When the will unambiguously left the testator’s estate to his four children in equal shares, it was error for the court to interpret the will to treat gifts made by the testator’s agent after the execution of the will as “advancements” that reduced the donees’ shares of the estate. It was also error for the court to sua sponte order that a joint account be included in the executor’s account as an asset of the estate when no party had raised the issue. In re: Estate of Alexander T. Tscherneff, 2019 PA Super 25 (2/1/2019).
Bedford County has entered an administrative order designating a “Guardianship Compliance Officer” to be responsible for enforcing the filing of inventories and reports in accordance with Pa. O.C. Rule 14.8(f). “Guardianship Compliance Officer; No. AD 1 for the Year 2019” (Bedford Co. C.P. 1/8/2019), 49 Pa.B. 445 (2/2/2019).
Note: Although the administrative order states that it will be effective 30 days after publication in the Pennsylvania Bulletin, the Pa. O.C. Rule 14.8 that the order is intended to enforce will not be effective until June 1, 2019.
The Supreme Court Orphans’ Court Procedural Rules Committee is planning to propose a new Pa.O.C. Rule 5.50 to specify the contents of a petition to settle a small estate in accordance with 20 Pa.C.S. § 3102.
Any comments on the proposed rule should be submitted by March 4, 2019.
“Proposed Adoption of Pa. O.C. Rule 5.50,” 49 Pa.B. 444 (2/2/2019).
The denial of a petition for an agent to account is a final order which is appealable as of right. Although the petitioner was an intestate heir of the principal, she did not have standing to demand an accounting by the agent when the agent produced a will (not yet probated) by which the principal left his estate to the agent. The remedy of the petitioner was to compel the probate of the will and contest the will in order to obtain standing, and then petition to obtain an accounting by the agent. In re: Allen Nadzam, Deceased, 203 A.3d 215, 2019 PA Super 14 (1/14/2019).
Trust document was interpreted to give grandchildren all of the trust income following their mother’s death, even though document provided for shares of income to other persons who predeceased the mother and directed that upon the death of an income beneficiary a share of principal shall be paid to charity, because the grandchildren were entitled to the “balance of income” not payable to the other named beneficiaries. However, award of legal fees to grandchildren was an abuse of discretion and reversed. In re: Insurance Trust Agreement of Frank P. Sawders, Jr., 2018 PA Super 345 (12/18/2018).
The following chart shows the status of legislation introduced in the 2017-2018 session of the Pennsylvania legislature that might be of interest to estate and trust practitioners. Click on the bill number to see the history or text of the bill.
| Bill | Purpose/Subject | Adds/Amends | Last House Action | Last Senate Action | Act |
|---|---|---|---|---|---|
| HB 30 | Facilitates organ donations | Amends 20 Pa.C.S. § 5471 and Ch. 86 | Referred to Judiciary (5/23/17) | ||
| HB 56 | New provisions for adoption-related counseling | Repeals 23 Pa.C.S. § 2505 and adds 23 Pa.C.S. § 2506 | Third consideration and final passage (3/13/17) | Amended on third consideration (6/20/18) | |
| HB 57 | New notice and consent procedures for termination of parental rights in adoptions | Amends 23 Pa.C.S. §§ 2102, 2503, 2512, and 2711, adds § 2514, and deletes § 2712 | Third consideration and final passage (3/13/17) | Referred to consideration (3/20/17) | |
| HB 58 | New procedures for report of intention to adopt, consents, and notices | Amends 23 Pa.C.S. §§ 2531, 2711, and 2721, adds § 2514, and deletes § 2712 | Third consideration and final passage (3/13/17) | Referred to Judiciary (3/20/17) | |
| HB 59 | Provides for appeals of adoption subsidies | Adds § 774(d) to Humans Services Code (Act of June 13, 1967, No. 21) | Signed in House (10/17/17) | Signed in Senate (10/18/17) | Vetoed by the Governor (10/19/17) |
