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HomeMy WebLinkAbout03-21-11Neil Warner Yahn, Esquire , , Attorney LD. No. 82278 c7 A James Smith Dietterick & Connelly, LLP ~ ~ - ~ n ~ P.O. Box 650 h '~ ~ ~? ~r r ~_ , Hers ey, PA 17033 ~ 1 ,-, ~ Petitioner ~ cry ~ -- ~ ' C7 C7 O --t - _; ~~ IN THE COURT OF COMMON PLEAS C7Om ~J ~-- ~ ~ -- CUMBERLAND COUNTY, PENNSYLVANIA D~ c `-" -fir, ORPHANS' COURT DIVISION ~" IN RE: No. 21-10 - 0973 ESTATE OF GUOLAUG BRYNJA GUOJONSDOTTIR, deceased ; AMENDED MOTION TO CONFIRM PAYMENT TO THE HONORABLE JUDGES QF SAID COURT: Petitioner, Neil Warner Yahn, Esquire (herein "Petitioner") of the Law Firm of JAMES, SMITH, DIETTERICK and CONNELLY, LLP, and as Administrator of the Estate of Guolaug Brynja Guojonsdottir (herein the "Estate"), sets forth upon valid information and belief, as follows: 1. Guolaug Brynja Guojonsdottir (herein the "DecedenP') died a resident of Reykjavik, Iceland on December 24, 2008, with a previous principal residence in Pennsylvania located at 2331 Chestnut Street, Camp Hill, Cumberland County, Pennsylvania. 2. Decedent is survived by her five (5) children who are named beneficiaries under the Estate, namely: i. Gudjon J. Olafsson who currently resides at 52 Boatswain Drive, Berlin, Maryland 21811 (electronically at Gudjon.Olafsson@perdue.com); ii. Bryndis Gudjonsdottir Bryndis Gudjonsdottir (can be written "Gudjonsdottir) Reynihlid 4 - 105 Reykjavik Iceland; iii. Brynja Gudjonsdottir Brynja Gudjtinsdottir c/o: Halldor Jakobsson Gautavik 20 104 Reykjavik Iceland (email at bgbebe65@gmail.com); iv. Asa B. Oates who currently resides at 121 Mapleton Blvd, Harrisburg, Pennsylvania 17112; and v. Olafur K. Olafson who currently resides at 145 Taylor Street, Apartment 608, San Francisco, California 94102. 3. On or about February 2, 2009, Stefan Geir Thorisson, Esquire (herein "Thorisson"), of Reykjavik, Iceland, was appointed as Receiver of the Decedent's Foreign Estate by the Reykjavik District Court whereby the Will was probated. 4. On or about December 2, 2010, upon petition, Ancillary Letters of Administration were granted to Petitioner by the Cumberland County Register of Wills as Administrator of the Decedent's Domestic Estate. 5. Petitioner has determined that the Decedent was not a U.S. citizen based upon information to date, however, the question of residency (as the concept is for transfer tax purposes) is relevant,t and now the Petitioner must apply the transfer tax concept of "residency" in order to determine whether the Code subjects or would subject a given property transfer to federal taxation and the amount of exemption of the Decedent. 6. If Petitioner finds that the non-citizen Decedent is a resident of the United States for transfer tax purposes, the Code reaches worldwide to all transfers of her Estate's property, wherever such pr©perties are located at the time of the transfers resulting in an exemption of Two Million Dollars ($2,000,000.00), however if Petitioner finds that the non-citizen Decedent is not ~ As the foregoing makes cleaz the application of the concept of residency, in any sense, is irrelevant if the Decedent is found to be a U.S. citizen (and even if a dual citizen), as the transfers made by U.S. citizens and their estates aze subject to the Code's worldwide reach and thus a standard 706 is filed. a "resident" of the United States for transfer tax purposes, the Code embraces only transfers of Decedent's properties located within the United States and the exemption amount is limited to $60,000. 7. Residency is determined by domicile, which can be said that this definition clearly carries within it two essential elements, those being physical presence and intent. The Decedent is a domiciliary of the United States if she is "living" in the United States "for even a brief period of time" (the physical presence element), "with no definite present intention" of later relocating to live somewhere else (the intent element). 