Inheritance tax is a tax on the right of succession or privilege of receiving property at death, and it is imposed upon the transfer of taxable property.
The net value subject to tax is determined by subtracting from the value of the gross estate the amount of approved deductions.
Who must file an inheritance tax return?
In Pennsylvania, an inheritance tax return must be filed for every decedent who has property which is or may be subject to tax.
You must file a return if you are:
a) The personal representative of the decedent’s estate. The return must disclose property of the decedent administered by the personal representative and additional property, which is or may be subject to Inheritance Tax, of which the personal representative has or acquires knowledge.
b) The transferee of property, if no personal representative is appointed or if the personal representative does not file a return, or if the personal representative files a return but does not include the subject property. A “transferee” means any person to whom a transfer is made and includes legatees, devises, heirs, next of kin, grantees, beneficiaries, vendees, assignees, hones or surviving joint tenants. The return must disclose any property or interest therein or income therefrom in possession or enjoyment, present or future, in trust or otherwise which passes ownership to the transferee. The
inclusion of property in the return does not constitute an admission that its transfer is taxable.
When to file the inheritance tax return
You must file as soon as possible after the decedent’s death, but not later than nine (9) months from the decedent’s death.
What is the inheritance tax rate?
The current spousal rate is 0% effective for all estates after January 1, 1995.
The level rate is 4.5% for deaths on or after July 1, 2000.
This applies to grandfather, grandmother, father, mother, children, un-remarried wife and husband or widower of a child and lineal descendents. “Children” includes natural children whether or not they have been adopted by others, adopted children and stepchildren. “Lineal descendents” includes all children of the natural parents and their descendents, whether or not they have been adopted by others, adopted descendents and their descendents, and step-descendents.
The sibling rate is 15% which applies to brothers or half-brothers, sisters or half-sisters, and persons having at least one parent in common with the decedent, either by blood or adoption.
Transfers to exempt charitable organizations except institutions and government entities are exempt from tax.
The preparation of the inheritance tax return can be complicated. Attorney Matz can assist you in both the administration of the estate and the preparation of the Pennsylvania Inheritance Tax return.