My father's will directed that my brothers share of my fathers estate go into a discretionary trust. I was the executor and administrator of...

Question

My father's will directed that my brothers share of my fathers estate go into a discretionary trust. I was the executor and administrator of my fathers estate. My father lived in Maryland. When my father died I established a checking account for my brother as a discretionary trust which I was the trustee. My brother was handicapped and died last Thanksgiving. My fathers will also stated that I am the sole beneficiary of my brothers trust when my brother dies. Does Pennsylvania law require this trust to be included in my brothers estate for inheritance tax purposes? In other words, when I gain possession of the trust do I have to pay a Pennsylvania inheritance tax on this trust. The attorney I hired says that I do and I'm seeing information on line that tells me different. Inheritance tax in PA is 12%.

Answer

And is the online information from a licensed PA attorney with malpractice insurance? Will you be able to collect from that attorney's malpractice insurance?

John

Answer

Now you are re-posting the same question but adding more facts. Nobody has seen the documents of which you speak and you are being grossly unfair both to your attorney and any online attorneys. You are second guessing your attorney who has seen the documents with information gleaned from other attorneys who have not. It also is unethical for outside attorneys to interfere.

Since you have an attorney, then you need to be discussing this with YOUR attorney. If you do not like the answer (not all attorneys are correct) then PAY another attorney for a second opinion, albeit one based on review of all of the documents.

Again, I do not see how a trust ever becomes an asset of your brother's estate if this was a properly drafted trust. Which leads me to believe either this was not a properly drafted testamentary trust OR you messed it up by creating some bank account in your brother's name. If the latter, then this would be an asset of your brother's estate because you made it one.

A bank account is not really a trust. Your father's will is the trust and specifies how and when money is to be disbursed to your brother. You need to review that language to see whether the trust says the trustee "shall" or trustee "may" disburse funds. Words mean things and which of these two words is used may be the key. If the trust says "may" the beneficiary has no right to demand funds and does not own funds. If the trust says "shall" then the money is now the beneficiaries and they have more of an ownership interest. In such case, that may also help point as to whether your brother owned the trust funds such that they would become part of his estate.

And I don't have malpractice insurance. Offering advice online is just that - advice. It is not a substitute for a legal opinion and review of the documents. It could be wrong advice too (I am not incompetent but not being able to review documentation and having you change facts at whim are factors which may lead to wrong conclusions by me). That is why you need to have this all checked out by someone who is competent.

if nothing else, talk to the PA revenue department and get an answer from them.