Westmoreland County has adopted new guardianship rules, effective 30 days after publication. “Guardianship Rules; No. 3 of 2019” (Westmoreland Co. 6/10/19), 49 Pa.B. 3476 (7/6/2019).
Schuylkill County has adopted local O.C. Rule 14.3(b), on proof of incapacity. “Local Orphans’ Court Rule 14.3(b); 2008-5000E” (6/18/2019), 49 Pa.B. 3476 (7/6/19).
H.B. 262, which eliminates the inheritance tax on all transfers from parents to children who are 21 or younger, also allows revocable trusts to be treated as part of the estate for Pennsylvania income tax purposes if the estate has made that election for federal income tax purposes. The bill passed both houses of the legislature and was approved by the governor as the Act of June 28, 2019, No. 13.
Under section 645 of the Internal Revenue Code, an estate can make an election to treat a revocable trust as part of the estate for federal income tax purposes, but there was no comparable provision under Pennsylvania law. So if an estate made that election, it would still be required to file separate Pennsylvania returns for the estate and trust, which was administratively burdensome. H.B. 262 eliminates this problem.
Section 10.2 of H.B. 262 amends section 331(g) of the Tax Reform Code of 1971, No. 2 of 1971 (72 P.S. § 7331), to read as follows:
“(g) The return for an estate or trust shall be made and filed by the fiduciary. If two or more fiduciaries are acting jointly, the return may be made by any one of them. If the executor of the estate and trustee of the trust make an election under section 645 of the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C. § 645), as amended, to treat the income of the trust as part of the estate, the fiduciary may make and file a joint tax return for the estate and trust under this subsection for the taxable years when the trust income is reported as part of the estate income in accordance with section 645 of the internal revenue code of 1986, as amended. If the income tax liabilities of the estate and trust are filed on a joint tax return under this subsection, the tax liabilities of the estate and trust shall be joint and several. The provisions of subsection (d) shall be applicable to a joint tax return filed under this subsection.”
Section 29 of H.B. 262 makes this new provision applicable to tax years beginning after December 31, 2019.
Monroe County has amended its local Orphans’ Court rules to include new Rules 14.3 and 14.8, relating to guardianships of incapacitated persons. “Amendment of Local Orphans’ Court Rules; 61 AD 2019” (Monroe Co. 6/12/2019), 49 Pa.B. 3311 (6/29/2019).
The Administrative Office of the Pennsylvania Courts has published some technical and mechanical amendments to the Case Record Public Access Policy of the Unified Judicial System that it is considering recommending to the Supreme Court.
The most significant proposal is that the option of allowing the filing of two different versions of the same pleading, one redacted and one unredacted, would be eliminated, so that all counties would require the use of the Confidential Information Form. (Seven counties currently require the filing of two versions in lieu of the Confidential Information Form. See “Public Access Policy Compliance for Orphans’ Court Filings” for additional information.)
Comments are requested by August 28, 2019.
“Proposed Amendments to the Case Records Public Access Policy of the Unified Judicial System,” 49 Pa.B. 3298 (6/29/2019).
The U.S. Supreme Court has held that a state cannot tax the undistributed income of a trust when the only connection between the state and the trust is that beneficiaries of the trust reside in the state but the beneficiaries have not received income from the trust, have no right to demand income, and are uncertain to receive any income. N.C. Dept. of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, 588 U.S. ___, 139 S. Ct. 2213, 204 L. Ed. 2d 621, No. 18-457 (U.S.S.C. 6/21/2019).
The son of the decedent was not removed as executor for wasting or mismanaging the estate because (a) the executor transferring the decedent’s worthless timeshare properties to himself relieved the estate of the maintenance fees; (b) the executor had been working to sell a property of the decedent’s but had been unable to find a buyer for the property, which was worth less than the mortgage on the property; and (c) it was not clear whether payments on a debt owed by the executor to the estate had been properly made or accounted for but an amended accounting might resolve those issues. However, the son was removed as trustee for selling a publicly traded utility and investing 10% of the trust in an unmarketable security which was not producing income, and because of acrimony between the trustee and the beneficiary of the trust, his mother. Shore Estate, 9 Fid.Rep.3d 142 (Monroe O.C. 2019).
Because the two executors were deadlocked over the discretionary distribution of the estate, and one of them had a conflict of interest over a claim against her daughter while the other was believed to be more likely to bring the estate to a conclusion, the court removed the executor with the conflict and left the other executor to complete the administration and distribution. Gurtler Estate, 9 Fid.Rep.3d 126 (Monroe O.C. 2019).
Probate of 2007 will was upheld based on testimony of lawyer who met with the decedent on several occasions and prepared the will, as well as the lack of any evidence of undue influence, while probate of a 2013 will was denied because of a lack of testamentary capacity and evidence of undue influence, based on medical records showing that the decedent had been diagnosed with advanced dementia and testimony that the will was prepared by the son who had been disinherited by the 2007 will, who lived with the decedent and “looked out after her as she got older” and so stood in a confidential relationship. Arnao Estate, 9 Fid.Rep.3d 115 (Philadelphia O.C. 2018), on appeal, 2645 EDA 2018 (Pa. Super.).