In a declaratory judgment action, the Orphans’ Court interpreted and applied the contracts, assignments, and other documents signed by the decedent, the executor, and a claimant against the estate to determine the ownership of commissions payable to an agency that had been owned by the decedent and purchased by the claimant, not considering allegations of fraud by the decedent or other misconduct as not properly before the court. Godlewski Estate, 10 Fid.Rep.3d 217 (Chester O.C. 2019).
The Internal Revenue Service has published final regulations on the deductibility of administration expenses for both estates and trusts and for their beneficiaries when the estates or trusts terminate. “Effect of Section 67(g) on Trusts and Estates,” TD 9918, 85…
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Under the new regulations for I.R.C. §§ 67 and 642(h), it becomes even more important for both estates and trusts and their beneficiaries to determine which administration expenses are deductible and which are not. (See “Final Regulations on Administration Expenses…
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The Supreme Court’s Committee on Rules of Evidence has published a proposed Pa.R.E. Rule 413 that would allow evidence of immigration status to be used only if relevant to an element of an action or defense, or to a party’s or witness’s motive. “Proposed Adoption of Pa.R.E. 413,” 50 Pa.B. 5222 (9/26/2020).
The committee had previously published a proposed comment to Pa.R.E. 401 that would have included immigration status among a number of other factors, such as race, sex, religion, and national origin, that are generally irrelevant. “Proposed Amendment of the Comment to Pa.R.E. 401,” 49 Pa.B. 2218 (5/4/2019). The committee reported receiving several comments suggesting that a separate rule was needed for immigration status.
The Supreme Court has issued an order adopting a revised public access policy for Pennsylvania courts, including the Orphans’ Court. Included with the order is an explanatory report.
These revised policy include two significant changes:
- The rules had previously made exceptions for confidential information or documents that were required to be included in pleadings or other documents because of statutes or other “applicable authority.” The rules now require that all confidential information and documents be safeguarded in the same way regardless of applicable authority.
- A certification of compliance is no longer required to be included as a separate page of the filing, but may be part of an electronic filing process, part of a cover page or other form, or included in the body of the pleading or other filing.
The revised rules will be effective in thirty days.
“In re: Order Amending Case Records Public Access Policy of the Unified Judicial System,” No 538 Judicial Administration Doc. (9/15/2020); 59 Pa.B. 5216 (9/26/2020).
Columbia and Montour Counties have adopted some new local rules, including a new Orphans’ Court rule, L.R. 2.9, for confirmation of accounts and proposed decrees of distribution. “Business of the Courts; Case No. 2020-MV-1” (26th Judicial Dist., 9/2/2020), 50 Pa.B. 4736 (9/19/2020).
The article “Low-Interest Estate Planning Strategies” described several estate planning strategies that should be considered now that interest rates have reached record lows. One of the strategies that is described in the article is a private annuity.
Webcalculators has been updated to include a new calculator that illustrates the possible benefits of a private annuity transaction, and the development of this calculator was accelerated in order to help planning for the current low interest rates. The section 7520 rate of 0.4% that is now in effect makes annuities more valuable, which means that private annuity transactions can have lower payouts, potentially increasing the benefit of those transactions for estate planning purposes.
The overview of the private annuity calculator is below:
Some of the calculations in Webcalculators have been updated to incorporate the new mortality table that is based on the 2010 census.
Although there are not yet any new actuarial tables from the Internal Revenue Service, the life estate, annuity, and unitrust calculators at wcalcs.com now include an option to calculate factors and values using the new mortality table published by the Centers for Disease Control on August 7th.
Those interested in the possible impact of the new mortality table can register (no fee required) and use the calculators for “Income (Life Estate) and Remainder Factors and Values,” “Annuity Factors and Values,” and “Unitrust Factors and Values” to calculate factors and values using the current (2000) and new (2010) census mortality tables.
With the release of the Chained Consumer Price Index (C-CPI-U) for August 2020, it’s possible to calculate various inflation adjustments for 2021. The following are the significant federal estate planning numbers, with the numbers for 2020 shown in parentheses:
- The base applicable exclusion amount (and generation-skipping tax exemption) will be $11,700,000 (was $11,580,000 for 2020).
- The annual gift tax exclusion will be $15,000 (unchanged).
- The annual gift tax exclusion for a non-citizen spouse will be $159,000 (was $157,000).
- The “2 percent” amount for purposes of section 6166 will be $1,590,000 (was $1,570,000).
- The limitation on the special use valuation reduction under section 2032A will be $1,190,000 (was $1,180,000).
- The top (37%) income tax bracket for estates and trusts will begin at $13,050 (was $12,950).
- The alternative minimum tax exemption for estates and trusts will be $25,700 (was $25,400), and the phaseout of the exemption will start at $85,650 (was $84,800).
The Internal Revenue Service will publish the official inflation adjustments in a Revenue Procedure in 4-8 weeks.
As a further response to COVID-19, and in order to protect Internal Revenue Service employees, as well as taxpayers and their representatives, by minimizing the need for in-person contact, the IRS has added federal estate and gift tax returns, Forms 706 and 709, to a list of forms that can be signed electronically even though they can’t be filed electronically. IR-2020-206 (9/10/2020).
According to the 8/28/2020 memorandum first allowing electronic signatures for certain forms that must be filed in paper form, “Electronic and digital signatures appear in many forms when printed and may be created by many different technologies. No specific technology is required for this purpose during this temporary deviation.”
The deviation applies to forms filed on or after August 28, 2020, until December 31, 2020.