Learning to navigate the Probate process in Pennsylvania can feel like a difficult task. The good news is that it doesn’t need to feel that way. This article will provide you with important information on what you should know about Pennsylvania’s Probate law.
Pennsylvania Inheritance Tax
Did you know Pennsylvania is one of only six states with an inheritance tax? This law doesn’t tax the deceased’s estate; instead, it taxes the assets passed onto each beneficiary. However, there is one exception to this law. Any property or assets jointly owned by the decedent and their spouse aren’t subject to the inheritance tax.
The tax breakdown depends on the decedent’s relationship with the beneficiary.
- 0% – decedent to spouse
- 0% – decedent under 21 years of age to a parent
- 4.5 % – decedent to children
- 4.5% – decedent to lineal heirs
- 12% – decedent to siblings
- 15% – decedent to another person or organization *one exemption is if the inheritance is going to a charitable organization, government entity, or a tax-exempt institution
Read more about the Pennsylvania Inheritance tax on our website.
Additional Pennsylvania Taxes
Along with the Pennsylvania Inheritance Tax, a few other state and federal taxes will need to be taken care of after the person’s passing.
#1 Federal and state income tax returns need to be completed for the year of the person’s death.
#2 Estate/Trust income tax return needs to be completed for the year of the person’s death.
#3 Federal estate tax return must be paid within nine months of the person’s passing (extensions might be available depending on your situation).
Having a Will vs. No Will
Many people will wonder whether they even need a Will. The answer will depend on your specific situation. Overall, if you have nothing of value at the time of your passing (assets, a home in only your name), then you might not need a Will. To be sure, you should check with a reputable Estate Planning attorney for an accurate answer.
If you do have items of value and there’s no Will in place at your passing, then the intestacy laws of the Commonwealth of Pennsylvania will dictate the division of your assets. Additionally, an Estate Administration will need to occur.
If there’s a Will in place, then your chosen Executor will follow your instructions and distribute your assets to your intended beneficiaries.
Probate Assets
In Pennsylvania, only assets without a listed beneficiary or if assets are only in the decedent’s name will go through Probate. All other possessions will be transferred to the beneficiary without court approval.
Probate assets will include:
- Bank accounts
- PA real estate
- Vehicles
- Collectible possessions
- Death benefits
- Business interests
Non-Probate assets that are not probate assets and may avoid tax:
- Joint accounts (Taxable)
- Real estate interests in any state (Not taxed for PA purposes. You may need to in that state.)
- Life Insurance (Non-Taxable)
- Revocable Living Trust assets (NonTaxable, but potentially taxed at a later date.)
The above is not a comprehensive list; you should consult with your Probate attorney regarding your specific situation.
Pennsylvania Probate Law Court Expectations
There are two Probate processes available depending on the size of the estate. First, there is a simplified approach for any estate worth less than $50,000, which is called a Small Estate Petition that receives approval from the Court. There is a formal and lengthy estate administration process for any estate worth over $50,000 of probate assets.
Here is a brief review of what you can expect to accomplish during Pennsylvania Probate law court proceedings.
- Gather all the assets
- Transfer assets are to their beneficiaries
- Pay any outstanding bills, including debts and taxes
Executor’s Duties and Responsibilities During Probate
The person chosen to be the estate’s Executor or Administrator is responsible for the following tasks.
- Probating the Will
- Inventorying and appraising estate assets
- Paying taxes
- Resolving debts
- Distributing assets to the heirs
- Closing out the estate with the courts
Here’s How a Probate Attorney Can Help You
Whether you’re preparing for the future or navigating the Probate process now, seeking assistance from a local Probate attorney can help. Auld Brothers Law Group is an Estate Planning Attorney and Probate law firm that regularly works with individuals and families. Our team provides you with clear, straightforward information regarding your specific situation so you can understand your options.