From our “Ask a Question” Mailbag: Executors and Pennsylvania Inheritance Tax in Chester County, PA

Most Recently Updated July 7, 2018

“As the Executor, if I sell my mother’s Chester County home, do I have to pay the Pennsylvania probate tax before dividing up the sale proceeds with my siblings?”

Executors and Pennsylvania Inheritance Tax in Chester County, PA – