Co-executors of the estate of a deceased lawyer, who had served as his secretaries and performed much of the legal work in the administration of the estate, were allowed as commissions the same percentage of the estate that the decedent had claimed in his own law practice for almost fifty years (5% of the first $100,000, 4% of the next $100,000, and 3% for balance), despite the objections of the Attorney General as parens patriae for the charitable beneficiaries of the estate. Peters Estate, 5 Fid.Rep.3d 265 (O.C. Montour 10/2/2014) (opinion by James, J.), aff’d, No. 1359 MDA 2014 (Pa. Super. 6/17/2015) (non-precedential).
Provisions of will were insufficient to change the beneficiary designation of an individual retirement account (IRA), there being no evidence that the decedent made reasonable efforts to comply with the terms of the account; objections to payments to claimant were overruled where payments by decedent for claimant were carefully documented and there was credible testimony that the payments were loans and not gifts. Sipos Estate, 5 Fid.Rep.3d 256, No. 526 DE of 2013 (O.C. Phila. 3/4/2015) (opinion by Herron, J.).
Surviving spouse lacked standing to appeal from probate of will when spouse had filed for divorce and grounds for divorce had been established, because the spouse was no longer an intestate heir under 20 Pa.C.S. § 2106(a). This was true even though spouse was contesting whether the decedent had been domiciled in Pennsylvania. Beal Estate, 5 Fid.Rep.3d 247, No. 119 AP 2014 (O.C. Phila. 5/4/2015) (opinion by Herron, J.).
According to a recent notice from the Governor’s office (“Regulatory Agenda,” 45 Pa.B. 4063 (7/25/2015)), the Department of Revenue will be promulgating an amendment to remove 61 Pa.Code § 93.101, on the deductibility of medical expenses covered by insurance, because the regulation has been superseded by statute (i.e., 72 P. S. § 9129(k)).
The amendment is expected to be promulgated in October 2015, and the agency contact person is Douglas Berguson (717-346-4633).
Consistent tax basis reporting by the executor of an estate on the federal estate tax return and the beneficiaries of the estate on their individual income tax returns will be required under section 2004 of the Surface Transportation and Veterans Health Care Choice Improvement Act of 2015, H.R. 3236, which has apparently passed both the House and the Senate. [Updated: The bill was signed into law by the President on 7/31, becoming P.L. 114-41..]
Previously, the values reported on the federal estate tax return were “deemed” to be the fair market values of the property passing from the decedent for the purpose of determining the income tax basis for the property under IRC section 1014 (see Treas. Reg. 1.1014-3(a)), but it was not an absolute requirement that the same values be used for federal estate tax and income tax purposes, and there were no specific reporting requirements or specific penalties for applying inconsistent values. H.R. 3236 adds a new subsection 1014(f) which states that the basis of property acquired from a decedent cannot exceed the value finally determined for estate tax purposes, a new section 6035 requiring basis reporting by persons required to file estate tax returns, and adds inconsistent basis reporting to the list of actions for which a 20 percent accuracy-related penalty is imposed under IRC section 6662.
These new provisions apply to property for which an estate tax return is filed after the date of enactment. [Update: Because the bill was signed into law on 7/31/2015, the new rules and reporting requirements apply to returns filed on or after 8/1/2015. Watch this website for suggestions on how to comply with the new reporting requirements.]
Northampton County has published a new administrative order governing the custody of exhibits in its courts, including the Orphans’ Court. The order provides for the confidentiality of exhibits in juvenile delinquency and dependency cases, and matters involving adoption, guardianship, minors, and incompetency, but confirms that estate and tax filings remain open to public inspection and copying. Northampton County Administrative Order 2015-5, C5 Custody of Exhibits, C-48CV2015-004903 (6/3/2015), 45 Pa.B. 3826 (7/18/2015).
A recent article in the NY Times shows how the patient privacy regulations under the Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) are often misunderstood. See “Hipaa’s Use as Code of Silence Often Misinterprets the Law.”
There are several circumstances under which notice must be given to the Attorney General of Pennsylvania:
- When a will has been probated that includes gifts to charities of more than $25,000, or which will not be be paid in full, notice must be given to the AG in accordance with Pa.O.C. Rule 10.5(a)(6).
- When a will has been probated that includes gifts to any governmental beneficiary, notice must be given to the AG in accordance with Pa.O.C. Rule 10.5(a)(7).
