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1. What are the inheritance tax rates for a surviving spouse?

The rate of tax imposed on transfers to or from a surviving spouse are based on the date of death of the decedent 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

2. Who are considered to be lineal heirs and lineal descendants for the purpose of inheritance tax?

Grandfather, grandmother, father, mother, and children are considered to be lineal heirs and lineal descendants for the purpose of inheritance tax.

“Children” include natural children (whether or not they have been adopted by others), adopted children, and stepchildren.

“Lineal descendants” include 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.

3. Is there a discount allowed on Pennsylvania inheritance tax?

The tax is due at the date of death and becomes delinquent nine months after the date of death. There is a discount of 5% of the tax paid or the tax due, whichever is less, when the payment is made within three months from the date of death.

4. Can the funeral expenses and unpaid bills of the decedent be deducted from the amount subject to tax?

Yes. 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 the estate, the cost of administration of the estate, attorney fees and fiduciary fees incurred to administer the estate, funeral and burial expenses, including the cost of a burial lot, tombstone or grave marker, and other related burial expenses, are deductible.

5. I put my mother’s name on my savings account. Recently my mother died and now I am being told that I will have to pay an Inheritance Tax on my own money. Can this be correct?

Under the inheritance tax law, the account was jointly-owned because you and your mother had equal access to the account. Therefore, in this example, the survivor is taxed on the one-half of the amount in the account.

6. Was the widows’ tax repealed in Pennsylvania?

Previously transfers to surviving spouses were taxed and this was commonly known as the widows’ tax. The tax rate for transfers to a surviving spouse is now zero when the decedent died on or after January 1, 1995. A Pennsylvania widow or widower pays no tax on assets, which are inherited, from a deceased spouse.

7. What is the family exemption and how much can be claimed?

The family exemption is a right given to specific individuals to retain or claim certain types of a decedent’s property in accordance with Section 3121 of the Probate, Estate and Fiduciaries Code. For decedents dying after January 29, 1995, the family exemption is $3,500. From June 27, 1974, through January 29, 1995 the amount of the family exemption was $2,000.

8. Who is entitled to claim the family exemption?

The family exemption may be claimed by a spouse of a decedent who died as 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 against assets which are passed on with or without a will.