0% Inheritance Tax Rate for Minors?

Posted on by March 21, 2017

Somewhat to my surprise, a  bill in the Pennsylvania legislature that would reduce the inheritance tax to 0% for transfers to children under the age of 21 (HB 291) has made it out of committee and received its first consideration.

This same bill was introduced in the last session and went nowhere, and seems to have been inspired by a change in 2000 that imposed a 0% tax rate on transfers from minor children to parents.

Leaving aside the weirdness of imposing different taxes on children who are 18 and children who are 22, the measure would also introduce some complexity in the calculations when the residue of an estate goes to children and some are under 21 and some are not.  Like the situation when a charity receives a fraction of the after-tax residue, the tax calculation will become inter-related (or circular) in most cases.

I’m not going to worry about it too much because it hasn’t passed yet (and I hope it doesn’t).

Guardianship, Adoptions, and Abortion Control Rules for Adams County

Adams County has adopted new Orphans’ Court local rules for Chapter 14 (Guardianship of Incapacitated Persons), Chapter 15 (Adoptions) and Chapter 16 (Abortion Control Act), all to be effective 30 days after publication in the Pennsylvania Bulletin, and has amended new Rule 15.6.  “Orphans’ Court Rules; Administrative Order No. 7 of 2017,” (2/2/2017), 47 Pa.B. 1628 (3/18/2017); “Orphans’ Court Rules; Administrative Order No. 7A of 2017,” (3/1/2017), 47 Pa.B. 1630 (3/18/2017).

Applicable Federal Rates Edge Upwards

Posted on by March 16, 2017

The various applicable federal rates (AFRs) published by the Internal Revenue Service, which are used to value life estates, remainders, annuities, and other future interests, as well as intra-family loans, continue to edge upwards.

The new section 7520 rate for April, 2.6%, is the highest since June of 2011, which is almost six years.

See the complete table of 7520 rates and the AFRs for 2017.

Non-Litigating Heir Cannot Challenge Settlement

An intestate heir who does not join in an appeal from the probate of a will has no standing to challenge a settlement agreement between the beneficiary under the will and the other intestate heirs which left the probate of the will intact and required the beneficiary to make payments to the intestate heirs who had appealed from probate.   Ballinger Estate, 7 Fid.Rep.3d 53, No. 545 AP of 2013 (O.C. Philadelphia Co. 11/9/2016), aff’d, 2620 EDA 2016 (Pa. Super. 5/19/2017) (non-precedential)..

Surcharge of Agent Denied

When a power of attorney lacks the notice and acknowledgement required by 20 Pa.C.S. § 5601, the burden is on the agent to show that the actions taken by the agent were in the principal’s best interest. Even though the agent failed to keep records of her transactions, the records of the decedent’s nursing facility showed that the payments from the decedent’s funds were all payments to that facility, except for two gifts to grandchildren, for which there was testimony that the gifts were at the direction of the decedent and consistent with her past practice, and so surcharge was denied.  Estate of Catherine E. Dunn, 8 Fid.Rep.3d 299, Nos. 1544 AP of 2015 and 1544 PR of 2015 (Philadelphia O.C. 1/23/2017).

Gift of Precious Metals not Proved

The daughter of the decedent did not prove ownership of precious metals that were in the decedent’s home at the of his death because she was the only witness to an alleged gift by the decedent to her during her lifetime and her testimony is barred by the Dead Man’s Act.  Even if her testimony were admissible, her self-serving testimony was not credible because she provided no explanation as to why the metals remained in the decedent’s possession after the alleged gift.  Estate of Otto C. Nay Jr., No 1304 DE of 2014 (Philadelphia O.C. 12/15/16).

Lawyer Registration Fee Changes

The Supreme Court has adopted amendments to the Rules of Disciplinary Enforcement that will reduce the annual registration fee for active lawyers from $125 to $120, but increase the annual fee that goes to the Lawyers Fund for Client Security from $45 to $75.  The annual fee for inactive lawyers will also increase, from $70 to $100.  Amendment of Rules 219(a) and (j) and 502(b) of the Rules of Disciplinary Enforcement, No. 149 Disciplinary Rules Doc. (2/15/2017), 47 Pa.B. 1276 (3/4/2017).

Note:  The two fees have added up to $170, and yet lawyers have been required to pay $200 each year.  The third fee that is collected each year is an annual fee of $30 for the IOLTA Board under Rule of Professional Conduct 1.15(u).  With the $5 decrease in the annual registration fee and the $30 increase in the Client Security fee, the new annual total should be $225.

Surviving Spouse Can Compel Portability Election

The Oklahoma Supreme Court has held that a decedent’s unused federal estate tax exclusion amount (referred to in IRC section 2010 as the “deceased spousal unused exclusion amount,” or “DSUE”) is an asset of the decedent’s estate that the administrator of the estate has a fiduciary duty to preserve for the benefit of the surviving spouse by filing a federal estate tax return, even though a prenuptial agreement barred the surviving spouse from being a beneficiary of the estate.  (The surviving spouse had agreed to pay the costs of the required estate tax return.)  In the Matter of the Estate of Vose, 2017 OK 3, 390 P.3d 238 (Okla. 1/31/2017).