- If there are no other intestate heirs, then the Commonwealth is a statutory heir under 20 Pa.C.S. 2103(6), and the AG would then need to receive notice in accordance with Pa.O.C. Rule 10.5(a)(7). (The instructions to REV-1513–Schedule J of the inheritance tax return–say that “Commonwealth of PA, Statutory Heir” should be listed in Section II, Part B, “Charitable and Governmental Distributions.”)
- In any Orphans’ Court proceeding involving or affecting a charitable interest (other than a pecuniary gift of $25,000 or less that has been or will be paid in full), at least twenty days advance written notice must be given to the AG in accordance with Pa.O.C. Rule 4.4. Also, Pa.O.C. Rule 2.5(c) requires that notice of the filing of an account be given to the AG if proposed distributions are to an estate or trust of which a charity is a “qualified beneficiary.”
- Under 20 Pa.C.S. § 7710(d), the Office of Attorney General has the rights of a charitable organization named in trust instrument, including the right of notice of any proceeding or nonjudicial settlement agreement, which should include any notice that may be required to the charitable beneficiaries of a trust under 20 Pa.C.S. § 7780.3 if the settlor died or was adjudicated incapacitated. See also, 20 Pa.C.S. § 7735(c) (enforcement of charitable purposes).
- There are sections of the PEF Code (Title 20 of the Pa. Consolidated Statutes) requiring notice or consent of the AG under specific circumstances, such as § 7203 (charitable trusts having voting control of certain publicly traded business corporations), § 7740.3(d) and (e) (termination of small charitable trusts), § 7764(d) (filling vacancy in trusteeship of charitable trust), and § 7799.3(d) (annual report of pooled trusts for individuals with disabilities).
The main office of the Attorney General is 14th Floor, Strawberry Square, Harrisburg, PA 17120. However, the Charitable Trusts and Organizations Section has three regional offices, and it is better practice to send notices relating to charitable interests to those regional offices. The Philadelphia Estate Practitioner’s Handbook suggests that the Philadelphia practice is to send the notice relating to governmental interests to the same regional offices that receive notices of charitable interests, and it seems appropriate that the same officers representing the interests of charities in estates and trusts should also represent the interests of the Commonwealth in estates, but there is no specific authority for that conclusion.
The addresses of the regional offices are as follows:
| Office Address | Counties Served |
|---|---|
| Central Regional Office Strawberry Square, 14th Floor Harrisburg, PA 17120 Tel: 717-783-2853 Fax: 717-787-1190 | Adams, Bedford, Blair, Bradford, Centre, Clinton, Columbia, Cumberland, Dauphin, Franklin, Fulton, Huntingdon, Juniata, Lackawanna, Lancaster, Lebanon, Luzerne, Lycoming, Mifflin, Montour, Northumberland, Perry, Potter, Schuylkill, Snyder, Sullivan, Susquehanna, Tioga, Union, Wyoming, and York |
| Eastern Regional Office 1600 Arch Street, Suite 300 Philadelphia, PA 19103 Tel: 215-560-2402 Fax: 215-560-2494 | Berks, Bucks, Carbon, Chester, Delaware, Lehigh, Monroe, Montgomery, Northampton, Philadelphia, Pike, and Wayne |
| Western Regional Office 1251 Waterfront Place, Mezz. Level Pittsburgh, PA 15222 Tel: 412-565-7680 Fax: 412-565-3181 | Allegheny, Armstrong, Beaver, Butler, Cambria, Cameron, Clarion, Clearfield, Crawford, Elk, Erie, Fayette, Forest, Greene, Indiana, Jefferson, Lawrence, McKean, Mercer, Somerset, Venango, Warren, Washington, and Westmoreland |
[Updated on 3/10/2017 to conform citations to the Pa. O.C. Rules that became effective 9/1/2016. Updated on 11/4/2019 due to changes in URLs for Pa.O.C. Rules. Updated on 9/23/2020 to revise addresses for Eastern and Western offices.]
A right of occupancy (which is different from a life estate) granted by the decedent’s will was not invalid or void against public policy merely because the decedent had no certificate of occupancy and the structure appeared to be in violation of building codes, and so the petition of the executor to sell the property was denied. Miller Estate, 5 Fid. Rep. 3d 231 (OC Chest. 2015) (Opinion by Tunnell, J.)
After a community ambulance association, a non-profit corporation, lost the authorization of their sponsoring community, the corporation was liquidated, and an account was filed with the court; the court confirmed the account (after amendment) and directed distributions. Coaldale Community Ambulance, 5 Fid. Rep. 3d 240 (OC Schuyl. 2015) (Opinion by Baldwin, P.J.)