Q: What happens when a small trust of $40,000 suddenly loses its trustee through death, and the alternate named trustee does not want to serve as trustee?
A: No one can be made to serve as a trustee. If the alternate trustee does not want to serve, she may resign or refuse to accept the office. Once a trust has no serving trustee, there are three ways to have a new trustee appointed: 1. look to the document and see who is to be the next alternate trustee; 2. the beneficiaries can unanimously in writing agree to a appoint a new trustee; 3. the Court of Common Pleas can appoint a trustee.
In your case, if the named trustee does not want to serve, can you have the beneficiaries agree upon a person or institution to act as a trustee? Most banks will not want to act as trustee on such a small trust; their costs and fees will slowly destroy the trust because a small trust does not earn enough income to maintain a trustee. You are really looking for someone who is willing to serve as trustee for free.
Q: I want to buy a parcel of land from a young woman who inherited the land from her mother and father. The parents died a number of years ago and I am told there is a Pennsylvania inheritance tax lien on the property now because neither of the parents’ estates paid inheritance tax upon their respective deaths. What is one to do?
A: Because you state that inheritance tax is due, there are two ways of handling the matter. The first way is to have the property appraised and/or use the county tax information to determine the value of the property, prepare a Pennsylvania inheritance tax return and file it with the Department of Revenue. The Revenue Department will then assess the tax, and once the tax is paid, the commonwealth will release any lien that it has.
The second way to handle the matter is to obtain a valuation of the property, send the valuation statement, appraisal or county assessment information along with a death certificate to the Revenue Department. The department will then review the matter after making the appropriate calculations of the current sale price less any mortgages that were due and owing on the property at the time of death, times the tax rate in effect at the time of death. A number is arrived at by the commonwealth and you will be assessed a tax to pay. Once the tax is paid, the commonwealth will release its tax lien.
People do not always realize that avoiding paying the inheritance tax at the time of someone’s death is often quite foolish, because the commonwealth’s lien continues into the future and accrues interest, which someday must be paid. It is often an unsuspecting person who ends up paying the tax because he or she cannot pass good title without having the tax lien removed.
James M. Rayback is a practicing lawyer with the State College firm of James M. Rayback Inc.
