Inheritance Tax

Forms and Publications

• Available at the Department of Court Records, Inheritance Tax Department
  • Room 216 of the City-County Building, 414 Grant St. Pittsburgh PA 15219.
• Download from the PA Department of Revenue

Extension for Filing a Return

Requests for an extension (not to exceed 6 months) for filing must be submitted within the 9 month filing period to:

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 9 months after the decedent's death.

Fees

The filing fee for the original return is $10.00. No personal checks are accepted.

Other probate fees, and other forms and information may be applicable.

Place for Filing

The return must be filed in duplicate with the Inheritance Tax Department 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 9 months after the decedent's death. Interest is charged on the amount of tax unpaid after 9 months from the date of death.

Place of Payment

Inheritance Taxes are payable to the Inheritance Tax Department of the county in which the decedent resided. All checks should be made payable to "Register of Wills, Agent"

Inheritance taxes may need to be paid when property is transferred as the result of a death.

The personal representative (executor or administrator) appointed by the Director of the Department of Court Records is responsible for filing the inheritance tax return.

If the property was not reported by the personal representative, the individual who received property by right of survivorship or a transfer is responsible for filing a return.

Find out about the effect of property transfers on inheritance tax, as well as allowable deductions.

Transfers Prior to the Decedent's 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 monies worth at the time of the transfer, are taxable to the extent that the transfer exceeds $3,000.00 per transferee during any calendar year. Property that was transferred with the decedent retaining a life interest in the same is also 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 not applicable.

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.

Deductions and Family Exemption

Deductions

These items are deductible against the decedent’s taxable estate:

• Unsatisfied liabilities incurred by the decedent prior to his/her death
• 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

Family Exemption

The family exemption is allowable only against assets which pass by a will or by the Pennsylvania Intestate Laws. For decedents dying after 01/31/95 the family exemption is $3,500.

• A right given to specific individuals to retain or claim certain items or amounts of the decedent's property; see Section 3121 of the Probate, Estates and Fiduciaries Code.
• 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.

Information about convenience accounts, how to obtain entry into a decedent’s safety deposit box and a glossary of terms may be helpful when preparing the inheritance tax return.

Convenience Accounts

If an individual adds a name to an account and the person added to the account pre-decease’s that individual, the surviving person whose name remains on the account is required to pay Pennsylvania Inheritance Tax on a portion of the account.

Entry into Safety Deposit Boxes

See Inheritance Tax Bulletin 2011-02.

Glossary of Terms

Codicil - A writing signed at the end by a testator which amends or augments an existing Will.

Decedent - A term used to identify a deceased person.

Estate - The property owned by a person at death over which an executor or administrator is authorized to exercise control either by virtue of a Will or, in the absence of a Will, by the Probate Code.

Joint Tenancy - Property held in the names of two or more persons. The property passes to the surviving joint tenant on death of the other joint tenant or joint tenants.

Probate - This means "to prove" a Will. A Will is proved when it is submitted to the Wills/Orphans' Court Division who determines the Will to be valid and issues a decree appointing a personal representative (executor) to administer the estate of the decedent.

Tenants by the Entireties - A form of joint ownership exclusively for husbands and wives. On the death of a spouse, the surviving spouse becomes the sole owner of the property.

Testator/Testatrix - A deceased person who leaves a Will disposing of property.

Learn the definition of taxable property, qualified exemptions, and how to determine the tax on property held in joint tenancy.

Taxable Property

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.

Exempt Property

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 (1) year of the decedent's death.

Life insurance proceeds payable to a named beneficiary as well as to the decedent's estate are tax exempt.

Life Insurance Exemption

Life insurance proceeds are exempt from the Pennsylvania Inheritance Tax provided that the decedent died after December 13, 1982.

Joint Tenancy

As a general rule, if the joint tenancy was established more than 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.

Example:
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 of 1/2 interest in savings account as of 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: $272.25
Less Discount of 5%: -$13.61
Total: $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.

Determine the inheritance tax rate that applies to your situation and how to obtain a discount for early payment.

Surviving Spouse

The tax rate is based on the date of death of the decedent and taxed as follows:

• Date of death on or after January 1, 1995 - 0% tax rate
• Date of death after June 30, 1994 and before January 1, 1995 - 3% tax rate
• Date of death before July 1, 1994 - 6% tax rate

Others

Lineal Descendants - 4.5%

• Grandfather, grandmother, father, mother children, and lineal descendants.
• "Children" includes natural children whether or not they have been adopted by others, adopted children and stepchildren.
• "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.

Siblings - 12%

• The term "siblings" is defined as those having at least one parent in common with the decedent, related by blood or adoption.

All Other Beneficiaries - 15%

• Except charitable organizations, exempt institutions and government entities which are exempt from tax.

Discount for Early Payment of Tax

If the tax is paid within 3 months after the decedent's death, a discount of 5% of the tax paid is allowed.