8. Petitioner is required to perform an extensive background check into the Decedent as the determination of domicile is mainly a question of fact and the U.S. Tax Courts look to a variety of factors in assessing the intention of an individual to live in the United States with no present, definite intention of relocating.Z 9. Byway of example of the fact sensitive nature of the matter at hand, in Khan Est. v. Comr., the U.S. Tax Court held that a Pakistani citizen was a resident of the United States ` A point of clarification that must be reiterated in this introduction is that the concepts of residency for federal income tax purposes and residency for transfer tax purposes aze profoundly different. Non-citizens who are "resident aliens" for Federal Income Tax (herein "FIT') purposes are not necessarily "resident" for the purposes of the Federal Estate Taxes. Residency for transfer tax purposes results only if the subject individual is a domiciliary of the United States. Thus, and as explained further below, for federal transfer tax purposes the term "residence" means "domicile," the term "resident" means colloquially a "domiciliary. Anon-citizen for FIT is considered to be a lawful permanent resident if he or she lawfully holds a "green cazd." One who holds a green cazd will continue to be considered a U.S. resident until such time as his or her green cazd is revoked or abandoned. And, anon-citizen that was not a U.S. resident during the previous calendar yeaz, obtains a green cazd during the current year, and does not meet the "substantial (presence test" with respect to the current year, is considered a U.S. resident as of the first day of the current year on which he or she was present in the United States whilst a "green cazd" holder. See §7701(b)(2)(A)(ii),7701(b)(6)(B); Regs. §301.7701(6)-1(6)(1). Effective for any individual whose expatriation date is on or after June 17, 2008, the Heroes Earnings Assistance and Relief Tax Act of 2008, P.L. 110-245, §301(c)(2)(B), (g)(1), added a provision to §7701(6)(6) specifying that an individual ceases to be treated as a lawful permanent resident if he or she commences to be treated as a resident of a foreign country pursuant to a tax treaty between the United States and that country, does not waive the treaty benefits applicable to residents of the foreign country, and notifies the IRS of the commencement of such treatment. when he died and, thus, his estate was entitled to>the full unified credit for estate tax purposes.3 10. On or about February 15, 2011, Petitioner filed a Motion to Enjoin to secure Decedent's assets, including two (2) investment accounts with Charles Schwab, to ensure adequate funds would be available to satisfy the taxes owed to the IRS upon the filing of the Estate Tax Return. 11. The Motion to Enjoin was granted on February 16, 2011 by this Honorable Court, however portions therefrom have already been paid to certain beneficiaries, namely, Gudjon, Asa, and Olafur. 12. In preparing the Estate Tax Return, Petitioner etas completed two (2) separate Form 706s which will be filed depending upon whether the Decedent had relinquished her domicile within the United States. 13. The draft Estate Tax Return Form 706 (attached as Exhibit "A") concludes the Decedent died as a citizen or resident of the United States. 14. The draft Estate Tax Return Form 706 NA (attached as Exhibit "B") concludes the Decedent dies as anon-resident/non-citizen of the United States taxing only United States property. s In Khan, the decedent was born and raised, married, and died in Pakistan. In the early 1900s, the decedent's father had established a farming and real estate business in California, the majority of which passed to the decedent upon his father's death in 1958. The decedent's eldest son came to California shortly after his grandfather's death and joined another relative in running that business, whilst the decedent remained in Pakistan, and therein operated a 15- acre farm and lived with his wife and other children. In 1971 the decedent came to the United States for the first time on a visitor's vise, leaving his wife and other children behind, but later returned to Pakistan in 1974 to continue farming. After being informed by his son that one of their U.S. businesses was going to lose U.S. rice subsidies because the decedent and the other owners had no social security numbers, the decedent returned to the United States and obtained a green card and a social security number. He returned to Pakistan about a year and a half later, in 1986. Although the decedent obtained a reentry permit before returning to Pakistan, he never returned to the United States. During this latter visit to the United States, the decedent resided with his son, who added a bedroom and bath to his home for his father's use. The decedent died in Pakistan in 1991. For tax years 1986-90, U.S. income tax returns were filed for the decedent, indicating that he was a nonresident, but after his death, amended returns were filed changing his status to resident. Additionally, the estate filed a U.S. estate tax return, indicating that he was a U. S. resident and, thus, his estate was not limited to We $13,000 unified credit under §2102. 