Chester County has published new fees schedules for the Register of Wills and the Orphans’ Court. Both schedules are effective 2/1/2017. “Fee Bill for the Office of Register of Wills and Clerk of Orphans’ Court,” No. 1516-9999, 46 Pa.B. 8027 (Chester Co. 12/24/2016).
Pennsylvania courts have jurisdiction to dissolve a Vermont civil union because it is the “functional equivalent” of marriage. Neyman v. Buckley, 2016 PA Super 307 (12/28/2016). (The Montgomery Co. Court of Common Pleas had reached the opposite conclusion in Corrado v. Musto, 6 Fid.Rep.3d 237, 153 Montg. 173, No. 2015-14981 (Fam.Div., 9/24/2015), app. discontinued, 3101 EDA 2015.)
The IRS has issued another private letter ruling granting retroactive tax effect to a judicial modification of a trust.
In PLR 201652002, the IRS granted retroactive effect to a court “reformation” under Uniform Trust Code § 416, which allows a court to “modify” a trust in order to carry out the settlor’s tax objectives. The trusts in question were expressly intended to be grantor retained annuity trusts, but failed to prohibit the trustee from issuing a note or other financial instrument in satisfaction of an annuity payment, which failure was a violation of Treas. Reg. § 25.2702-3(d)(6). The IRS concluded that the judicial reformation was to correct a “scrivener’s error,” and that as a result of the reformation, the grantor’s interest in the trust was a qualified interest as of the date the trusts were created. This was a generous result, because for the reasons explained in my article “Tax Effects of Retroactive Reformations and Modifications,” the taxpayer should have sought a reformation under UTC § 415 and not a trust modification under UTC § 416.
The “21st Century Cures Act,” H.R. 34, which was signed into law on December 13, 2016, becoming P.L. 114-255, made a change to the Social Security Act in order to allow people with disabilities to create their own Medicaid-qualifying trusts without court approval.
Specifically, section 5007 of the Act provides as follows::
‘SEC. 5007. FAIRNESS IN MEDICAID SUPPLEMENTAL NEEDS TRUSTS.
‘(a) IN GENERAL.—Section 1917(d)(4)(A) of the Social Security Act (42 U.S.C. 1396p(d)(4)(A)) is amended by inserting ‘‘the individual,’’ after ‘‘for the benefit of such individual by’’.
‘(b) EFFECTIVE DATE.—The amendment made by subsection (a) shall apply to trusts established on or after the date of the enactment of this Act.’
Before this amendment, the relevant section of the Social Security Act referred to a trust established “for the benefit of such individual by a parent, grandparent, legal guardian of the individual, or a court….” So persons with disabilities who were nevertheless legally competent could add their assets to a trust created by a parent, grandparent, etc., but could not establish the trust themselves.
Although the Adoption Act contains no provisions allowing an adult adoption to be annulled, the Orphans’ Court nevertheless has the power to annul an adult adoption with the consent of both parties in order to allow the parties to enter into a same-sex marriage. In re: Adoption of: R.A.B., Jr., 2016 PA Super 295 (12/21/2016).
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— Short Term Rates for 2016 —
| Month | Annual | Semiann. | Quarterly | Monthly |
|---|---|---|---|---|
| Jan. | 0.75% | 0.75% | 0.75% | 0.75% |
| Feb. | 0.81% | 0.81% | 0.81% | 0.81% |
| March | 0.65% | 0.65% | 0.65% | 0.65% |
| April | 0.70% | 0.70% | 0.70% | 0.70% |
| May | 0.67% | 0.67% | 0.67% | 0.67% |
| June | 0.64% | 0.64% | 0.64% | 0.64% |
| July | 0.71% | 0.71% | 0.71% | 0.71% |
| Aug. | 0.56% | 0.56% | 0.56% | 0.56% |
| Sept. | 0.61% | 0.61% | 0.61% | 0.61% |
| Oct. | 0.66% | 0.66% | 0.66% | 0.66% |
| Nov. | 0.68% | 0.68% | 0.68% | 0.68% |
| Dec. | 0.74% | 0.74% | 0.74% | 0.74% |
— Mid Term Rates for 2016 —
| Month | Annual | Semiann. | Quarterly | Monthly |
|---|---|---|---|---|
| Jan. | 1.81% | 1.80% | 1.80% | 1.79% |
| Feb. | 1.82% | 1.81% | 1.81% | 1.80% |
| March | 1.48% | 1.47% | 1.47% | 1.47% |