| HB 60 | Provides for reimbursements to intermediaries in adoptions | Adds 23 Pa.C.S. § 2726 | Referred to Children and Youth (1/24/17) | ||
| HB 61 | Provides for adoptions consents by incarcerated parents | Amends 23 Pa.C.S. § 2711(d) | Third consideration and final passage (3/13/17) | Amended on third consideration (6/20/18) | |
| HB 62 | Amends procedures for parents to consent to adoption | Amends 23 Pa.C.S. § 2504 | Third consideration and final passage (3/13/17) | Referred to Judiciary (3/20/17) | |
| HB 63 | Amends definition of "intermediary" in adoptions to include attorney and licensed social workers | Amends 23 Pa.C.S. § 2102 | Third consideration and final passage (3/13/17) | Reported as committed from Judiciary; first consideration (3/27/18) | |
| HB 102 | Makes audiovisual records of autopsies confidential | New 20 Pa.C.S. Ch. 89 | Referred to Judiciary (1/23/17) | ||
| HB 143 | Exempts transfers of $250,000 or less from inheritance tax | Amends § 2106 of the Tax Reform Code of 1971 | Referred to Finance (1/23/17) | ||
| HB 144 | Exempts certain kinds of printing and mailing activities from "fundraising activities" | Amends § 6(a)(3) of the Solicitation of Funds for Charitable Purposes Act | Third consideration and final passage (4/24/17) | Reported from Finance and first consideration (6/13/17) | |
| HB 152 | Establishes a central database of life insurance policies | Adds 40 Pa.C.S. § 102 | House concurred in Senate amendments; signed in House (6/18/18) | Signed in Senate (6/19/18) | Act 48 (6/28/2018) |
| HB 203 | Increases the amount of wages that may be paid to family from $5,000 to $10,000 | Amends 20 Pa.C.S. § 3101(a) | House concurred in Senate amendments, and signed in House (10/25/17) | Signed in the Senate (10/25/17) | Act 41 (10/30/17) |
| HB 233 | Requires fiduciaries to withhold tax on Pa. source income distributed to nonresident beneficiaries | Amends §§ 324 and 335 of the Tax Reform Code of 1971 | Referred to Finance (1/31/17) | ||
| HB 242 | Allows grandchildren to receive unclaimed property of $5,000 or less | Adds 20 Pa.C.S. § 3101(e)(1.1) | Referred to Judiciary (1/31/17) | ||
| HB 243 | Adds drug and alcohol abuse as grounds for involuntary termination of parental rights | Amends 23 Pa.C.S. §§ 2511 and 6351 | Referred to Judiciary (1/31/17) | ||
| HB 289 | Amends procedures for interim adoption placements, contents of petitions, and permissible payments to birth mothers | Amends 23 Pa.C.S. §§ 2530, 2701, 2702, and 2901, repeals §§ 2533 and 2534, and adds § 2726 | Third consideration and final passage (3/13/17) | Re-reported from Appropriations (10/1/18) | |
| HB 291 | Sets inheritance tax rate of 0% for transfers to children under 21 (See also SB 598) | Amends § 2116 of the Tax Reform Code of 1971 | Re-reported from Appropriations, third consideration and final passage (4/4/17) | Reported as committed from Finance; first consideration (1/31/18) | |
| HB 299 | Provides notices and acknowledgements of possible criminal penalties for agents who abuse the elderly | Amends 20 Pa.C.S. §§ 5601(c) and (d) and 5604(d), | Referred to Judiciary (3/6/17) | ||
| HB 342 | Prohibits purely public charities from entering into restrictive covenants | Amends §§ 3 and 5 of the Institutions of Purely Public Charity Act (No. 55 of 1997) | Referred to Finance (2/6/17) | ||
| HB 383 | Allows for disposition of decedent's remains by majority of persons with equal standing | Amends 20 Pa.C.S. § 305(d)(2) | Re-reported from Rules (9/8/17) | ||
| HB 390 | Increases exemption threshold for registration under Solicitation of Funds for Charitable Purposes Act from $25,000 to $50,000 in gross annual receipts | Amends sections 5(p), 6(a)(8), and 7(a)(3) of Solicitation of Funds for Charitable Purposes Act | Referred to State Government (2/7/17) | ||
| HB 415 | Eliminates inheritance tax for children with disabilities | Amends sections 2012 and 2116 of the Tax Reform Code of 1971 (No. 2 of 1971). | Reported as amended by Finance; first consideration (4/17/18) | ||
