Courts extend estate tax, pension plan rights to same-sex couples

In recent months, courts have extended important elder rights to same-sex married couples.

Estate tax

Last summer’s landmark ruling by the U.S. Supreme Court in United States v. Windsor struck down a provision of federal law that excluded same-sex couples from the definitions of “marriage” and “spouse.”

Edith Windsor sued to obtain a refund of federal estate tax she had paid after the death of her spouse, Thea Spyer. Edith and Thea married in Canada in 2007, and their marriage was recognized by the state of New York, where they resided. Edith claimed she was entitled to a refund because of the exemption from federal estate tax available to surviving spouses, but the IRS denied the refund.

The Supreme Court ruled it was unconstitutional for the law to exclude same-sex couples from the definition of “marriage.” “The federal statute is invalid, for no legitimate purpose overcomes the purpose and effect to disparage and to injure those whom the State, by its marriage laws, sought to protect in personhood and dignity,” the Court held. “By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment.”

As a result, Edith was entitled to an estate tax refund of $363,053.

Pension plan

Following the Windsor ruling, a federal court in Pennsylvania ruled in favor of another same-sex surviving spouse who sought of the death benefits from her deceased wife’s pension plan.

Under the terms of pension plan, death benefits were payable to the surviving spouse unless she had signed a written waiver. Jean Tobits, who was considered the spouse of Sarah Farley under Illinois law where they lived, applied to receive Sarah’s pension plan death benefits after Sarah died from cancer in 2010.

The Pennsylvania-based law firm for whom Sarah worked also received a claim for death benefits from Sarah’s parents. The firm asked the court to resolve the competing claims.

Following the Windsor decision, the court held that Jean met the definition of a “spouse” under applicable federal law, since her marriage to Sarah was recognized as valid by the state where they lived. Since Jean had never signed a waiver, she was entitled by law to receive the death benefits of Sarah’s pension plan. (Cozen O’Connor, P.C. v. Tobits, et al.)

Pennsylvania status

Currently, Pennsylvania neither permits same-sex marriages nor recognizes such marriages entered into in other states, territories, or countries. A lawsuit in federal court has challenged the constitutionality of Pennsylvania’s laws on this issue. The presiding judge has said the case may go to trial in June of 2014, according to Reuters. (Whitewood, et al. v. Wolf, et al.)

Pittsburgh Steelers Seat License: Do You Need to Probate?

If a person dies owning a seat license for Pittsburgh Steelers football games, will someone need to open a probate estate to transfer the license?

Yes, according to a number of estate attorneys I have spoken with who have had this issue arise in their practices. According to the official Pittsburgh Steelers website:

“Transfer Resulting From Death Of A Seat License Holder - In addition to all other items required for processing a transfer request, the following requirements must be met: (1) a certified copy of the death certificate of the deceased license holder must be submitted; (2) the Transfer Form must be signed by the Executor or Administrator of the deceased license holder’s estate; and (3) the Executor or Administrator must submit official evidence of his/her capacity. In the case of an Executor, a recently-dated short certificate of Letters Testamentary must be submitted; or, in the case of an Administrator, Letters of Administration, bearing a raised seal.”

Can you avoid probate by owning the seat license jointly with someone else? The Steelers website says no:

“No Joint-Ownership Of Seat Licenses - There shall be no joint-ownership of any seat license. There may only be one license holder for a given seat at any given time.”

However, the seat license may be owned by a corporation or partnership and transferred by the signature of an “authorized official.” A person could also avoid probate by transferring ownership before death.

What is a “self-proved” or “self-proving” will in Pennsylvania?

If you’re the executor of an estate, you want to be able to walk into the register of wills office, present the original will (along with other required materials), get sworn in, obtain the documents you need, and walk out ready to start settling the estate.

A “self-proved” or “self-proving” will is going to help.

If you are doing your estate planning now, make things easier for your executor by signing a will that is self-proved. (I will discuss how shortly.)

Background

To make a valid will in Pennsylvania, you must put it in writing and sign it at the end. If you can only make an “x” or some other mark instead of signing, two witnesses must be present and must also sign their names to the will in your presence. If you can’t sign or even make a mark, you can authorize someone else to sign for you, but again, you must have two witnesses who also sign their names to the will in your presence.

In order for the will to be accepted by the register of wills to open an estate, Pennsylvania law requires that the will be “proved by the oaths or affirmations of two competent witnesses.”

So if you had simply signed your will in front of two witnesses, those witnesses could appear at the register of wills office and swear under oath that they did indeed watch you sign that will. But what an inconvenience for the witnesses!

And what if you signed the will 30 years before you died? Will the witnesses still remember? Are they still alive? Can they be found? If not, can someone else swear that they recognize your signature on the will?

Self-proved will

A self-proved (sometimes called “self-proving”) will solves this problem.

If the will contains certain acknowledgements and affidavits, the register of wills shall accept the will without the need of witnesses to the signature.

Here is an example of an acknowledgement and affidavit that would be acceptable under Pennsylvania law:

When it won’t be accepted

There are three situations in which the register of wills would not accept a self-proved will:

1. When the validity of the will is being contested;

2. When the will is signed by mark; and

3. When the will is signed by someone else (as described above in the first paragraph under Background).

In these situations, you’ll need to have witnesses appear or submit sworn statements.

Execution

Finally, it’s important to remember that to make an effective self-proved will, the document must be executed correctly.

You’re not required to use the services of an attorney, but a qualified attorney can often help you make sure your will is drafted and executed properly.

New probate petition form required

The Supreme Court of Pennsylvania has adopted a new form to be used in opening probate estates.

The new form is not radically different from the current form, but in my opinion it is an improvement. It arranges information in a clearer, more logical fashion.

Use of the new form will be required beginning November 10, 2011.

The new form can be found here.

The Supreme Court’s order adopting the new form can be found here.

What is an intestate estate?

If you die without a will, the state will say who gets your estate.

In Pennsylvania, where I practice, the state has a set of rules for what’s called your “intestate estate.” (Our rules are similar to those in other states, but check the law where you live.)

But what is an intestate estate?

Pennsylvania defines it as “all or any part of the estate” of a deceased person that is “not effectively disposed of by will or otherwise.”

If you die with a will, hopefully it will take care of all your property, especially if it is drafted well. But it might not, for various reasons. For example, your will might leave some portion of what you own – or maybe all of it – to someone who dies before you do. That’s why you might have some or all of it “not effectively disposed of by will.”

On the other hand, what you owned could have been disposed of “otherwise” even if you didn’t have a will. Jointly held property, for instance, passes directly by law to the surviving owner if it is owned with a right of survivorship. (It’s different, though, if multiple parties own property as “tenants in common.” If one of the tenants dies, that tenant’s share is treated as owned by him or her alone.) Also, many accounts have beneficiary designations, which likewise pass property directly to the beneficiaries without going through a probate estate.

So an intestate estate is what was owned by the deceased in his or her own name, or as a tenant in common, and wasn’t given to an existing beneficiary through a will or other legal arrangement.

Who gets the intestate estate? Stay tuned – I’ll address that in later blog posts.