The Orphans’ Court erred, and abused its discretion, when it entered an injunction against a trustee prohibiting the payment of legal fees and costs without first hearing evidence to determine if a breach of trust had occurred or may occur and whether an injunction was necessary to prevent immediate and irreparable harm. The court also erred in enjoining the exercise of a power of appointment based on alleged misconduct by the trustee when the power of appointment was held in a nonfiduciary capacity and was separate and distinct from the duties as trustee. In re: Trust under Deed of Trust of Nell G. Jack, 2022 PA Super 158, ___ A.3d ___ (9/14/2022).
With the release of the Chained Consumer Price Index (C-CPI-U) for August 2022, it’s possible to calculate various inflation adjustments for 2023. The following are the significant federal estate planning numbers, with the numbers for 2022 shown in parentheses:
- 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 Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure that will probably appear in 4-8 weeks.
It was previously reported, in “Realty Transfer Tax on Remainders,” that the Department of Revenue had published a new table of life estate and remainder factors based on an interest rate of 2.6%, to be effective July 1, 2022. The factors were actually based on an interest rate of 1.4%, but the original publication erroneously referred to “Table S(2.6).” The Department has republished the factors with a corrected reference to “Table S.” See “Life Estate and Remainder Factors; Pennsylvania Realty Transfer Tax (Revised),” 52 Pa.B. 5877 (7/10/2022), effective July 1, 2022, correcting 52 Pa.B. 3382 (6/11/2022).
The Superior Court has affirmed a summary judgment in favor of the trustee of a perpetual charitable trust, and against the charitable beneficiary, finding that the trustee fees of approximately 28% of the trust income are not “unreasonably out of proportion” within the meaning of 20 Pa.C.S.A. § 7740.3(e) and so termination of the trust is not warranted. In re: Trust B Under Agreement of Richard H. Wells dated September 28, 1956, ___ A.3d ___, 2022 PA Super 154 (9/7/2022), aff’d, ___ A.3d ___, 5 WAP 2023 (Pa. 10/17/2023).
When a petition for letters is rejected by the Register of Wills and the Orphans’ Court refuses to grant letters, the finding by the court that the petitioner is not entitled to letters is not an appealable order because there was no action by the Register from which to appeal. In re Estate of Thomas Wisniewski, 2022 PA Super 144, ___ A.3d ___ (8/22/2022).
[DBE Note: Although the Superior Court was clear that that the Orphans’ Court could not “clothe itself with jurisdiction by ordering backdated docketing of an unfiled petition and then deeming that petition denied” by the Register, the Superior Court never explained what the petitioner should have done after the Register refused to accept the petition for letters. Was the problem merely that the Orphans’ Court never held a hearing to determine whether the Register had in fact rejected the petition? Or was the problem that there was no record by the Register of any petition and so no “action” of the Register to appeal? If the problem was the latter, and the filing with the Register is a jurisdictional requisite for an appeal to the Orphans’ Court, what is the remedy if the Register refuses to accept and act on a petition? Petition for writ of mandamus against the Register?]
[The failure to obtain letters for the administration of the estate lead to the dismissal of an appeal to the Commonwealth Court. Wisniewski v. Frommer et al., No. 912 C.D. 2021 (Pa. Cmwlth. Ct. 2/16/2023.]
The Orphans’ Court Procedural Rules Committee is considering an amendment to Pa.R.O.C.P. 14.8 to require a court that completes reasonable enforcement procedures to ensure compliance with guardianship reporting to enter an order to explain the actions taken to attempt enforcement, why a guardian cannot be compelled to comply, and directions for delinquent filings by future guardians. “Proposed Amendment of Pa.R.O.C.P. 14.8,” 52 Pa.B. 5119 (8/20/2022).
Comments should be submitted to the committee by October 11, 2022.
Upon the dissolution of a nonprofit corporation formed to provide firefighting services, application of cy pres doctrine led to distribution of assets to two other firefighting organizations rather than to nonprofit corporations providing training or support services to fire fighters. Lincoln Fire Company, 12 Fid.Rep.3d 312 (Montgomery O.C. 2022), aff’d in part and rev’d in part, ___ A.4th ___, 479 C.D. 2022 (Pa. Cmwlth. 1/16/2024).
Although the incapacitated person was unable to make or communicate medical decisions, and was suffering from stage 5 chronic kidney disease that may ultimately end in death, he did not have an “end-stage medical condition” within the meaning of 20 Pa.C.S. §5422 and so the court was without power to authorize the withholding of life-sustaining treatment by the plenary guardian of the person. Estate of R.C., 12 Fid.Rep.3d 297 (Chester O.C. 2020).
Although the decedent’s spouse had a confidential relationship with the decedent through her increasing control over the decedent’s business affairs, there was insufficient evidence of a weakened intellect and so the claims of undue influence over two lifetime transactions was denied. Lack of evidence of weakened intellect also led to conclusion that the creation of a joint account by the decedent with his spouse was not the product of undue influence and so the funds in the account passed to the spouse upon the death of the decedent. Perlstein Estate, 12 Fid.Rep.3d 273 (Montgomery O.C. 2022).
Accounts of estate and inter vivos trust (funded by estate) were filed together, and executor and trustee was denied commissions for failure to administer estate and trust in timely fashion, objections to miscellaneous expenses were sustained for failure to substantiate the expenses, and legal fees were reduced based on LaRocca factors, with the executor and trustee being surcharged for half of some of the fees due to the trustee’s dilatory conduct. Tobias Trust, 12 Fid.Rep.3d 251 (Montgomery O.C. 2020); Tobias Estate, 12 FId.Rep.3d 262 (Montgomery O.C. 2020).
[Note: These are the same adjudications for which the court wrote a R.A.P. 1915(a) opinion published at 12 Fid.Rep.3d 143 (Montgomery O.C. 2021), which was affirmed in part, reversed in part, vacated in part, and remanded by the Superior Court, 446 EDA 2021 and 2176 EDA 2020 (Pa. Super. 1/19/2022) (non-precedential).]