Tax Cuts and Jobs Act Preview

Posted on by December 19, 2017

The revised text of the  “Tax Cuts and Jobs Act” (H.R. 1) was released by the joint conference committee last Friday (12/15/2017), and the Republicans seem to have enough votes in the House and the Senate to pass the bill this week without any Democratic votes (although that could change).

A brief preview of provisions affecting estates and trusts:

  • The estate tax basic exclusion amount (i.e., the unified credit exclusion) will be doubled, but only for gifts and estates in the years 2018 through 2015.  Because of a change in the way future inflation adjustments are to be made, using the “chained consumer price index” instead of the regular CPI-U, the exclusion amount will most likely be $11.18 million in 2018 instead of $11.2 million.  And the Treasury will be instructed to adopt regulations to prevent people who make gifts with the larger exclusion from having to pay estate or gift tax on those gifts when the exclusion goes back down.
  • No income tax deductions will be allowed for miscellaneous itemized deductions (which includes deductions for the administration of income-producing property) for the years 2018 through 2025, which means that estates and trusts will not be entitled to any income tax deductions for legal fees or other administration fees that were previously subject to the 2% floor on miscellaneous itemized deductions.  It is not yet clear whether estates and trusts will be able to continue to deduct expenses that were not subject to the 2% floor (i.e., expenses described in IRC section 67(e) “which would not have been incurred if the property were not held in such trust or estate”).
  • The income tax brackets that apply to estates and trusts have not changed much, but the top rate will be reduced to 37% from 39.6%.
  • Estates and trusts will also be subject to the $10,000 limitation for the years 2018 through 2025 on income tax deductions for state and local income taxes unrelated to a trade or business and property taxes unrelated to the production of income.

[Updated (12/19/2017) to revise description of limitation on state and local taxes.]

More New Public Access Rules

Seven more counties have adopted public access rules to comply with Section 7 of the Public Access Policy of the Unified Judicial System of Pennsylvania, which applies to the Clerks of the Orphans’ Courts.

“Local Rules Regarding Public Access Policy; No. 10149 of 2017” (Beaver Co.), 47 Pa.B. 7558 (12/16/2017).

“Local Rules of Judicial Administration; No. 2016IR0074” (Bradford Co. 12/4/2017), 47 Pa.B. 7558 (12/16/2017).

“Public Access Policy: Official Case Records of the Carbon County Court of Common Pleas C.C.R.J.A 5001; No. 17-2602; 17-9395; CP-13-AD-0000010-2017” (Carbon Co. 11/28/2017), 47 Pa.B. 7559 (12/16/2017).

“Public Access Policy of the Unified Judicial System of Pennsylvania: Case Records of the Appellate and Trial Courts; Doc. No. 90052-17” (Erie Co. 11/29/2017), 47 Pa.B. 7560 (12/16/2017).

“Adoption of Local Rule of Judicial Administration 510; No. 90182 of 2017, A.D.” (Lawrence Co. 11/22/2017), 47 Pa.B. 7560 (12/16/2017).

“Local Rule—NCV-001; No. AD-2017-6” (Northumberland Co. 11/29/2017), 47 Pa.B. 7561 (12/16/2017).

“Local Rules of Judicial Administration; 61-Civil-2017” (Wayne Co. 11/29/2017), 47 Pa.B. 7561 (12/16/2017).

More New Public Access Rules

Eight more counties have adopted public access rules to comply with Section 7 of the Public Access Policy of the Unified Judicial System of Pennsylvania, which applies to the Clerks of the Orphans’ Courts.

“Adoption of Local Rules Regarding Public Access Policy Case Records of the Trial Court; No. 1194 CD 2017” (Clarion Co. 11/15/2017), 47 Pa.B. 7439 (12/9/2017).

“Adoption of Local Rule of Judicial Administration 200; Misc. Doc. No. 2017-4415” (Franklin Co. 11/21/2017), 47 Pa.B. 7443 (12/9/2017).