15. At this time, Petitioner has insufficient facts to adequately answer Questions 5 and 6 of the Form 706-NA (see page 2 of Exhibit "B"). 16. As Petitioner has presented, the determination of the Decedent's domicile prior to her death has a substantial impact on the taxes owed to the IRS as the balance due on the traditional Form 706 (see line 20 of Exhibit "A") is approximately One Hundred Thirty Six Thousand Nine Hundred Eighty One Dollars and Forty Four Cents ($136,981.44) whereas the balance due on the non-resident/non-citizen Form 706-NA (see line 16 of Exhibit "B") significantly increases the taxes owed to approximately Three Hundred Thirty Two Thousand One Hundred Seventy Five Dollars and Fifty Three Cents ($332,175.53).4 17. However, as Petitioner continues to gather facts regarding the Decedent's domicile prior to her death, Petitioner is not desirous of further delaying payment to the IRS as penalties and interest continue to accrue on the overdue Estate Tax Return because at a minimum One Hundred Thirty Six Thousand Nine Hundred Eighty One Dollars and Forty Four Cents ($136,981.44) will be due to the IRS. 18. As such, Petitioner requests authority from this Honorable Court to make a payment to the IRS in the amount of One Hundred Twenty Five Thousand Dollars ($125,000.00) to mitigate the assessment of further potential penalties and interest. WHEREFORE, Petitioner respectfully requests that this Honorable Court authorize Petitioner, Neil Warner Yahn, Esquire, as Administrator of the Estate of Guolaug Brynja Guojonsdottir, to make a payment of One Hundred Twenty Five Thousand Dollars ($125,000.00) to the Internal Revenue Service from such assets as the Petitioner deems appropriate. 4 These calculations do not include penalties or interest due on the balance owed which may be assessed by the IRS due to the delays in filing. In addition, allocations of additional assets and/or excluded assets may be determined at a later time. Respectfully submitted, JAMES, SMITH, DIETTERICK & CONNELLY,LLP Date: J ~ By: Neil W. Attorney. No. 82278 134 Sipe Avenue Hummelstown, PA 17036 (717) 533-3280 Petitioner VERIFICATION I, NEIL WARNER YARN, ESQUIRE, verify that the statements made in the foregoing Amended Motion are true and correct to the best of my knowledge. I under§tand that false statements herein aze made subject to the penalties of 18 Pa.C.S. §4904 relating to unsworn falsification to authorities. Date: 321 < NEIL WARDjER YARN, Neil Warner Yahn, Esquire Attorney LD. No. 82278 James Smith Dietterick & Connelly, LLP P.O. Box 650 Hershey, PA 17033 Petitioner IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION IN RE: No. 21-10 - 0973 ESTATE OF GUOLAUG BRYNJA GUOJONSDO'Y'TIR, deceased . CERTIFICATE OF CONCURRENCE Pursuant to the Cumberland County Local Rules, having not been presented with opposing counsel in the matter herein, Petitioner avers the Amended Motion to Confirm Payment is uncontested. Respectfully submitted, JAMES SMITH DIETTERICK & CONNELLY, LLP Date: 2 ` ~ By: Neil W ahn, Esqut Attorney . # 82278 P.O. Box 650 Hershey, PA 17033 (717)533-3280 Petitioner Neil Warner Yahn, Esquire Attorney LD. No. 82278 James Smith Dietterick & Connelly, LLP P.O. Box 650 Hershey, PA 17033 Petitioner IN THE COURT OF COMMON PLEAS CUMBERLAND COUNTY, PENNSYLVANIA ORPHANS' COURT DIVISION IN RE: No. 21-10 - 0973 ESTATE OF GUOLAUG BRYNJA : GUOJONSDOTTIR, deceased CERTIFICATE OF SERVICE AND NOW, this ~ day of March, 2011, I, Neil W. Yahn, Esquire, do hereby certify that I served a true and correct copy of the foregoing Amended Motion to Confirm Payment upon the following below-named individuals by depositing the same in the U.S. Mail, postage pre-paid at Hershey, Dauphin County, Pennsylvania: Gudjon J. Olafson 52 Boatswain Drive Berlin, MD 21811 Brynja Gu6jonsdottir 20 IS-104 Reykjavik Olafur K Olafson 145 Taylor Street, Apt 608 San Francisco, CA 94102 Bryndis GuBjonsdottir Reynihli6 4 IS-105 Reykjavik Kristine Passow Charles Schwab Estates Distribution Services Orlando Operations Center P.O. Box 628291 Orlando, FL 32862 Asa B. Oates 121 Mapleton Blvd Hamsburg, PA 17112 Stefan Geil Thorisson Adalstraeti 6 IS-101 Reykjavik Neil W. ahn