Extended Due Date for Inheritance Tax Exemptions

Section 41 of the Act of October 30, 2017, No. 43, extends by one year the due date for inheritance tax returns that claim an agricultural or small business exemption from inheritance tax.

Specifically, section 41 of the Act amends section 2166 of the Tax Reform Code of 1971 (72 P.S. 9166) by adding the following sentence at the end:

Any inheritance tax return filed after July 1, 2012, under section 20136 that reports transfers of property that are exempt from the inheritance tax under section 2111(s), (s.1) and (t) shall be considered timely if filed within one year of the tax return due date, including an extended due date.

The exemptions for agricultural property that are found in sections 2111(s) and (s.1), and the exemption for family owned business interests in section 2111(t), all require that the property be reported on a timely filed inheritance tax return.  This change to section 2166 (which otherwise provides that timely mailed is timely filed) allows an additional year for inheritance tax returns to be considered timely filed when the return claims an exemption under one of those sections, and the change applies retroactively to returns filed after July 1, 2012.  However, it is possible that this change will not provide retroactive relief if the tax has already been assessed and the time for filing an appeal or challenge to the assessment has expired.

Act 41 of 2017 – Wages Paid Post-Death

Governor Wolfe signed H.B. 203 on 10/30/2017, making it Act 41 of 2017.

The original purpose of the bill was to allow $10,000 (up from $5,000) in post-death wages to be paid to the family without a grant of letters under PEF Code 3101(a).  (This parallels the recent increases from $5,000 to $10,000 in subsections 3101(b) and (c).)

A Senate amendment added a new rule of construction to Chapter 76, on powers of appointment. Section 7602(E)(2) had stated that a grant of a testamentary power to appoint to the donee’s creditors shall include the power to appoint to creditors of the donee’s estate.  The amendment adds a new rule that is the logical inverse, which is that the denial of a power to appoint to the donee’s creditors shall be construed as a denial to appoint to the creditors of the donee’s estate.

Agent Surcharged for Lifetime Transactions, Counsel Fees Reduced

Lifetime transfer of real property from decedent to son was voided due to lack of donative capacity and undue influence, so son must return proceeds of sale of property to the estate, along with mineral royalties received for the property.  Son who served as agent for mother was also surcharged for the death benefit under a life insurance policy which he improperly cashed in during his mother’s lifetime.  Counsel fees paid by estate reduced by half for portion of services devoted to defending the son as executor.  Knapp Estate, 7 Fid.Rep.3d 170 (Jefferson Co. C.P. 2017).

Stipulated Confidentiality Order Denied

Pettition for approval of stipulated order regarding confidential information to be exchanged by the parties was denied without prejudice when the court was not asked to determine whether documents were confidential and there was no compelling reason to approve the agreement of the parties, the court summarizing the standards for filing documents under seal.  Bauer Trust, John Middleton, Inc. Trust, Frances S. Middleton Trust, 7 Fid.Rep.3d 168 (Montgomery Co. O.C. 2017).

Revocation of Consent to Adoption was not Timely

Father’s attempt to revoke his consent to the adoption of his child, made orally at a hearing more than 30 days after the execution of the consent, was not timely under 23 Pa.C.S. § 2711(c) and was ineffective.  In re: R.L., 2017 PA Super 333 (10/20/2017).

Judgment for “Necessaries” Denied

Judgment will not be entered against surviving spouse for “necessaries” when the creditor did not bring suit against the contracting spouse, did not attempt to obtain letters of administration for the estate of the deceased contracting spouse and did file any claim against the estate, and so cannot show that the estate is insolvent, as required by 23 Pa.C.S. § 4102.  Ridge MD Leasing Co. LLC v. Whittington, 7 Fid.Rep.3d 151 (Franklin Co. C.P. 2017).

No Action against Lawyer and Charity

Action against lawyer to decedent and charitable beneficiary of estate was dismissed because lawyer did not have conflict of interest merely because the lawyer’s partner has represented the charity in other matters and charity was not unjustly enriched.  Estate of Kasych v. Butz, 7 Fid.Rep.3d 139 (Lehigh Co. C.P. 2017).

Surcharge Imposed for Unjustified Payments

Administrator C.T.A. surcharged for disbursements from estate funds for expenses that appear to be for her own personal use, and for amounts paid to the estate of the decedent’s brother and his widow, but not for amounts paid for repairs to be made to a property co-owned with the decedent’s brother, even though the repairs were apparently never made and the administrator was the victim of a scam, or for amounts paid to a possible contestant to the will.  Commissions paid to the administrator of approximately 6% of the gross estate were reduced by one half.  Hunsicker Estate, 7 Fid.Rep.3d 130 (Monroe Co. O.C. 2017).