Special Needs Trusts and Other Sources of Support

When two trusts for the same beneficiary have different remaindermen, and one trust is a special needs trust created by her parents and the other is a self-settled irrevocable special needs trust, the court found that the intentions of the settlors, as expressed in the trust documents, were that the (larger) parents’ trust should first be spent for the care of the beneficiary until both trusts were equal in value.  When both trusts became equal, the remainder beneficiaries may provide trustees with evidence of “probable future needs” to allow the trustees to consider in determining whether to continue to pay all of the beneficiary’s expenses from the parents’ trust or pay some expenses from the self-settled trust.  Brennen Trusts, 4 Fid. Rep. 3d 146 (O.C. Lehigh 2014) (Opinion by Johnson, J.)

Carbon Co. Access Fees

Carbon County has adopted an an administrative order imposing an annual fee of $300 for remote access to the dockets and images of documents filed with the Prothonotary and the Register of Wills and Orphans’ Court.

Establishment of Remote Access Fee to Records Filed in the Prothonotary’s Office and the Register of Wills/Orphans Court Office, Nos. 14-0619 and 14-9101, Administrative Order No. 10-2014 (4/4/2014), 44 Pa.B. 2515 (4/26/2014).

IRS Guidance on Retirement Benefits for Same-Sex Couples

IRS Notice 2014-19 provides guidance on the application (including the retroactive application) of the decision in United States v. Windsor, 570 U.S. ___, 133 S. Ct. 2675 (2013), and the holdings of Rev. Rul. 2013-17, 2013-38 I.R.B. 201 (Sept. 16, 2013), to retirement plans qualified under section 401(a) of the Internal Revenue Code (Code).

Notice 2014-19 will be in 2014-17, dated April 21, 2014.

NY Estate Tax Exclusion Increases

On March 31, the New York legislature passed Senate Bill 6359 and the identical Assembly Bill 8559, and Governor Cuomo signed them into law, increasing the NY estate tax exclusion from $1,000,000 to $5,250,000 over the next four years.  Specifically, the estate tax exclusion will be:

  • $2,062,500 for decedents dying on or after 4/1/2014
  • $3,125,000 for decedents dying on or after 4/1/2015
  • $4,187,500 for decedents dying on or after 4/1/2016
  • $5,250,000 for decedents dying on or after 4/1/2017

The intention was to bring the NY exclusion into line with the federal exclusion, which was $5,250,000. But the federal exclusion is adjusted for inflation each year, and has changed to $5,340,000 in 2014, so it will certainly be more than $5,250,000 by the time NY reaches that exclusion amount in 2017. DBE

Pre-Objections Discovery

After an account had been filed and before objections, executor petitioned for discovery (specifically interrogatories) from fiduciary of decedent, and court found pre-complaint discovery in civil court analogous and granted petition.  Robinson Estate, 4 Fid. Rep. 3d 105 (O.C. Monroe 2014) (Opinion by Williamson, J.)

Delay in Estate Administration And Removal

In petition to remove executor and stop sale of real property for mismanagement, waste, and delay, the court found the executor to be acting reasonably and not wasting or mismanaging estate; petitioners also wanted bond posted as the executor spent a majority of his time out of state, but the court found that the executor’s residence was Pennsylvania and denied bond.  Mutchler Estate, 4 Fid. Rep. 3d 107 (O.C. Monroe 2014) (Opinion by Williamson, J.)

Irrevocable Trust Created under Power of Attorney a Legal Nullity

Agent under durable power of attorney established irrevocable trust, which denied the right of the principal to the trust’s principal.  Principal objected to the trust, and the trust was terminated.  Following principal’s death, former agent petitioned to have the trust restored, and the court held that the power of attorney did not explicitly give the power to create an irrevocable trust and that PEF 5603(b) specifically forbids an agent from creating an irrevocable trust, making the trust a legal nullity.  In the alternative, the court held that the trust was properly terminated under PEF 5603(b)(2) and that the petitioner is barred by the doctrine of accord, satisfaction or release.  Edler Estate, 4 Fid. Rep. 3d 113 (O.C. Lycoming 2014) (Opinion by Lovecchio, J.)

Same-Sex Marriages in Michigan

Attorney General Eric Holder has announced that the federal government will recognize the same-sex marriages that were performed in Michigan after the ruling of a federal judge went into effect and before the ruling was stayed, even though Michigan itself will not.  This is consistent with the position previously taken on marriages in Utah, and the general recognition by the federal government that same-sex marriages will be given effect if legal when entered into even if the couple lives in a state that does not recognize same-sex marriages.  DBE