The beneficiaries of certificates of deposits which were originally alleged to be “in trust for” accounts, and which had been held to give them standing to challenge actions of decedent’s agents who removed the beneficiary designations before the decedent’s death, continued to have standing even though the accounts were later found to be joint accounts, because both types of accounts are testamentary in nature and the beneficiaries had the same interest in litigating the breach of fiduciary duty by the agents acting under a durable power of attorney. Rellick v. Rellick-Smith, 630 WDA 2022 (Pa. Super. 5/17/2023) (non-precedential). (For an earlier opinion in this case, first addressing the issue of standing, see Rellick v. Rellick-Smith, 147 A.3d 897, 2016 PA Super 184 (Pa.Super. 8/22/2016).)
The Orphans’ Court had addressed the argument that the alleged incapacity person had established an adequate support system, so that there was a less restrictive alternative and the appointments of a guardian of the estate and a partial guardian of the person were not necessary, and the findings of the court were fully supported by the record and so were affirmed. In the Matter of: Estate of W.K.B., 1459 MDA 2022 (Pa. Super. 7/17/2023) (non-precedential; the court adopted the opinion of the Orphans’ Court as its own, but did not quote from it or attach it).
The testimony of two doctors who diagnosed the decedent as suffering from dementia before and after she executed a “gifting agreement” transferring valuable coins to her son was sufficient to establish weakened intellect, and the testimony of the son showed that the decedent relied on him to driver her twice a week to visit relatives, and entrusted him with her engagement ring and her will, established that the son had a confidential relationship with his mother. The presumption of undue influence was not rebutted by the testimony of the lawyer who prepared and supervised the execution of the gifting agreement because the court was within its discretion in not finding the testimony credible when the lawyer had a professional relationship with the son and his testimony about the lucidity of the decedent was inconsistent with by the medical testimony. In re: Estate of Alvena T. Miller, 1666 MDA 2022 (Pa. Super. 7/25/2023) (non-precedential).
Claim of undue influence was properly rejected when Orphans’ Court found that the decedent did not suffer from a weakened intellect and the alleged influencer did not have a confidential relationship with the decedent. Summary judgment on lack of testamentary capacity was proper when evidence of brain injury showed decreased mental acuity but nothing to support findings that the decedent was unaware of the natural objects of his bounty, the composition of his estate, or what he wanted done with his estate. FInally, the court had the discretion to reject the settlement agreement when it provided no direct benefit for the grandchildren who were the primary beneficiaries under the will. In re: Estate of Michael E. Lehman, 341 MDA 2022 (Pa. Super. 7/24/2023) (non-precedential).
In Notice 2023-54, 2023-31 I.R.B. ____ (7/31/2023), the Internal Revenue Service has provided some guidance on transition rules for both the changes made by the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act of 2023, P.L. 117-328) and the regulations that were proposed at 87 F.R. 10504 (2/24/2022) for the “SECURE Act” (Setting Every Community Up for Retirement Enhancement Act of 2019, P.L. 116-94).
The notice covers the following issues:
- When they are final, the proposed regulations will not apply to years before 2024.
- Relief is provided for distributions made in 2023 that were believed to be RMDs but were not RMDs because of changes made by the SECURE 2.0 Act and so eligible for rollover treatment.
- Some failures to make required minimum distributions in 2023 will not be subject to excise taxes or other consequences.
Practitioners who may have clients interested in or affected by these issues should review the notice.
Checks that were signed by the decedent’s agent and delivered before the death of the decedent but were not paid from the decedent’s account before death were not completed gifts under Pennsylvania law and so the amounts of the checks were still part of the federal taxable estate. The checks were also not gifts causa mortis because there was insufficient evidence that the decedent (and not the agent) believed he was about to die and had made the gifts in contemplation of his expected death. Estate of Demuth v. Commissioner, 2023 U.S.App. LEXIS 17613, No. 22-3032 (3rd Cir. 7/12/2023) (non-precedential).
[DBE Note: Although the decision was a federal estate tax dispute, the same principles would presumably apply for Pennsylvania inheritance tax purposes.]
Although the decedent’s business advisor received no direct benefit from the decedent’s will (which named him as the executor and testamentary trustee), he received a collateral benefit from being named the trustee of a discretionary charitable trust, and so a presumption of undue influence would arise except that the decedent’s estrangement from, and hostility towards, his wife and her sons provided an independent basis for his will. It was error for the Orphans’ Court not to remove the business advisor as executor because of his conflict of interest in filing a notice of claim, complaint, and confession of judgment against the estate. In re: Estate of Robert J. Rosemeier, 1502 MDA 2021 (Pa. Super. 7/18/2023) (non-precedential).
[DBE Comment: How did the surviving spouse have standing to continue to seek the removal of the executor when she was not a beneficiary of the will and had waived her right to elect against the will, and so was not a beneficiary of the estate? Should the issue of removal have become moot when the probate of the will was upheld, or did the court still have the power and duty to act to protect the interests of the charitable beneficiaries?]
A premarital agreement that waived all rights to the “separate property” of the other spouse also waived all rights to an individual retirement account (IRA) following the death of the IRA owner even though the existence of the IRA might not have been known to the surviving spouse. A provision of the IRA agreement that made the surviving spouse the beneficiary “If you make no [beneficiary] designation” did not apply because the decedent had designated a beneficiary who predeceased him. In re: Estate of Donald Thomas Schaefer, 2023 PA Super 125, ___ A.3d ___ (7/19/2023), aff’ng 11 Fid.Rep.3d 73 (O.C. Allegheny).
[The validity of the premarital agreement had been upheld in a non-precedential memorandum in a previous appeal. Estate of Schaefer, 281 A.3d 1044, 352 WDA 2021 (Pa. Super. 2022).]
The Internal Revenue Service has confirmed that the assets of a trust that is a grantor trust for federal income tax purposes do not get a new income tax basis at the death of the grantor merely because the trust is a grantor trust, but will get a new basis if the grantor has a power over the trust that causes the trust assets to be included in the grantor’s gross estate for federal estate tax purposes. Rev. Rul. 2023-2, 2023-16 I.R.B. 658 (4/17/2023).
The Orphans’ Court has nonmandatory jurisdiction over an ejectment action when there are “entangled” counterclaims that are within the mandatory jurisdiction of the Orphans’ Court, but the proper remedy is not the dismissal of the ejectment action brought in the Civil Division but the transfer of the action to the Orphans’ Court. Estate of Ricky E. Hull v. Melissa S. Showman, 1277 WDA 2022 (Pa. Super. 7/6/2023) (non-precedential).
[DBE Note: A possible problem with this decision is the suggestion that the Orphans’ Court had jurisdiction over the ejectment action only because the defendant asserted counterclaims that were within the mandatory jurisdiction of the Orphans’ Court, so the court had nonmandatory jurisdiction under 20 Pa.C.S. § 712(3) because there were “substantial questions” that were within the mandatory jurisdiction of the court and also matters not within that jurisdiction. However, under 20 Pa.C.S. § 711(a), the mandatory jurisdiction of the court includes “the administration and distribution of the real and personal property of decedents’ estates” and obtaining possession of a decedent’s real property would seem to be necessary in most–if not all–cases if the real property is to be sold.]