| HB 462 | Regarding disqualifications for sales and use tax exemptions for purely public charities | Amends section 11 of the Institutions of Purely Public Charity Act (No. 55 of 1997) | Referred to Finance (2/13/17) | ||
| HB 474 | Eliminates liability of spouses, children, and parents for the support of the indigent | Repeals 23 Pa.C.S. § 4603 | Referred to Judiciary (2/13/17) | ||
| HB 748 | Excludes state universities and other institutions of higher education for real estate tax exemption | Amends the Institutions of Purely Public Charity Act (No. 55 of 1997) | Referred to Finance (3/7/17) | ||
| HB 844 | Prohibits employees of long-term care facilities from becoming guardians, agents, executors, or beneficiaries of long-term care consumers | Enacts the "Long-Term Care Consumer Financial Interest Prohibition Act" | Referred to Aging and Older Adult Services (3/13/17) | ||
| HB 855 | Protects the rights of parents to control the upbringing of their children against infringement by government | Enacts the "Parental Rights Protection Act" | Referred to Children and Youth (3/13/17) | ||
| HB 967 | Amends the inheritance tax exemption for family owned farms | Amends §§ 2002 and 2111(s) and (s.2) of the Tax Reform Code of 1971 | Referred to Finance (3/27/17) | ||
| HB 1019 | Provides for transfer of ownership of cemeteries and for reasonable access to private burial grounds | Amends 9 Pa.C.S. 101 and adds Chs. 5 and 7. | Third consideration and final passage (7/7/17) | Third consideration and final passage (11/15/17) | Act 64 (12/21/17) |
| HB 1164 | Allows grandchildren to close bank accounts of less than $10,000 | Amends 20 Pa.C.S. § 3101(a) | Referred to Judiciary (4/12/17) | ||
| HB 1196 | Enacts new provisions for "Pennsylvania orders for life-sustaining treatment" (POLST) | Amends 20 Pa.C.S. Ch. 54 and adds a new Subchapter F | Re-referred to Health (9/26/17) | ||
| HB 1360 | Adds licensing, disclosures, and prohibitions for third party solicitors, increases requirements, penalties, and fees for annual registrations, and adds disclosures for solicitations for specific disasters or crises. | Amends section 3 of the Solicitation of Funds for Charitable Purposes Act | Referred to Commerce (5/11/17) | ||
| HB 1385 | Limits income tax deduction for contributions to section 529 tuition assistance plans to Pennsylvania's PA 529 College Savings Program. | Amends section 303(a.7) of the Tax Reform Code of 1971, No. 2 of 1971. | Re-reported from Rules (9/8/17) | ||
| HB 1397 | Explands definition of "exploitation" of older adults to include conduct by an individual acting under a power of attorney. | Amends section 103 of the Older Adults Protective Services Act, No. 79 of 1987. | Referred to Aging and Older Adult Services (5/18/17) | ||
| HB 1420 | Aligns audit requirements for charitable organizations with federal law | Amends section 5(f) of the Solicitation of Funds for Charitable Purposes Act | Third consideration and final passage (6/14/17) | Third consideration and final passage (12/13/17) | Act 71 (12/22/17) |
| HB 1421 | Allows timely registrations of charitable organizations if postmarked by renewal date | Amends sections 5, 8, and 9 of the Solicitation of Funds for Charitable Purposes Act | Third consideration and final passage (6/14/17) | Third consideration and final passage (12/13/17) | Act 72 (12/22/17) |
| HB 1445 | Creates an income tax deduction for contributions to ABLE Savings Accounts | New "Pennsylvania ABLE Savings Program Tax Exemption Act" | Referred to Finance (5/24/17) | ||
| HB 1462 | Exempts transfers of $100,000 or less from inheritance tax | Amends § 2106 of the Tax Reform Code of 1971 (Act 2 of 1971) | Referred to Finance (5/31/17) | ||
| HB 1509 | Extends stand-by guardians for minors for "long-term absence" | Amends 23 Pa.C.S. §§ 5602 and 5612 | Referred to Children and Youth (6/12/17) | ||
| HB 1596 | Increases Uniform Transfer to Minors Act limit on transfers by fiduciaries from $25,000 to $50,000 | Amends 20 Pa.C.S. § 5306(c)(3) | Referred to Judiciary( 6/21/17) | ||
