,000 |
2021 | $11,700,000 | 40% | 40% | $15,000 |
2022 | $12,060,000 | 40% | 40% | $16,000 |
2023 | $12,920,000 | 40% | 40% | $17,000 [4] |
2024 | $13,610,000 | 40% | 40% | $18,000 |
2025 | $13,990,000 | 40% | 40% | $19,000 |
Notes to table:
[1] The 60% maximum tax rate actually represents an additional 5% that was added to estates of more than $10,000,000 from the years 1997 to 2001 in order to eliminate the benefit of the progressive tax table. The additional 5% ended at a taxable estate of $17,184,000, which is when the average tax rate reached 55%. So the top marginal tax rate during those years was 60%, but the top average tax rate was 55%.
[2] The federal estate tax in 2010 was actually optional, and estates could elect to pay no estate tax and instead accept a limit on the increase in the income tax basis on assets included in the estate.
[3] The basic exclusion amount was doubled in 2018, but that doubling ends after 2025.
After entering an order adopting new Orphans’ Court rules, generally effective September 1, 2016 (see In re: Order Rescinding and Replacing Rules 1.1 through 13.3 and Rule 17, and Amendment Rules 14.1 through 16.12 of the Pennsylvania Orphans Court Rules, No. 682 Supreme Court Rules Docket (12/1/2015), 45 Pa.B. 7098 (12/19/2015)), the Supreme Court entered an order directing that local rules for which there is a “continued necessity” should be submitted to the Orphans’ Court Procedural Rules Committee for review no later than June 1, 2016.
Local rules that are not reviewed and adopted under new Pa.O.C. Rule 1.5 shall be vacated effective September 1, 2016.
Review and Vacatur of Local Orphans’ Court Rules, No. 683 Supreme Court Rules Docket (12/1/2015), 45 Pa.B. 7126 (12/19/2015).
The Supreme Court has held that the denial of a petition to intervene in a child custody proceeding is a collateral order that is appealable as of right under Pa.R.A.P. 313. K.C. and V.C. v. L.A., 128 A.3d 774, No. 65 MAP 2015 (Pa. 10/21/2015).