The Internal Revenue Service has published final regulations on the deductibility of administration expenses for both estates and trusts and for their beneficiaries when the estates or trusts terminate. “Effect of Section 67(g) on Trusts and Estates,” TD 9918, 85…
Under the new regulations for I.R.C. §§ 67 and 642(h), it becomes even more important for both estates and trusts and their beneficiaries to determine which administration expenses are deductible and which are not. (See “Final Regulations on Administration Expenses…
The Supreme Court’s Committee on Rules of Evidence has published a proposed Pa.R.E. Rule 413 that would allow evidence of immigration status to be used only if relevant to an element of an action or defense, or to a party’s or witness’s motive. “Proposed Adoption of Pa.R.E. 413,” 50 Pa.B. 5222 (9/26/2020).
The committee had previously published a proposed comment to Pa.R.E. 401 that would have included immigration status among a number of other factors, such as race, sex, religion, and national origin, that are generally irrelevant. “Proposed Amendment of the Comment to Pa.R.E. 401,” 49 Pa.B. 2218 (5/4/2019). The committee reported receiving several comments suggesting that a separate rule was needed for immigration status.
The Supreme Court has issued an order adopting a revised public access policy for Pennsylvania courts, including the Orphans’ Court. Included with the order is an explanatory report.
These revised policy include two significant changes:
The revised rules will be effective in thirty days.
“In re: Order Amending Case Records Public Access Policy of the Unified Judicial System,” No 538 Judicial Administration Doc. (9/15/2020); 59 Pa.B. 5216 (9/26/2020).
Columbia and Montour Counties have adopted some new local rules, including a new Orphans’ Court rule, L.R. 2.9, for confirmation of accounts and proposed decrees of distribution. “Business of the Courts; Case No. 2020-MV-1” (26th Judicial Dist., 9/2/2020), 50 Pa.B. 4736 (9/19/2020).
The article “Low-Interest Estate Planning Strategies” described several estate planning strategies that should be considered now that interest rates have reached record lows. One of the strategies that is described in the article is a private annuity.
Webcalculators has been updated to include a new calculator that illustrates the possible benefits of a private annuity transaction, and the development of this calculator was accelerated in order to help planning for the current low interest rates. The section 7520 rate of 0.4% that is now in effect makes annuities more valuable, which means that private annuity transactions can have lower payouts, potentially increasing the benefit of those transactions for estate planning purposes.
The overview of the private annuity calculator is below:
Some of the calculations in Webcalculators have been updated to incorporate the new mortality table that is based on the 2010 census.
Although there are not yet any new actuarial tables from the Internal Revenue Service, the life estate, annuity, and unitrust calculators at wcalcs.com now include an option to calculate factors and values using the new mortality table published by the Centers for Disease Control on August 7th.
Those interested in the possible impact of the new mortality table can register (no fee required) and use the calculators for “Income (Life Estate) and Remainder Factors and Values,” “Annuity Factors and Values,” and “Unitrust Factors and Values” to calculate factors and values using the current (2000) and new (2010) census mortality tables.
With the release of the Chained Consumer Price Index (C-CPI-U) for August 2020, it’s possible to calculate various inflation adjustments for 2021. The following are the significant federal estate planning numbers, with the numbers for 2020 shown in parentheses:
The Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure in 4-8 weeks.
As a further response to COVID-19, and in order to protect Internal Revenue Service employees, as well as taxpayers and their representatives, by minimizing the need for in-person contact, the IRS has added federal estate and gift tax returns, Forms 706 and 709, to a list of forms that can be signed electronically even though they can’t be filed electronically. IR-2020-206 (9/10/2020).
According to the 8/28/2020 memorandum first allowing electronic signatures for certain forms that must be filed in paper form, “Electronic and digital signatures appear in many forms when printed and may be created by many different technologies. No specific technology is required for this purpose during this temporary deviation.”
The deviation applies to forms filed on or after August 28, 2020, until December 31, 2020.
The Supreme Court has adopted a new Pa.O.C. Rule 5.50 governing the form and contents of petitions to settle small estates in accordance with 20 Pa.C.S. § 3102, the new rule to be effective on October 1, 2020. A note has also been added to Rule 2.4 with a cross-reference to the new Rule 5.50. “Order Amending the Note to Rule 2.4 and Adopting Rule 5.50 of the Pennsylvania Orphans’ Court Rules; No. 847 Supreme Court Rules Doc.” (8/18/2020), 50 Pa.B. 4387 (8/29/2020).
The proposed version of this new rule was published as “Proposed Adoption of Pa. O.C. Rule 5.50,” 49 Pa.B. 444 (2/2/2019). In a previous commentary, “Proposed Rule for Small Estate Petitions and Rights of Creditors,” it was suggested that the proposed version of Rule 5.50(b)(2) was problematic, because it required the disclosure of all assets of the estate, and then added that “If it appears that all creditors cannot be paid in full, then include all other assets in which the decedent had an interest as a joint tenant with right of survivorship, together with the value of each such asset and decedent’s fractional interest therein.” The rule that was adopted deleted that sentence, but added a clause to exclude from disclosure “property distributable under 20 Pa.C.S. § 3101.”
The exclusion of property distributable under § 3101 from the small estate petition is curious, because that section is not supposed to be determinative of the rights of beneficiaries of the estate. For example, § 3101(a), which allows unpaid wages not exceeding $10,000 to be paid directly to family members, states that “Any person to whom payment is made shall be answerable therefor to anyone prejudiced by an improper distribution.” Similar provisions appear in subsections (b), (c), and (d). A small estate petition would seem to be a proper vehicle for disclosing distributions under § 3101 and allowing interested parties to object to any improper distribution. At the very least, a petitioner should be able to report that a beneficiary has received funds in accordance with § 3101 and ask that the beneficiary’s share of the assets to be distributed under the petition should be adjusted accordingly. And yet the Supreme Court has apparently excluded any consideration of those issues from the small estate petition.