| HB 1885 | Allows the Register of Wills to increase the bond required after an inventory or inheritance tax return is filed | Amends 20 Pa.C.S. § 3175 | Third consideration and final passage (4/10/18); House concurred in Senate amendments (10/17/18) | Third consideration and final passage (10/16/18) | Act. No. 113 (10/24/2018) |
| HB 1886 | Requires tracking and review of annual reports of guardians | Adds 20 Pa.C.S. § 5521(c)(3) and (4) | Third consideration and final passage (4/10/18) | Third consideration and final passage (10/17/18) | Act. No. 114 (10/24/2018) |
| HB 1903 | Requires advertisement of grant of letters on the website of the Register of Wills | Amends 20 Pa.C.S. § 3162(a) | Referred to Judiciary( 11/6/17) | ||
| SB 99 | Regulates collection bins for donations of clothing and household items | Adds new section 13.1 to the Solicitation of Funds for Charitable Purposes Act | Reported as amended from State Government; first consideration (10/17/17) | ||
| SB 108 | Protects the right of the disabled to receive organ donations | Adds 20 Pa.C.S. § 8613(g). | Third consideration and final passage (10/10/18) | Third consideration and final passage (5/22/17) | |
| SB 113 | Visitation and communication between incapacitated persons and relatives | Adds a Subchapter G to 20 Pa.C.S. Ch. 55 | Referred to Judiciary (11/17/17) | Third consideration and final passage (11/15/17) | |
| SB 180 | Expands who may make or receive organ donations, how organ donations are made, and other changes | Amends 20 Pa.C.S. Ch. 86 | House concurred in Senate amendments (10/10/18) | Senate concurred in House amendments, as amended by Senate (10/2/18) | Act 90 (10/23/2018) |
| SB 197 | Provides for 50% joint and survivor annuity benefit for state employee retirement plans unless spouse consents | Amends 24 Pa.C.S. §§ 8345, 8347, 8349, 8505, and 8507 and 71 Pa.C.S. §§ 5705, 5707, 5709, 5905, and 5907 | Referred to Finance (1/26/17) | ||
| SB 218 | Creates and registry of living wills for use by doctors | Amends 20 Pa.C.S. Ch. 54 | Referred to Judiciary (1/31/17) | ||
| SB 238 | Allows physician-assisted suicide for terminally ill | Adds 20 Pa.C.S. Ch. 54B | Referred to Judiciary (1/26/17) | ||
| SB 423 | Increases the percentage of inheritance tax collected by the Register of Wills that is kept by the county | Amends Section 21 of the Transfer Inheritance Tax Law, No. 258 of 1919. | Referred to Finance (2/27/17) | ||
| SB 506 | Phases out the inheritance tax for siblings | Amends Section 2216(a)(1.3) of the Tax Reform Code of 1971 | Referred to Finance (3/10/17) | ||
| SB 598 | Sets inheritance tax rate of 0% for transfers to children under 21 (See also HB 291) | Amends Section 2116(a) of the Tax Reform Code of 1971. | Referred to Finance (4/13/17) | ||
| SB 623 | Implements Pa. Orders for LIfe Sustaining Treatment (POLST) | Amends 20 Pa.C.S. Ch. 54 and enacts new Subchapter F | Referred to Health (10/3/18) | Third consideration and final passage (10/1/18) | |
| SB 677 | Provides income tax exemption for ABLE (Achieving a Better Life Experience) accounts (See HB 1445) | New "Pennsylvania ABLE Savings Program Exemption Act" | Referred to Finance (7/11/17) | Third consideration and final passage (7/10/17) | |
| SB 718 | Allows taxation of land (not buildings) owned by charities with total value in excess of $500,000 | Amends the Institutions of Purely Public Charity Act, No. 55 of 1997. | Referred to Finance (5/12/17) | ||
| SB 827 | Enacts the Revised Uniform Fiduciary Access to Digital Assets Act (2015) | Amends 20 Pa.C.S. §§ 711 and 5601.4 and adds new 20 Pa.C.S. Ch. 39 | Referred to Judiciary (1/24/18) | Third consideration and final passage (1/22/18) | |
| SB 861 | Sets inheritance tax rate of 0% for transfers to or in trust for disabled children | Amends Sections 2102 and 2116(a) of the Tax Reform Code of 1971 | Referred to Finance (8/29/17) | ||
| SB 884 | Amendments to guardianship procedures, and powers and duties of guardians, recommended by JSGC Advisory Committee on Decedent's Estates | Amends 20 Pa.C.S. §§ 751 and 752 and Ch. 55 | Re-reported from Appropriations (6/4/18) | ||
