Repeal of the Inheritance Tax for Descendants?

Posted on by June 28, 2019

There have been attempts from time to time in the Pennsylvania House of Representatives to repeal the Pennsylvania inheritance tax, but those attempts have always died in the Senate.

It is therefore noteworthy that a bill to repeal the inheritance tax on children, grandchildren, and other lineal descendants (as well as parents and grandparents) has been favorably reported out of the Senate Finance Committee, and has received in its first consideration by the Senate as a whole.

S.B. 28 would phase out the inheritance tax on lineal descendants (and ancestors), which is now 4.5%, by reducing the tax rate by 0.25%, 0.5%, and 1% increments over the next 10 years, ending with a 0% rate effective 7/1/2029. The 12% rate for siblings, and the 15% rate for other beneficiaries, will not be affected.

For information on other pending bills that might be of interest, see Pennsylvania Legislation Pending.

[6/28/2019 Update: Support for S.B. 28 may be undermined by the passage of H.B. 262, which imposes a tax of 0% for children who are age 21 or younger.)

Relevant Evidence and Classifications

Posted on by May 3, 2019

The Supreme Court’s Committee on Rules of Evidence has published a proposed addition to the official comment to Pa.R.E. Rule 401 (“Test for Relevant Evidence”). The new comment would state that:

“Generally, evidence of a person’s race, sex, gender identity or expression, religion, national origin, immigration status, ethnicity, disability, age, sexual orientation, marital status, socioeconomic status, or political affiliation is irrelevant and inadmissible. See Pa.R.E. 402 (evidence not relevant is not admissible). Such evidence may also be subject to analysis under Pa.R.E. 403, concerning unfair prejudice.”

The report on the proposed change explains that the original catalyst for the change was a recommendation on the admissibility of evidence of immigration status, and the report explains why immigration status has usually been considered to be legally irrelevant. The committee then decided to address the more general issue of class prejudice and discrimination, drawing on other legal guidelines to create a more expansive list of classes protected from discrimination by public policy.

The deadline for comments is June 4, 2019.

“Proposed Amendment of the Comment to Pa.R.E. 401,” 49 Pa.B. 2218 (5/4/2019).

Trust Beneficiary as Sole Trustee

When trust document specifically excluded son from discretionary distribution decisions for son’s trust, son may be appointed to serve as a trustee but may not be the sole trustee. It was proper for the corporate trustee who had been appointed to serve “at will” to raise this issue, to delay distributions to the new trustees, and to continue to receive compensation for administering the trust until the issue had been resolved by the court and the account of the corporate trustee had been approved. Griggs Revocable Trust, 9 Fid.Rep.3d 85 (Chester Co. O.C. 2019).

Agent Must Return Joint Accounts

An agent abused her powers, and was ordered to return joint accounts to the estate, when she added the principal’s money to accounts that were in the joint names of her and the principal, knowing that the money would become hers upon the death of the principal, knowing that the principal’s will provided for a different disposition of his money, and without advising the principal of those consequences. Waite Estate, 9 Fid.Rep.3d 75 (Jefferson Co. O.C. 2019), aff’d, 157 WDA 2019 (Super. Ct. 2/24/2020) (non-precedential).

Attorney Registration Late Payment and Collection Fees

The Disciplinary Board of the Supreme Court has announced that, for the 2019-2020 Registration Year, the penalty for failing to complete registration by July 16 will be $200, with an additional $200 penalty for failing to complete registration by August 1. The collection fee for returned checks will be $100.

“Collection Fee and Late Payment Penalty; 2019-2020 Registration Year,” 49 Pa.B. 1999 (4/27/2019).

Trust not Voided for Fraud in Inducement

Posted on by January 25, 2021

Failure to list property addresses in the schedule to an irrevocable trust was not sufficient evidence of fraud in the inducement to void the trust when the corporate owners of the properties were listed and were accurately valued, there being no duty to disclose every individual asset of the corporations.  Passarelli Family Trust, 2019 PA Super 95 (3/28/2019) (en banc), rev’g 7 Fid.Rep.3d 63 (O.C. Chester Co. 2016). (The previous decision of a three-judge panel, 2017 PA Super 366 (11/16/2017), was withdrawn and en banc rearg. granted, 3150 EDA 2016 (1/12/2018).)

Update: An appeal was allowed by the Supreme Court,  235 MAL 2019 (9/11/2019), and the Supreme Court has affirmed, ___ A.3d ___, 71 MAP 2019 (Pa. 12/22/2020).

Out-of-State Conservator without Authority to Contract for Incapacitated Person

Conservator appointed in California did not have authority to bind his conservatee to an arbitration agreement in Pennsylvania when the conservator did not follow the procedures to transfer or register the conservatorship under the Uniform Adult Guardianship and Protective Proceedings Jurisdiction Act, 20 Pa.C.S. Ch. 59. There was also no agency relationship that would allow the conservator to bind the conservatee. McIlwain v. Saber Healthcare Group, Inc., 2019 PA Super 122.