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P & T Hot Tip Emailees:
Some assorted tips--some "hotter" than others:
A sad note: I am very sorry to report the death of Fred George, a former partner of Eckert Seamans, after a five year battle with ALS. Fred was a highly accomplished tax,
estate and trust lawyer, a former President of the Pittsburgh Estate Planning Council, Pittsburgh Tax Club, Allegheny Tax Society, an ACTEC Fellow, a frequent PBI contributor,
and, most importantly, a gentleman, a good man and a friend. During his five year battle, he never lost his intellect, his concern for others or his sense of humor.
Friends will be received at JOHN A. FREYVOGEL SONS, INC., 4900 Centre Avenue at Devonshire Street, from 2-4 and 6-8pm on both Sunday and Monday.
Funeral Tuesday at 11:00 a.m. in the Homewood Cemetery Chapel.
Slomski Case: Accepted by the PA Supreme Court. Sorry, this is really old news (March 31, 2009) for all of you concerned about the development of the law concerning Powers of
Attorney. The issue accepted was: "Whether the “all powers” language in 20 Pa.C.S. §5603(q) includes the power of the agent to change the beneficiary designation of a
qualified retirement plan owned by the principal." The Superior Court analyzed this case as a gifting case rather than a powers case, so it should be interesting to see what
the Supreme Court will do with it.
Novasielski and Piet Update: The Novaselki case was argued about 7-8 weeks ago before the Supreme Court, and, alas, the part of the case that was covered on oral argument was
apparently only the issue of the Supremacy Clause. The case involved a Treasury Direct account and the effect of the establishment of a joint account after execution of a will
whose beneficiaries vary from the joint ownership. As you may recall, Piet and Novasielski held that the will prevailed, despite the provisions of the Multiparty Accounts Act
which for financial accounts purports to create a presumption that a joint account remains the property of the contributor during the life of the contributor, and passes to the
joint owner at death. This issue is very important for planning and estate administration. Note that the law in Pennsylvania at the present time is that if a joint bank
account is established subsequent to a will in which the surviving joint owner is different from what is provided in the will, the will governs the disposition of the joint
account, presumably in the absence of proof of intent to the contrary. The exact reach of this rule, which seems contrary to our statute and decades, if not centuries,
of estate and trust law, is uncertain at this time. Presumably the affected contracts and the actual intent would be examined carefully before application of this rule.
Hopefully, the Supreme Court will provide additional guidance to our Orphans' Court Divisions soon.
Tax Tip: On an entirely different note, if you have clients, or have seen trust or investment accounts in which treasury obligations have significantly appreciated due to the
recent (until recently) flight to safety, you may have noticed that they are now selling at a substantial premium to their purchase price. If they were held over a year,
the gain would be taxed as long term capital gain and the interest received otherwise if held to maturity will be taxed as ordinary income. Therefore, even if all you wanted
to do was buy an equivalent market coupon treasury to replace it, you are able to convert ordinary income interest into capital gain by selling the bond and repurchasing
another, without giving up the return. You will give up "income" in exchange for "principal", so you have to be careful to be sure that your trust can function on a total
return basis, but otherwise, this is a universally smart move. It is not unusual for even a shorter term treasury of a few years maturity to be 10% to 20% appreciated.
By swapping them, you will generally reduce the tax by more than 50%.
Best regards,
Bob Wolf, Moderator |
