The decedent became disabled as an adult, and the decedent’s father owed him no legal duty of support, so the decedent as not a “dependent child” for the purpose of the forfeiture statute, 20 Pa.C.S. § 2106(b). In Re: The Estate of Charles L. Small, ___ Pa. ___, ___ A.3d ___, 26 EAP 2019 (Pa. 7/21/2020), aff’g 744 EDA 2018 (Pa. Super. 1/28/2019), 8 Fid.Rep.3d 229, No. 617 DE of 2017 (O.C. Philadelphia 6/7/2018).
H.R. 2484 was signed into law by Governor Wolf on July 23, 2020, becoming Act 71 of 2020.
The act amends Titles 15 and 20 to allow nonprofit corporations and charities to pay out more than 10% of their charitable funds as “income” in the years 2020, 2021, and 2022. The usual limit is 7%, and this change was thought to be needed to address the financial effects of the COVID-19 pandemic.
The act also amends Title 15 to allow nonprofit corporations to enter into nonjudicial settlement agreements with donors in order to modify restrictions on charitable gifts.
On Thursday, the Internal Revenue Service announced federal rates for the month of August under §§ 1274 and 7520 of the Internal Revenue Code (“IRC”) that will be lower than some of the previously record-low rates for June.
- The §7520 rate, which is used to value life estate, remainders, and annuities, will be only 0.4%. (The rate for June was 0.6%.)
- The federal mid-term rate under §1274, which defines the market rates of interest for purposes of intra-family loans under §7872 (among other things), will be 0.41%, which is a new record low. The August short-term rate of 0.17% is not a record low, because that rate was 0.16% in October of 2011 (0.18% in June), and the long-term rate of 1.12% is not a record because it was 1.01% in June.
The §7520 rate of 0.4% is peculiar because that rate is defined as 120% of the federal mid-term rate, and yet the mid-term rate is 0.41%. The rate that is 120% of the mid-term rate can be less than 100% of the mid-term rate because the §7520 rate must be rounded to the nearest two-tenths of a percent. Multiplying 0.41% by 120% produces 0.492%, which rounds down to 0.4% (which is the nearest percentage evenly divisible by 0.2%).
For information on estate planning techniques to take advantage of these low rates, see “Low-Interest Estate Planning Strategies.”
The following message was sent to the Pennsylvania Bar Association on or about 6/29/2020 by Lora A. Kulick, Senior Counsel in the Office of Chief Counsel of the Department of Revenue:
“The department recently received inquiries regarding whether it was issuing Inheritance Tax notices of assessment. It temporarily had not been issuing assessments due to its offices and ROW offices COVID-19 closures. The department now has resumed issuing limited assessments and other notices. The department will continue to increase the number of and types of notices issued. The most up to date information regarding Revenue’s operations can be found on the department’s website at: https://www.revenue.pa.gov/Pages/COVID19.aspx.”
In Notice 2020-51, 2020-29 I.R.B. __ (7/9/2020), the Internal Revenue Service has provided additional guidance on whether (and how) taxpayers may return or rollover required minimum distributions (RMDs) that were taken in 2020 but that were no longer required following the enactment of I.R.C. § 401(a)(9)(I) as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act), P.L. 116-136 (“CARES Act). See “No Required Minimum Distributions in 2020.”
The Notice generally allows distributions from qualified defined contribution plans to be rolled over, so that no income is realized in 2020.
What is perhaps most significant is that the Notice allows the owner or beneficiary of an individual retirement account (IRA) to return an unnecessary distribution to the IRA. See paragraph D of Section III. This is an important concession by the IRS because distributions from an inherited IRA (i.e., distributions to the beneficiaries of the IRA following the death of the IRA owner) cannot be rolled over. The Notice therefore says that the recipient may “repay” the distribution to the distributing IRA, provided the repayment is made no later than August 31, 2020.
The National Taxpayer Advocate Objectives Report to Congress for Fiscal Year 2021 (6/29/2020) addresses the issue of whether deceased taxpayers may receive “economic impact payments” (aka “stimulus payments”) authorized by the CARES Act and made the following observations and recommendations:
- In 2008, the IRS did not ask that similar payments to decedents be returned and took no steps to collect the payments from the decedent’s estate or family.
- The statute could be interpreted to include a person who dies in 2020 in the definition of “eligible individual” even if the person died before the payment is received.
- The IRS should not spend resources pursuing enforcement actions to recover payments sent to decedents.
See “Individuals in Limited Circumstances Are Being Asked to Return the Economic Impact Payments,” beginning at page 56 of the Report.
Conclusion #2 is consistent with the observations made in “Economic Impact Payments for Decedents,” which has additional information about the relevant provisions of the CARES Act.
The merger of two non-profit corporations holding charitable funds, one of which had been decertified as a fire fighting organization by its municipality, did not require the application of the cy pres doctrine when the decertified organization had broad charitable purposes that would be continued by the surviving corporation. In Re: Merger of Universal Volunteer Fire Department into Point Breeze Volunteer Fire Association, No. 1060 C.D. 2019 (Pa. Cmwlth. 7/1/2020).
Amendments to the articles and by-laws of a foundation that changed the charitable goals of the foundation, and eliminated provisions that guaranteed that control of the foundation remained in the oldest descendant of the founder, adopted by the directors of the foundation in accordance with the by-laws (including the approval of the oldest descendant of the founder), were not breaches of duties of care, obedience, and loyalty and were not fundamental changes that required the approval of the Orphans’ Court. In Re: Jack Buncher Foundation, No. 306 C.D. 2019 (Pa. Cmwlth. 7/1/2020).
Following Trust under Agreement of Edward Winslow Taylor, 640 Pa. 629, 164 A.3d 1147 (2017), a trust cannot be modified to allow the beneficiaries to remove and replace trustees even with the consent of the settlor under 20 Pa.C.S. § 7740.1(a). Garrison Trusts, 10 Fid.Rep.3d 189, Nos. 1992-X1509, 1992-X1518, and 1992-X1519 (Montgomery O.C. 6/16/2020), 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 Note: This decision is almost certainly wrong. It relies entirely upon the failure of the Taylor court to distinguish between subsections (a) and (b) of § 7740.1, and so reaches a result that the Taylor court never considered.]
[Updated on 1/27/2023 to show that the Supreme Court reversed the Superior Court and Orphans’ Court.]
The Supreme Court of Pennsylvania has adopted an amendment to Rule of Professional Conduct 8.4 that adds a new paragraph (g) to make it professional misconduct for a lawyer to “in the practice of law, by words or conduct, knowingly manifest bias or prejudice, or engage in harassment or discrimination, as those terms are defined in applicable federal, state or local statutes or ordinances, including but not limited to bias, prejudice, harassment or discrimination based upon race, sex, gender identity or expression, religion, national origin, ethnicity, disability, age, sexual orientation, marital status, or socioeconomic status.”
“Amendment of Rule 8.4 of the Pennsylvania Rules of Professional Conduct; No. 196 Disciplinary Rules Doc.” (6/8/2020), 50 Pa.B. 3011 (6/20/2020).
This is the same amendment published as “Proposed Amendments to the Pennsylvania Rules of Professional Conduct Relating to Misconduct,” 49 Pa.B. 4941 (8/31/2019), as previously reported.