THIS INFORMATION HAS BEEN ISSUED TO INFORM AND NOT TO ADVISE.
IT IS BASED ON PENNSYLVANIA LAW. THE STATEMENTS ARE GENERAL, AND INDIVIDUAL
FACTS IN A GIVEN CASE MAY ALTER THEIR APPLICATION OR INVOLVE OTHER LAWS NOT
REFERRED TO HERE.
All necessary Inheritance Tax forms and publications are
available at the Register of Wills. They can also be downloaded at the
PA Department of Revenue website.
Inheritance Tax: An Overview
Rates for Inheritance Tax
The rate of tax imposed on transfers to or for a surviving spouse
are based on the date of death of the decedent and taxed as follows:
|Dates of Death||Rate
|Prior to July 1, 1994||6%
|July 1, 1994 through December 31, 1994||3%
|January 1, 1995 and after||0%
The rates of tax imposed on transfers to other relatives
are as follows:
|Grandfather, grandmother, father, mother, children
1, and lineal descendants2||4½%
|Siblings: those having at least one parent in common with the decedent, related by blood or adoption||12%
|All other beneficiaries (except charitable organizations and exempt institutions)||15%
1 "Children" includes natural children
whether or not they have been adopted by others, adopted children and
2 "Lineal descendants" includes all children of the natural
parents and their descendants, whether or not they have been adopted by others,
adopted descendants and their descendants and step-descendants
Discount for Early Payment of Tax
If the tax is paid within three months after the decedent's
death, a discount of 5% of the tax paid is allowed.
Property owned by husband and wife with right of survivorship
is exempt from Inheritance Tax unless the joint ownership was created by the
decedent within one year of the decedent's death. Life insurance proceeds
payable to a named beneficiary as well as to the decedent's estate are tax
All real property and all tangible personal property,
including but not limited to cash, automobiles, furniture, antiques, jewelry,
etc., located in Pennsylvania are taxable. All intangible property including
stocks, bonds, bank accounts, loans receivable, etc., is taxable regardless of
where it is located. Jointly-owned property, except between husband and wife,
including but not limited to real estate, securities, bank accounts, etc., with
right of survivorship, is taxable. Joint property is taxable even though the
decedent's name was added as a matter of convenience. As a general rule, if the
joint tenancy was established more than a year before death, the decedent's
fractional portion of joint property is subject to tax. The fractional portion
is determined by dividing the value of the property by the number of joint
tenants regardless of their contribution.
Decedent died on 07/07/00. The only asset was interest in a joint savings
account held with son, with right of survivorship. Gross value of account,
including interest to date of death was $20,500. Account was opened on
03/06/94. Surviving son paid $4,200 for father's burial after the funeral.
|Gross appraised value (1/2 interest in savings account at 10/07/00)||$10,250.00
|Less funeral bill allowed as deduction||$4,200.00
|Clear value of estate for tax purposes||$6,050.00
|Inheritance Tax due as of 10/07/00 from son (at 4½%)||$272.25
|Less discount (at 5%)||$13.61
|Total Tax Payable||$258.64
Half of the joint account is subject to tax. The funeral bill
is an allowable debt. Tax is imposed at 4.5% for lineal heirs, and 5% discount
is permitted since payment was made within 3 months of the date of death.
If the decedent died after December 12, 1982, a transfer made
within one (1) year of the date of death, if made without valuable and adequate
consideration in money or money's worth at the time of the transfer, is taxable
to the extent that the transfer exceeds $3,000 per transferee during any
calendar year. Property that was transferred with the decedent retaining a life
interest is taxable. Also included as transfers are accounts registered in the
name of the decedent in trust for another person, but the $3,000 exclusion is
Transfers to Spouse for Dates of Death on or after
January 1, 1995
Transfers in trust for the sole use of the surviving spouse
are not taxable in the current decedent's estate but are includable in the
surviving spouse's estate when they die. This exclusion of the asset in the
first decedent's estate may be bypassed, however, if the executor of the estate
elects to include the trust in the first decedent's estate. This election must
be made on a timely filed inheritance tax return.
Child to Parent Transfers
A transfer from a child twenty-one (21) years of age or
younger to a natural parent, adoptive parent, or step-parent will be taxed at
the zero rate. This applies to estates of decedents dying after June 30, 2000,
and to inter vivos transfers made by decedents dying after June 30, 2000,
regardless of the date of the transfer.
Unsatisfied liabilities incurred by the decedent prior to
his/her death are deductible against his/her taxable estate. In addition to
debts incurred by the decedent or estate, the cost of administration, attorney
fees, fiduciary fees, funeral and burial expenses including the cost of a
burial lot, tombstone or grave marker and other related burial expenses are
The family exemption is a right given to specific individuals
to retain or claim certain items or amounts of the decedent's property in
accordance with Section 3121 of the Probate, Estates and Fiduciaries Code. For
decedents dying after 01/31/95 the family exemption is $3,500.
The family exemption may be claimed by a spouse of a decedent
who died a resident of Pennsylvania. If there is no spouse, or if the spouse
has forfeited his/her rights, then any child of the decedent who is a member of
the same household as the decedent may claim the exemption. In the event there
is no spouse or child, the exemption may be claimed by a parent or parents who
are members of the same household as the decedent. The family exemption is
allowable only against assets which pass by a will or by the Pennsylvania
Persons Responsible for Filing Return
The personal representative (executor or administrator)
appointed by the Register of Wills is responsible for filing the return. An
individual who received property by right of survivorship or a transfer is
responsible for filing a return if the property was not reported by the
Place for Filing
The return must be filed in duplicate with the Register of
Wills of the county in which the decedent resided.
Time for Filing and Payment of Tax
The Inheritance Tax Return and tax liability is due within
nine months after the decedent's death. Interest is charged on the amount of
tax unpaid after nine months from the date of death.
Extension for Filing Return
Requests for an extension (not to exceed six months) for
filing must be submitted within the nine-month filing period to the Bureau of
Individual Taxes, Inheritance Tax Division, Dept. 280601, Harrisburg, PA
17128-0601. This extension will not relieve the estate of the interest which
will accrue on any tax liability unpaid nine months after the decedent's death.
Place of Payment
Inheritance Taxes are payable to the Register of Wills of the
county in which the decedent resided. All checks should be made payable to
"Register of Wills, Agent."
Entry into Safe Deposit Boxes
Unless registered in the names of husband and wife, the box
is sealed at the death of the decedent. However, entry into the box to remove a
will or cemetery deed is possible if done in the presence of an employee of the
financial institution. If the box is in the decedent's name alone or in the
name of the decedent and a deputy or custodian, the box is sealed at death. The
executor or administrator must schedule an appointment to meet with a
representative of the Dept. of Revenue (412-565-5253) at the bank and present a
Short Certificate to the financial institution before the box can be opened.
Once the box has been inventoried, a copy is given to the co-owner or personal
representative and another copy is sent to the Dept. of Revenue. After the box
is inventoried, any or all contents may be removed.
In lieu of scheduling an appointment with the Dept. of
Revenue, the box may be entered with an employee of the bank and inventoried by
that employee providing all the same criteria are met. This, however, is at the
discretion of the financial institution and there may be a reasonable charge.