Trustee Deadlock on Charitable Distributions

In a dispute between individual trustees and the corporate trustee over discretionary distributions from a charitable trust, the individual trustees have standing to appeal an adverse decision because it affects the rights of unascertained beneficiaries.  The Orphans’ Court erred in approving the charitable beneficiaries selected by the corporate trustee without first taking evidence needed to determine the intent of the settlors of the trust.  In re: John E. Jackson and Sue M. Jackson Charitable Trust, 2017 PA Super 350 (11/7/2017).

“Death Bed” Transfer on Death Designation Valid

Orphans’ Court properly denied motion for summary judgment claiming that a transfer on death beneficiary designation signed by decedent and delivered to her bank shortly before her death was invalid because it was not accepted by the bank during the decedent’s lifetime, was filled in by her agent and not by the decedent, and failed to designate a contingent beneficiary, but the court’s finding that the account was not a testamentary asset was vacated and the case remanded so that the court could address the claim that the beneficiary designation was the result of undue influence by the agent.  In re: Estate of Anna S. Wierzbicki, 2017 PA Super 346 (11/6/2017).

Executor Commission of 3% Approved

Executor’s commission that fell between 3% of the inventory value and 3% of the inheritance tax value was approved, and a surcharge for early distribution to the executor was denied when the amount of interest that would have been earned by the estate would have been negligible.  Dewalt Estate, 7 Fid.Rep.3d 200 (Lycoming Co. O.C. 2017).

Agents without Power to Create Joint Accounts

Power of attorney did not include power to create joint accounts with rights of survivorship, or to commingle assets of the principal with the agents, so the creation of a joint account was invalid and the money in the account was part of the principal’s estate.  Miller Estate, 7 Fid.Rep.3d 195 (Cumberland Co. O.C. 2017), rev’d, 312 MDA 2017 (Pa. Super. 11/6/2017) (non-precedential).

Petitions Dismissed for Failing to Disclose Changes to Trust

Petitions relating to an irrevocable trust were dismissed sua sponte, but without prejudice, when it became clear that the irrevocable trust had been “amended” and the petitioners had failed to disclose the original terms of the trust or how it had been amended, so that the court could not determine whether the purported amendment was valid. Frances S. Middleton Trust, 7 Fid.Rep.3d 187 (Montgomery Co. O.C. 2017).

Updated Software Listings

Posted on by November 3, 2017

I have updated the software listing that was originally published as an appendix to my book Wills, Trusts, and Technology, and have published it as “Software and Services for an Estates Practice” in the “Directories” menu.

In updating the listing, I also checked to see what operating systems (e.g., Windows or Mac OS) were supported by different publishers, and was surprised to find that a number of systems are “cloud computing,” meaning that the program is not downloaded and installed on a desktop computer or laptop, but instead runs on a remote server that is controlled by the publisher.  In other words, users are not really buying software, but are subscribing to a service.  One of the advantages is that these systems can be accessed through almost any browser running on any kind of a machine, including Macs, tablets such as the iPad, or iPhones and other “smart phones.”

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.