No Termination of Trust with Vested Charitable Remainder

A trust with a remainder payable to a named charity will not violate the rule against perpetuities even though the current beneficiaries were not lives in being when the trust was created, and so the early termination of the trust will violate a material purpose of the trust and will not be approved under 20 Pa.C.S. § 7740.1(b) even with the consent of all parties. John A. Quigley Testamentary Trust, 10 Fid.Rep.3d 111, No. 374ST of 1935 (Philadelphia O.C. 2/18/2020).

Note: 20 Pa.C.S. § 7740.1 applies to “noncharitable” trusts, and 20 Pa.C.S. § 7703 defines “charitable trust” as a “trust, or portion of a trust, created for a charitable purpose described in section 7735(a) (relating to charitable purposes; enforcement – UTC 405)” (emphasis added). 20 Pa.C.S. § 7740.3, on the modification or termination of charitable trusts, refers to the possibility of a charitable trust having noncharitable beneficaries, so it appears that a trust with both charitable and noncharitable beneficiaries should be governed by § 7740.3 and not § 7740.1.

Realty Transfer Tax on Remainders

When there is a transfer of a residence or other real estate with a retained life estate (which is usually not recommended, because it does not avoid any inheritance tax and can restrict the ability of the transferor to sell the property during his or her lifetime), the retained life estate is not subject to tax but the remainder interest may be taxable if the transfer is not to a spouse, child, or other family member to whom transfers are exempt. See Example 3 of 61 Pa. Code § 91.165 and 61 Pa.Code § 91.193(b)(6).

When the remainder is taxable, the taxable value is usually determined by multiplying the value of the entire property by an actuarial factor, based on a current interest rate and the age of the life tenant. The most recent table of life estate and remainder factors, based on Table 2000CM and an interest rate of 1.4%, was published as “Life Estate and Remainder Factors; Pennsylvania Realty Transfer Tax (Revised),” 52 Pa.B. 5877 (7/10/2022), effective July 1, 2022,” correcting Life Estate and Remainder Factors; Pennsylvania Realty Transfer Tax,” 52 Pa.B. 3382 (6/11/2022). The previous table was published at 49 Pa.B. 3023 (6/8/2019).

[9/9/2022 Correction: The factors published on 6/11/2022 were at 1.4%, and not 2.6% as originally reported. The 6/11/2022 publication referred to “Table S(2.6),” which was wrong because the factors were from Table S(1.4). In the revised publication, the table name was reported as “Table S.”]

Application of Cy Pres Denied for Nonprofit Corporation

Although a nonprofit corporation formed as a volunteer fire company had been decertified and could no longer fight fires in accordance with its original charitable purposes, the Attorney General could not enforce the application of cy pres in the absence of a showing as to what assets of the corporation were “donated, granted, or devised” from an outside source “in trust.” In re: Independent Fire Co. No. 1, No. 1489 C.D. 2018 (Cmwlth Ct. 2/5/2020), aff’g on other grounds, 9 Fid.Rep.3d 20 (Lycoming Co. O.C. 2018).

Lawyers Must Retain Original Wills Indefinitely?

Posted on by February 1, 2020

The New York State Bar Association has released an ethics opinion stating that a lawyer may not dispose of wills even when the testators’ locations and circumstances are unknown, and that the lawyer must safeguard the wills indefinitely unless the law provides an alternative. New York State Bar Association Committee on Professional Ethics Opinion 1182 (1/23/2020).

A few comments:

  • The opinion discusses the possibility of filing wills with the Surrogate’s Court, which is allowed by statute in New York. There is no comparable statute in Pennsylvania, and there is no authority requiring (or allowing) a Register of Wills to accept a will when the testator might be living, might have died outside of Pennsylvania, and might have revoked the will by a later will.
  • The opinion relies on Model Rule of Professional Conduct 1.15, which relates to safeguarding property. But is the “property” the physical will or the testamentary intent expressed in the will? At a recent southeast Pennsylvania regional meeting of the American College of Trust and Estate Counsel, a fellow of the college reported that her firm, after repeated attempts to contact the testator, and after a suitable period of time, will destroy the testator’s will but will also create a contemporaneous record of the destruction of the will so that a copy of the will (saved electronically) could be admitted to probate in the unlikely event that the will was ever actually needed.

New (and Old) Minimum Required Distribution Rules Summarized

Posted on by July 21, 2024

[DBE (7/21/2024): This article has not yet been updated to reflect the final regulations published at 89 F.R. 58886 (7/19/2024)., the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act of 2023, P.L. 117-328), or Notice 2023-54, 2023-31 I.R.B….

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Writing “2020” and Not “20”

Posted on by January 15, 2020

I’ve seen more than one article recommending that, when we (meaning the public generally and not just lawyers) write the year on checks and other documents, we should write out the whole year, “2020,” and not just the last two digits, “20.”

The reasons is that, if you write only “20,” the date can be altered by just adding two more digits at the end, so that “20” could easily become “2019” or “2021.” (There was reportedly a similar concern in 1919.)

I’m not sure what advantage there could be in backdating (or postdating) a check by one year, but writing out the full year does no harm, and takes very little in the way of time or ink (or printer toner), and so seems like a good idea.

Login/Logout Confusion

Posted on by January 7, 2020

I recently learned that, when subscribers log onto this site, they don’t see the home page, but a “profile” or “dashboard” page which I found to be both confusing and useless.

I’ve reconfigured the site so that, after logging in, subscribers will next see the home page.

I also found that there was no way to log out after logging it, and so I added a “Log Out” choice on the main menu.

I hope that these changes improve the experience of using this site.

Problems with New Forms for Register of Wills

Posted on by January 3, 2020

It was previously reported that new Orphans’ Court forms, and new forms for use before the Register of Wills, had been posted to the collection of Orphans’ Court forms on the pacourts.us website, to be effective January 1, 2020. It now appears that there is a problem with two of the forms.

New Form RW-04 (“Oath of Non-subscribing Winess(es)”) and new Form RW-05 (“Oath of Witness(es) to Will Executed by Mark”) include both jurats for execution of the oaths in the Register’s office and jurats for execution of the oaths before a notary public outside of the Register’s office. However, the relevant statute, 20 Pa.C.S. § 3154, requires that those oaths be taken either before the Register or, if taken outside of Pennsylvania, by a public officer of the other jurisdiction having duties similar to those of the Register.

The new forms are still usable, but practitioners should not be misled into thinking that the oaths can be taken before a notary public outside of the Register’s office.

New Pa.O.C. Rule 1.40 for “In Forma Pauperis”

The Supreme Court has entered an order adopting a new Pa.O.C. Rule 1.40 which applies Pa.R.C.P. 240 (“In Forma Pauperis“) to Orphans’ Court proceedings, to be effective April 1, 2020. Rule 14.8, on guardianship reporting, has also been amended to include a note that cross-references Pa.R.J.A. 510, which governs the filing of inventories and reports under the Guardianship Tracking System. The report of the Orphans’ Court Procedural Rules Committee has also been published. “In Re: Order Adopting Rule 1.40 and Amending the Note to Rule 14.8 of the Pennsylvania Orphans’ Court Rules,” No. 820 Rules Doc. (1/2/2020), 50 Pa.B. 306 (1/18/2020).