The decedent’s attorney testified that he had administered a “Mini-Mental Status Exam” to the decedent and that the decedent was “sharp” and “understood what he was doing” when he signed his fourth will providing increasing gifts to his long-time companion, and the objectors to the will failed to provide clear and convincing evidence of a lack of testamentary capacity or of weakened intellect. Frederick Estate, 11 Fid.Rep.3d 286 (Bucks O.C. 2021).
When the will directed that personal property should be distributed among the beneficiaries as they may agree, or shall be converted to cash if they are unable to agree, and the beneficiaries are unable to agree, the court ordered the disposition of items for which there was agreement, the distribution of other items among the beneficiaries by a lottery, a private auction among the beneficiaries of another item, and a public auction of the remaining items. Selig, Sr. Estate, 11 Fid.Rep.3d 275 (Monroe O.C. 2021).
Motion for protective order was granted, and the deposition of the objector was denied, in order to avoid unnecessary delays and protect the beneficiary of the estate from additional attorney fees and litigation costs. Logue Estate, 11 Fid.Rep.3d 273 (Lycoming O.C. 2021).
The Supreme Court has amended Pa.R.O.C.P. 1.99 to require the use of “confidential information forms” (and not the filing of redacted documents) to comply with the public access policy in the Orphans’ Court. As explained in the adoption report of the Orphans’ Court Procedural Rules Committee, this order conforms the O.C. rules with the change in the public access policy that was made in October. The amendment is effective on January 1, 2022. “Order Amending Rule 1.99 of the Pennsylvania Rules of Orphans’ Court Procedure,” No. 892 S.C. Rules Doc. (12/1/2021), 51 Pa.B. 7261 (12/11/2021).
The Supreme Court has approved a number of clarifying amendments to the Electronic Case Record Public Access Policy of the Unified Judicial System of Pennsylvania, some of which will explicitly bring the clerk of the Orphans’ Court and the Guardianship Tracking System within the scope of the policy. These changes take effect January 1, 2022. ” Electronic Case Record Public Access Policy of the Unified Judicial System of Pennsylvania,” 51 Pa.B. 7411 (12/4/2021).
The Orphans’ Court Procedural Rules Committee has proposed a new Pa.R.O.C.P. 1.20 that would allow the Orphans’ Court to conduct proceedings using “advanced communication technology,” which is defined as “any communication technology providing for two-way simultaneous communication of image and sound.” Comments may be submitted to the committee by January 4, 2022. “Proposed Adoption of Pa.R.O.C.P. 1.20,” 51 Pa.B. 7442 (12/4/2021).
The Superior Court affirmed a decision of the Orphans’ Court holding that a trust modification that allowed the beneficiaries to remove and replace trustees was ineffective even with the consent of the settlor. Garrison Trusts, 10 Fid.Rep.3d 189 (Montgomery O.C. 2020), aff’d 1429 EDA 2020 (Pa. Super. 9/27/2021) (non-precedential), rev’d, ___ Pa. ___, ___ A.3d ___, 61 MAP 2022, 62 MAP 2022, and 63 MAP 2022 (1/19/2023).
[DBE Comment: These decisions make no sense, because even a material purpose of a trust can be modified, or an otherwise irrevocable trust can be terminated, with the consent of the settlor and all beneficiaries. Both courts thought that they were following the Supreme Court’s decision in Trust under Agreement of Edward Winslow Taylor, 640 Pa. 629, 164 A.3d 1147 (2017), and a Uniform Law Comment to what was enacted as 20 Pa.C.S. § 7740.1, but the issue in Taylor was an attempted modification by the beneficiaries under subsection (b) and not a modification with the consent of the settlor under subsection (a), and the UTC comment addresses subsection (b) and not subsection (a).]
[Updated on 1/27/2023 to show that the Supreme Court reversed the Superior Court.]
The Internal Revenue Service has released Rev. Proc. 2021-45 with inflation adjustments for 2022 and, consistent with earlier predictions, the changes in the most significant federal estate and trust planning numbers will be as follows:
- The base applicable exclusion amount (and generation-skipping tax exemption) will be $12,060,000 (was $11,700,000 for 2021).
- The annual gift tax exclusion will be $16,000 (had been $15,000 since 2018).
- The annual gift tax exclusion for a non-citizen spouse will be $164,000 (was $159,000).
- The “2 percent” amount for purposes of section 6166 will be $1,640,000 (was $1,590,000).
- The limitation on the special use valuation reduction under section 2032A will be $1,230,000 (was $1,190,000).
- The top (37%) income tax bracket for estates and trusts will begin at $13,450 (was $13,050).
- The capital gains tax zero rate amount is $2,800 for an estate or trust (was $2,700) and the maximum 15 percent rate amount is $13,700 (was $13,250).
- The alternative minimum tax exemption for estates and trusts will be $26,500 (was $25,700), and the phaseout of the exemption will start at $88,300 (was $85,650) and the phaseout be complete at $194,300 (was $188,450). The excess taxable income above which the 28 percent rate applies will be $206,100 (was $199,900).
A 1954 letter from the corporate trustee stating that its compensation would be 5% of income was a fee agreement binding the trustee, and the trustee did not provide sufficient evidence that additional compensation should be allowed under 20 Pa.C.S. § 7768(b). The letter did not limit principal commissions, and the trial court did not abuse its discretion in allowing an interim principal commission. Trust under Deed of Wallace F. Ott, 2021 PA Super 203 (10/12/2021), aff’g 10 Fid.Rep.3d 281 (Philadelphia O.C. 2020).
Addressing a series of inter-related in limine motions and motions for summary judgment, the court held that: Although a party with an interest adverse to the estate may be barred from testifying under the Dead Man’s Act, the spouse of the adverse party is not barred. When more than one party is interested in the same series of transaction, each is barred from testifying in support of their own claim but may testify in support of other claimants if the testimony does not inherently support their own claim. If a claimant is allowed to testify in this way, the cross-examination of the claimant is not a waiver of the Dead Man’s Act. Testimony that a claimant had performed services for which the disputed transfers might have been compensation was allowed even though it was inconsistent with the claims of inter vivos gifts because it was relevant to refute other claims. The admissible evidence was insufficient to allow an interested party to testify who was otherwise barred by the Dead Man’s Act. Dead Man’s Act was not waived by the inclusion of a police report in a motion for summary judgment when the report was hearsay and so inadmissible. A good faith waiver of interests in the estate may make a witness competent to testify. Estate of Leland W. Benson, Jr., 11 Fid.Rep.3d (Lycoming O.C. 2021).