“Adoption of Local Rule of Judicial Administration 200; Misc. Doc. No. 27-2017” (Fulton Co. 11/21/2017), 47 Pa.B. 7443 (12/9/2017).

“Local Rule 101 of Judicial Administration; CP-44-CV-2-2017” (Mifflin Co. 11/22/2017), 47 Pa.B. 7446 (12/9/2017).

“Pennsylvania Supreme Court Public Access Policy Local Procedure; 5 AD 2017; 51 ADM” (Monroe Co. 11/15/2017), 47 Pa.B. 7446 (12/9/2017).

“Adoption of Local Rule of Judicial Administration 520*—Public Access Policy; No. 2017-00001” (Montgomery Co. 11/21/2017), 47 Pa.B. 7448 (12/9/2017).

“Adoption of Local Rule of Orphans’ Court 1.99A— Confidential Information and Confidential Documents. Certification; Rescission of Local Rule of Orphans’ Court 4.7A(g)—Electronic Filing of Legal Papers” (Montgomery Co. 11/21/2017), 47 Pa.B. 7448 (12/9/2017).

“Judicial Administration Public Access Policy Local Rule 102; No. 213 MS 2017” (Tioga Co. 11/21/2017), 47 Pa.B. 7450 (12/9/2017).

“Adoption of Local Rules Re Public Access; CIV No. 1259-2017” (Venango Co. 11/14/2017), 47 Pa.B. 7451 (12/9/2017).

Benefits Claim of Common Law Spouse Denied after Failure to Appeal

A person denied benefits from a municipal pension fund after a finding by a hearing board that a common law marriage was not proven, from which no appeal was made to the Court of Common Pleas, cannot later obtain a judgment in the Orphans’ Court that a common law marriage existed, and the 0% spousal inheritance tax rate applies, and then use that judgment to force payment of the benefits previously denied.  In re: Estate of John F. Pancari Sr., 1304 C.D. 2016 (Pa. Cmwlth. 12/8/2017).

Lawsuit against “Estate” Was Nullity

Legal action cannot be filed against the “estate” of a decedent, but only the personal representatives of the estate, and so an action filed against an estate is a nullity and a personal representative of the estate cannot be substituted as the defendant after the statute of limitations has expired.  Wilkinson v. Knight, 7 Fid.Rep.3d 336 (Crawford Co. C.P. 2017).

Valid Marriage Officiated by Person Ordained on Internet

The decedent and his fiance obtained a marriage license, and their marriage was valid even though the marriage ceremony was conducted by a friend who was ordained over the Internet by “First Nation Church and Ministry” and the marriage certificate was not properly filed with the Clerk of the Orphans’ Court. Zimmerman Estate, 7 Fid.Rep.3d 330 (Montgomery Co. O.C. 2017).

Wrongful Death Proceeds not Part of Estate

In accounting filed for husband’s estate, Orphans’ Court had no jurisdiction over funds previously awarded to wife as compensation for wrongful death and loss of consortium but erroneously paid to husband’s estate, and so ordered the personal representatives to file an amended account excluding those funds, after which the court may determine whether wife’s estate has standing to object to the account.  Truax Estate, 7 Fid.Rep.3d 327 (Franklin Co. O.C. 2017).

Counsel Fees Imposed on Obdurate Party

Counsel fees of $25,000 were properly imposed under 42 Pa.C.S. § 2503(7) and (8) on a party as sanctions for dilatory, obdurate, and vexatious conduct in continuing to pursue matters that were without merit and were previously decided.  Mumma Estate, 7 Fid.Rep.3d 323 (Cumberland Co. O.C. 2017), appeal quashed, 319 MDA 2017 (Pa. Super. 10/2/2017).

(For previous decisions involving this same party, see 4 Fid. Rep. 3d 384 and 6 Fid.Rep.3d 352.)