| SB 946 | Raises thresholds for requiring audits or reviews of financial statements of charitable organizations soliciting contributions | Amends § 5(f) of the Solicitation of Funds for Charitable Purposes Act | Referred to State Government (11/15/17) | ||
| SB 1207 | Identifies persons with standing to challenge actions of agent under power of attorney | Adds new 20 Pa.C.S. § 5615 | First consideration (10/2/18) |
The Supreme Court has granted certiorari in the appeal of the North Carolina Department of Revenue in North Carolina Department of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, 814 S.E.2d 43 (N.C. 2018), No. 18-457 (U.S.S.C. 1/11/2018).
The North Carolina Supreme Court had held that the imposition of an income tax on the undistributed income of a New York trust merely because a beneficiary of the trust resided in North Carolina violated the due process clause of the U.S. Constitution. The trust was created by a New York resident under New York law, the trustee resided in Connecticut, the trust assets were marketable securities held by a custodian in Massachusetts, and the beneficiary who had moved to North Carolina after the trust was created had no power to withdraw any income or principal of the trust.
The “questions presented” (taken from the petition for cert.) is as follows:
More than $120 billion of our nation’s income flows through trusts. That income is a vital source of tax revenue for the states. Eleven states, including North Carolina, tax trust income when a trust’s beneficiaries are state residents.
For the last ninety years, however, this Court has been silent on whether these taxes comport with due process. The Court’s last words on the subject come from the Pennoyer era of due-process analysis. Pennoyer v. Neff, 95 U.S. 714 (1878). As a result, lower courts and state taxing authorities have been searching in vain for modern guidance.
There is now a direct split spanning nine states. Four state courts have held that the Due Process Clause allows states to tax trusts based on trust beneficiaries’ in-state residency. Five state courts, including two state supreme courts this year, have concluded that the Due Process Clause forbids these taxes.
The Due Process Clause should not have different meanings in different states particularly when billions of dollars of state-tax revenue hang in the balance. The question presented to this Court is:
Does the Due Process Clause prohibit states from taxing trusts based on trust beneficiaries’ in-state residency?
The court was not required to accept the option of a psychologist as to incapacity when the psychologist administered a single test and did not examine medical records, the alleged incapacitated person appeared in court and provided lucid and compelling testimony, and the alleged incapacitated persons son and other friends and relatives were adequately caring for her, so denial of the petition for adjudication of incapacity was supported by the weight of the evidence. Estate of Rose Phillips, an Alleged Incapacitated Person, 8 Fid.Rep.3d, No. 539AI of 2017 (O.C. Philadelphia 2017), aff’d 2331 EDA 2017 (Pa. Super. 11/14/2018) (non-precedential).
Large transfers shortly before the death of the decedent into joint accounts with the decedent’s daughter, arranged by the daughter while the decedent was gravely ill, could not have been an intentional act of the decedent, and was the product of undue influence by the daughter. A change of beneficiary for an IRA account was similarly defective. All compensation for the daughter as executor, and her husband as attorney, was denied for negligent, deceptive, and fraudulent conduct. Estate of Joan Marden, Deceased; Estate of Jack M. Marden, Deceased, 8 Fid.Rep.3d 319 (O.C. Montgomery Co. 2018).
Testamentary gift to disbanded volunteer ambulance association was awarded under the cy pres doctrine to a volunteer fire department providing first responder services to the same community. Estate of Kendell B. Cramer, Deceased, 8 Fid.Rep.3d 315 (O.C. Monroe Co. 2018)