Estate Planning Laws in Pennsylvania

Estate Planning Law in Pennsylvania: Overview

Pennsylvania is one of six states with an inheritance tax. The tax rate depends on the beneficiary's relationship: 0% for surviving spouses, 4.5% for lineal descendants and ascendants, 12% for siblings, and 15% for all others. Pennsylvania does not have a separate state estate tax. The state is a common law property state with an elective share of one-third. Pennsylvania requires two witnesses for wills; holographic wills are not recognized. The Register of Wills handles probate in each county. The small estate threshold is $50,000. Pennsylvania does not allow transfer-on-death deeds for real property.

Key Statutes & Deadlines

Pennsylvania Inheritance Tax

Pennsylvania's inheritance tax applies to virtually all transfers at death, regardless of estate size. Surviving spouses are exempt (0%). Direct descendants and ascendants pay 4.5%. Siblings pay 12%. All other beneficiaries, including nieces, nephews, friends, and unmarried partners, pay 15%. Life insurance payable to a named beneficiary is exempt. Revocable trusts do NOT avoid the inheritance tax—assets in a revocable trust are still subject to the tax. This is a critical distinction that surprises many people who create trusts thinking they will avoid all taxes.

Register of Wills

Pennsylvania uses Registers of Wills (elected officials in each of the state's 67 counties) to handle probate. The Register admits wills to probate, grants letters testamentary, and oversees estate administration. Contested matters go to the Orphans' Court Division of the Court of Common Pleas. Philadelphia has a separate Orphans' Court.

Trust Planning

While revocable trusts avoid probate in Pennsylvania, they do not avoid the inheritance tax. Irrevocable trusts established more than one year before death may avoid the tax, but certain transfers to irrevocable trusts within one year of death are taxable. Pennsylvania does not have TOD deeds or a domestic asset protection trust statute. Life insurance trusts and charitable planning are important tax planning tools.

Pennsylvania Court System

Pennsylvania probate is handled by the Register of Wills in each of its 67 counties. Contested matters go to the Orphans' Court Division of the Court of Common Pleas. Philadelphia has a separate Orphans' Court. The process includes filing the will, granting letters testamentary, inventorying assets, paying debts and taxes, and filing an inheritance tax return. Appeals go to the Superior Court and then to the Supreme Court.

Damages & Penalties

Pennsylvania's inheritance tax applies at rates from 4.5% to 15% depending on the beneficiary. The tax is due nine months after death with a 5% discount for early payment within three months. Revocable trusts do not avoid the inheritance tax. Fiduciaries face liability for breach. Courts can surcharge and remove fiduciaries. The state criminalizes will destruction and fraud.

Recent Legislative Changes

Pennsylvania has maintained its inheritance tax structure with limited changes. The state has updated some probate procedures and increased the small estate threshold.

Frequently Asked Questions