New Inheritance Tax Exemption for Military Deaths

Section 15.1 of the Act of July 8, 2022, No. 53 (HB 1342), adds a new subsection 2111(u) to the inheritance and Estate Tax Act (72. P.S. §9111(u)) that exempts from inheritance tax the transfer of personal property resulting from the death of a member of the armed forces or National Guard as a result of injury or illness while on active duty, which includes training. The exemption applies to deaths on or after September 7, 2022*.

[* The effective date provisions are a little confusing. Section 24(2.1) of the act says that the new subsection applies to deaths “after the effective date of this section,” but there is no explicit effective date for section 24. Section 26(2) of the act says that the addition of the new subsection “shall take effect in 60 days.” Sixty days after enactment would be September 6, and the word “after” in section 24(2.1) leads to the conclusion that the amendment applies to deaths after the 60th day, or beginning with deaths on September 7.]

Spousal Election is Irrevocable after Six Months

Absent fraud or duress, a spousal election against a will (or an election to take under the will) becomes irrevocable at the end of the six month period allowed by 20 Pa.C.S. § 2210(b) and may not be revoked merely because the surviving spouse had insufficient information about the estate. In re: Estate of Caleem L. Jabbour, Deceased, ___ Pa. ____, 276 A.3d 1180, 13 WAP 2021 (6/22/2022), rev’g 2020 PA Super 299, 244 A.3d 1254 (12/30/2020).

Distribution of House “As Part of” a Residuary Share Was Not “In Lieu of” That Share

A direction in a will that a beneficiary should have the right to receive the decedent’s residence as part of her one third share of the estate or purchase the house at fair market value did not give the beneficiary a share of the estate equal to the value of the house when her one third share of the estate would otherwise be less than the value of the house. Indelicato Estate, 12 Fid.Rep.3d 217 (Bucks O.C. 2022).

Agent’s Deposit into Joint Account Was a Breach of Fiduciary Duty

An agent’s deposit of a refund check payable to the principal into a bank account in the joint names of the principal and agent was an act of self-dealing and a breach of fiduciary duty by the agent because she commingled the funds of the principal with the funds of the agent, and so a surcharge on the agent was imposed. A receipt signed by a beneficiary for two rings of the decedent was upheld over the testimony of the beneficiary that she received only one ring. A tax penalty was directed to be paid by the estate and not imposed on one co-executor when there were delays and miscommunications between the one co-executor and the attorney for the estate. Other objections to the account of the executors and agent were was dismissed for failures of proof. Finnie Estate, 12 Fid.Rep.3d 203 (Montgomery O.C. 2022).

Right of First Refusal Exercisable

A right of first refusal granted to daughter and her husband by her father’s will was exercisable by daughter alone after her divorce from her husband when an offer to purchase the property was received by the executors more than 10 years after the death of the testator. Beck Estate, 12 Fid.Rep.3d 201 (Montgomery O.C. 2022).

Superior Court Affirms Fiduciary Exception to Attorney-Client Privilege

The Superior Court has followed the plurality opinion in In re Estate of McAleer, 248 A.3d 416 (Pa. 2021), and held that the “fiduciary exception” to the attorney-client privilege and attorney work product doctrine is not contrary to the law in Pennsylvania, affirming an order of the Orphans’ Court compelling discovery of documents related to the legal services performed by counsel to trustees. In re: Trust Established under Agreement of Sarah Mellon Scaife, Deceased, Dated May 9, 1963, 276 A.3d 776, 2022 PA Super 93 (5/23/2022), app. den., 169 WAL 2022 (1/24/2023).

There were three appeals from the discovery order and the Superior Court released three opinions which appear to be identical in substance, but with different docket numbers and naming different appellants. The appeal of PNC Bank as corporate trustee (722 WDA 2021) was published as 2022 PA Super 93. The opinions related to the appeals of the individual trustees (696 WDA 2021) and counsel to the trustees (697 WDA 2021) were released as non-precedential.

Unsigned Will Not Probated

Decedent gave instructions to attorney for the preparation of a will, but she died in the hospital without signing the will because COVID-19 protocols prevented her attorney or others from delivering the will to her for her signature, and so the will could not be probated. The conversations between the administrator and one of the intestate heirs were not sufficient to constitute a gift of the decedent’s real estate to the intended beneficiaries, or to apply equitable estoppel to the heirs. Administrator’s commission of 6% approved, but legal fees relating to equitable claims (but not the unsigned will) were denied. Bennett Estate, 12 Fid.Rep.3d 185 (Monroe O.C. 2022).

Value of Rings; Compensation of Administrator Reduced

Value of rings determined by purchase prices from four years before, rather than an appraiser by a jeweler who did not actually examine the rings and misstated the size of the diamond in one of the rings. Compensation of the administrator at $104 an hour, or 14.3% of the estate, was reduced to 5% when there was nothing special or extraordinary in the estate warranting additional compensation. Johnson Estate, 12 Fid.Rep.3d 181 (Monroe O.C. 2022).

Undue Influence by Spouse

A will which directed the executor (who was the decedent’s long-time companion and later spouse) to distribute the residue of his estate “according to my wishes” would result in a distribution by intestacy, and so a later will which left the residue to the spouse was a substantial benefit. There was conclusive evidence that the decedent suffered from a weakened intellect before executing the new will, and that the decedent’s spouse influenced and controlled the decedent’s decisions, and that the new will was the product of the spouse’s undue influence. Roscher Estate, 12 Fid.Rep.3d 151 (Berks O.C. 2021), rev’d, 119 MDA 2022 (Pa. Super. 11/29/2022), (non-precedential; insufficient evidence of weakened intellect).