| April | 1.45% | 1.44% | 1.44% | 1.44% |
| May | 1.43% | 1.42% | 1.42% | 1.42% |
| June | 1.41% | 1.41% | 1.41% | 1.41% |
| July | 1.43% | 1.42% | 1.42% | 1.42% |
| Aug. | 1.18% | 1.18% | 1.18% | 1.18% |
| Sept. | 1.22% | 1.22% | 1.22% | 1.22% |
| Oct. | 1.29% | 1.29% | 1.29% | 1.29% |
| Nov. | 1.33% | 1.33% | 1.33% | 1.33% |
| Dec. | 1.47% | 1.46% | 1.46% | 1.46% |
— Long Term Rates for 2016 —
| Month | Annual | Semiann. | Quarterly | Monthly |
|---|---|---|---|---|
| Jan. | 2.65% | 2.63% | 2.62% | 2.62% |
| Feb. | 2.62% | 2.60% | 2.59% | 2.59% |
| March | 2.33% | 2.32% | 2.31% | 2.31% |
| April | 2.25% | 2.24% | 2.23% | 2.23% |
| May | 2.24% | 2.23% | 2.22% | 2.22% |
| June | 2.24% | 2.23% | 2.22% | 2.22% |
| July | 2.18% | 2.17% | 2.16% | 2.16% |
| Aug. | 1.90% | 1.89% | 1.89% | 1.88% |
| Sept. | 1.90% | 1.89% | 1.89% | 1.88% |
| Oct. | 1.95% | 1.94% | 1.94% | 1.93% |
| Nov. | 2.07% | 2.06% | 2.05% | 2.05% |
| Dec. | 2.26% | 2.25% | 2.24% | 2.24% |
Under Act 95 of 2016 (H.B. 1605), which became effective last Saturday, inactive individual retirement accounts (IRAs) can escheat to the Pennsylvania Treasury even though the account owner is under age 70-1/2 and not required to take distributions.
Under the previous version of section 1301.8 of the Fiscal Code (Act of April 9, 1929, P.L. 343, No. 176), an individual retirement account or self-employed plan would be not be considered to be “abandoned and unclaimed” until at least three years after the owner has attained age 70-1/2, which is the age when mandatory distributions are required under the Internal Revenue Code and regulations.
Under the amended section 1301.8, an IRA will be considered to be “abandoned and unclaimed” three years after the holder has “lost contact” with the account owner, unless the account owner has begun taking distributions, increased or decreased the principal, received a payment of income or principal, or has “otherwise indicated an interest in the account or plan or in other property of the owner in possession, custody or control of the holder.”
The “date on which the holder has lost contact with the owner” is defined by the statute and refers to dates when mail is returned undelivered. And a new section 1301.10A imposes an obligation on holders of unclaimed property to send notices to the owners of the property before sending the unclaimed property to the state.
The new section 1301.8 also refers specifically to attorneys-in-fact as well as fiduciaries generally.
Act 95 is a general revision of the Fiscal Code that was enacted as part of the budget process, and the change to the unclaimed property rules seems to an attempt to increase the collection of abandoned or unclaimed property, which the state apparently considers to be a form of revenue.
Cumberland County has published new fees schedules for the Register of Wills and the Orphans’ Court. Both schedules are effective 1/1/2017.
“Register of Wills Fee Schedule; 21-16-1253,” 46 Pa.B. 7812 (Cumberland Co. 12/17/2016).
“Orphans’ Court Fee Schedule; 21-16-1253,” 46 Pa.B. 7811 (Cumberland Co. 12/17/2016).
An attempted election against a will, made more than six months after probate, is properly dismissed on summary judgment because the claimant must have known whether she and the decedent agreed to be married and so the six month limitation in 20 Pa.C.S. § 2210(b) was not tolled by alleged fraud by the decedent’s children in repeatedly telling her she was merely a “girlfriend.” In re Est. of Tito, 150 A.3d 464, 2016 PA Super 245 (11/15/2016), app. den., 168 A.3d 1274 (2017).
The Orphans’ Court Procedural Rules Committee has released a Notice of Proposed Rulemaking with new proposed rules for guardianship proceedings. “Proposed Amendment of Pa. O.C. Rule 1.5, Proposed Rescission of Pa. O.C. Rules 14.1—14.5 and Orphans’ Court Forms G-01—G-04, Proposed Adoption of New Pa. O.C. Rules 14.1—14.12 and Orphans’ Court Forms G-01—G-07 and Proposed Amendment of the Appendix of Forms,” 46 Pa.B. 7934 (12/17/2016).
The deadline for comments is February 27, 2017.