Because the decedent’s will granted an option to purchase real estate at “the value as finally determined for Federal Estate Tax purposes,” the court ordered the executor to file a federal estate tax return even though the estate was too small to require one and even though the filling of the return will not resolve the dispute because the executors may claim special use valuation under I.R.C. section 2032A and some of the beneficiaries may refuse to join in the required agreement to pay the additional estate tax that might become due if the property ceases to be used for a “qualified use.” Finck Estate, 12 Fid.Rep.3d 381 (Lycoming O.C. 2022)
An individual trustee who is not a lawyer may not represent the trust in court. Delaware Valley Landscape Stone, Inc. v. RRQ, LLC, ___ A.3d ___, 2022 PA Super 173 (10/13/2022).
The Internal Revenue Service has released Rev. Proc. 2022-38 with inflation adjustments for 2023 and, consistent with earlier predictions, the changes in the most significant federal estate and trust planning numbers will be as follows:
- The federal estate tax base applicable exclusion amount (and generation-skipping tax exemption) will be $12,920,000 (was $12,060,000 for 2022).
- The annual gift tax exclusion will be $17,000 (was $16,000).
- The annual gift tax exclusion for a non-citizen spouse will be $175,000 (was $164,000).
- The “2 percent” amount for purposes of section 6166 will be $1,750,000 (was $1,640,000).
- The limitation on the special use valuation reduction under section 2032A will be $1,310,000 (was $1,230,000).
- The top (37%) income tax bracket for estates and trusts will begin at $14,450 (was $13,450).
- The alternative minimum tax exemption for estates and trusts will be $28,400 (was $26,500), and the phaseout of the exemption will start at $94,600 (was $88,300).
The Register of Wills of Lehigh County has adopted a new fee schedule, to be effective January 1, 2023. “Clerk of Judicial Records—Register of Wills Division Fee Schedule; Case No. 2022-J-0133” (9/19/2022), 52 Pa.B. 6452 (10/15/2022).
A mortgage on property owned by husband and wife as tenants by entireties was valid, even though signed by only one spouse, when the signing spouse normally handled the finances for the family and the non-signing spouse benefitted from the mortgage because the proceeds were used to repay an existing mortgage, and so the “entireties presumption” applied and the signing spouse had the authority to act for both spouses with respect to entireties property without the specific authority the other spouse. Wykel v. Knapp, 288 A.3d 889, 2022 PA Super 167 (9/30/2022), app. den., ___ A.3d ___, 167 MAL 2023 (8/28/2023).
A joint trust created by a husband and wife which remained revocable by the surviving spouse (who was also the sole trustee) following the death of one spouse did not qualify as a “sole use trust” but was not a transfer subject to inheritance tax tax under 72 P.S. 9111(m), which exempts property owned by husband and wife with right of survivorship. In Re: Estate of Edward J. Potocar, 283 A. 3d 936, 662 C.D. 2020 (Pa. Cmwlth. 9/30/2022), aff’g, 11 Fid.Rep.3d 150 (Allegheny O.C. 2021).
[DBE Note: Not cited by the court is Miller Estate, 4 Fid.Rep.2d 346 (1984), which held that entireties property transferred to a joint trust remained entireties property, or McEwen’s Estate, 348 Pa. 23, 33 A.2d 14 (1943), which held that separate property transferred to a joint trust of husband and wife was fully taxable at the second death, and not the first, because the beneficial interests in the trust were held as tenants by the entireties. How the property that was transferred to the Potocar trust was held before the trust was created was not discussed by the Commonwealth Court.]
The Orphans’ Court of Lehigh County has adopted a new fee schedule, to be effective November 1, 2022. “Clerk of Orphans’ Court Division, Fee Schedule; File No. AO-2022-0001” (9/19/2022), 52 Pa.B. 6155 (10/1/2022).
Child born during a same-sex marriage is presumed to be the child of both parents, even though Pennsylvania did not recognize the validity of same-sex marriages when the child was conceived and born. Bossler v. Ebling, 12 Fid.Rep. 362 (C.P. Berks 2021).
[Note: Other holdings related to standing, adoption, and custody have not been summarized.]
Claim for compensation for care of parents by one of their sons was denied for lack of “clear, direct, precise and convincing” evidence of an agreement for compensation, but claim for family exemption was allowed even though the decedent had been declared to be incapacitated and was moved out of the house she shared with her son. Both legal fees and costs resulting from a delay in the sale of the house were imposed on the son for failing to vacate the premises, and the son’s objections to the account and petition for adjudication were dismissed as untimely. Harper Estate, 12 Fid.Rep.3d 319 (O.C. Delaware 2021), aff’d 2307 EDA 2021 (Pa. Super. 7/19/2022) (non-precedential).
The decedent had purchased an annuity, and had named “Mildred Williams – Friend,” as the beneficiary, but failed to provide a Social Security number or other identifying information for the beneficiary. The decedent also failed to disclose the annuity to Department of Human Services (DHS) when applying for Medicaid. The decedent’s estate requested that the insurance company pay the annuity to the estate in order to pay the estate recovery claim of DHS, but the insurance company instead paid the annuity to the Bureau of Unclaimed Property after it was unable to locate “Mildred Williams.” The Bureau denied a claim for the funds by the estate, and the Commonwealth Court affirmed the denial, but remanded for a determination of whether the Orphans’ Court had entered a valid decree for the payment of the annuity to the estate before the funds were delivered to the Bureau. Estate of Doretha Green v. Bureau of Unclaimed Property, ___ A.3d ___, No. 749 C.D. 2021 (Cmwlth Ct. 9/21/2022).