Unofficial Inflation Adjustments for 2025

Posted on by September 11, 2024

The Bureau of Labor Statistics has published the Chained Consumer Price Index (C-CPI-U) for August 2024, and so it’s possible to calculate various inflation adjustments for 2025. The following are the significant federal estate planning numbers calculated for 2025, with the numbers for 2024 shown in parentheses:

  • The federal estate tax base applicable exclusion amount (and generation-skipping tax exemption) will be $13,990,000 (was $13,610,000 for 2024).
  • The annual gift tax exclusion will be $19,000 (was $18,000).
  • The annual gift tax exclusion for a non-citizen spouse will be $190,000 (was $185,000).
  • The “2 percent” amount for purposes of section 6166 will be $1,900,000 (was $1,850,000).
  • The limitation on the special use valuation reduction under section 2032A will be $1,420,000 (was $1,390,000).
  • The top (37%) income tax bracket for estates and trusts will begin at $15,650 (was $15,200).
  • The alternative minimum tax exemption for estates and trusts will be $30,700 (was $29,900), and the phaseout of the exemption will start at $102,450 (was $99,700).

The Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure that will probably appear in 4-8 weeks.

Cotrustee’s Petition to Partition Denied

Posted on by August 19, 2024

The current beneficiary and individual cotrustee of a trust holding a partial interest in a family farm, had petitioned the Orphans’ Court to allow him to file a partition action without the consent or joinder of the institutional cotrustee. The court had denied the petition without prejudice and the Superior Court affirmed, concluding that the beneficiaries of other trusts with interests in the farm had standing to contest the petition both because they would be adversely affected by a partition and because they were vested future beneficiaries of the petitioner’s trust, that the sale of the farm was contrary to the intentions of the settlors, that the farm produced enough income to pay for its maintenance and the partition was not in the long-term best interests of the current and future beneficiaries of the trust (which the court must consider under 20 Pa.C.S.A. 7763(a.1), that the institutional cotrustee serving as a trustee of other trusts holding interests in the farm was not a conflict of interest, that the current beneficiary did not have an unqualified right to force a partition as a co-tenant, and that the denial without prejudice was not error because it was speculative to assert that circumstances were not likely to change in the future. In re: That Portion of the Ward Family Trust for the Benefit of Michael Edward Ward, 1241 WDA 2023 (Pa. Super. 7/30/2024).

Extension of Involuntary Commitment Reversed

Posted on by August 18, 2024

An extension of an involuntary commitment under section 303 of the Mental Health Procedures Act, 50 Pa.C.S. 7303, requires clear and convincing evidence that the person is a danger to herself and others. The commitment order is not moot and is appealable even though the patient is no longer in custody because the sufficiency of evidence for a temporary commitment is a legal question that is “capable of repetition and yet apt to evade review.” In this case, the testimony of the doctor showed only “the mere presence of mental illness” and insufficient facts to prove a danger of self-harm. In re: J.G., ___ A.3d ____, 2024 PA Super 173 (8/8/2024).

Decree Invalidating Power of Attorney is Appealable

Posted on by August 18, 2024

A judgment declaring a power of attorney to be invalid and ordering the purported agent to return property to the estate of the decedent is a final appealable order, but the appeal will be dismissed when the record on appeal fails to include a transcript of the hearing which produced the testimony which is the subject of the appeal. David Paul Washinsky, Executor of the Estate of Paul Washinsky v. Thomas Nicholas Washinsky, 468 WDA 2023 (Pa. Super. 8/6/2024) (non-precedential).

Guardian Properly Represented Divorcing Spouse

Posted on by August 12, 2024

Husband filed for divorce and died after grounds for divorce were established, so equitable division of marital property was determined in accordance with the Divorce Code. The husband had initiated the divorce proceedings and participated in the proceedings for nearly three years without any question raised about his mental competency, which was only questioned after grounds for divorce were established. A guardian for the husband was appointed, and his guardian represented the husband’s interests even though she was never a named party to the proceedings, so the divorce proceedings did not need to be dismissed and the equitable distribution award will not be set aside. Other issues raised on appeal were deemed to have been waived. DiLucente v. DiLucente, 1138 WDA 2023 and 1139 WDA 2023 (Pa. Super. 7/30/2024) (non-precedential).

Credibility Determinations Affirmed

Posted on by August 11, 2024

The Orphans’ Court denied the objections to the executor’s account based upon the testimony of the executor which the court found to be credible, and the court did not find the testimony of the objectant and the objectant’s son to be credible. The court’s factual findings and credibility determinations were supported by the record and will not be disturbed on appeal. The objectant argued that account statements were “missing” that were needed to determine “where the missing money went” while the executor served as the decedent’s agent, but the objectant failed to raise any discovery issues and so failed to meet her burden of proof. In re: Estate of Aileen Minnock, Deceased, 1386 WDA 2023 (7/30/2024) (non-precedential).

Decedent Did Not Substantially Comply with Beneficiary Designation Requirements

Posted on by August 11, 2024

The Orphans’ Court properly entered a judgment on the pleadings denying a petition to change the beneficiaries of the decedent’s individual retirement account (IRA) when the decedent did not comply with the change of beneficiary procedures required by the custodian of the IRA and the petition relied instead upon a note found after the decedent’s death that was written on the back of an envelope, which the court found was inconsistent with her prior emails to the custodian and was too ambiguous to support a finding that the decedent had done all she reasonably could to comply with the custodian’s procedures to change the beneficiaries. Estate of Carol D. Stanley, 1424 WDA 2023 (8/5/2024) (non-precedential).

Amended Rules for Orphans’ Court Appeals

Posted on by August 11, 2024

The Pa. Rules of Appellate Procedure have been amended to define “Orphans’ Court appeal,” provide a new rule for determining the date on which Orphans’ Court orders have been entered, and require that the notice of appeal from the Orphans’ Court include a statement that the appeal is an Orphans’ Court appeal. “Order Amending Rules 102, 108, and 904 of the Pennsylvania Rules of Appellate Procedure; No. 312 Appellate Procedural Rules Docket” (7/26/2024), 54 Pa.B. 5079 (8/10/2024).

Guardianship Decree Unsupported by Statute

Posted on by July 23, 2024

The appointment of a “guardian ad litem” to manage the financial affairs and make medical decisions for the alleged incapacitated person was vacated when three years had elapsed from the initial petition, there was no record of any notice to the alleged incapacitated person, and there was no finding of incapacity, because the appointment was not authorized by 20 Pa.C.S. §§ 5511 or 5513 or by the rules of court for the appointment of guardians ad litem. Estate of J.L.C., an Alleged Incapacitated Person, 2024 PA Super 151, ___ A.3d ___ (7/22/2024).

Sale of Residence Affirmed

Posted on by July 23, 2024

It was proper for the Orphans’ Court to approve the sale of the decedent’s residence to a third party for $150,000 rather than allow the heir who occupied the property to purchase her half of the property in monthly installments of $1,000 because the sale to the third party would provide cash to the estate that would allow the administrator “to alleviate the ongoing expenses of the residence, to settle the debts of the estate, to pay the inheritance tax, and to make appropriate distribution of the remaining balance of the estate funds to the heirs, all within a reasonable time.” In re: Estate of Constance Grace Patterson, 1173 WDA 2023 (Pa. Super. 7/22/2024) (non-precedential).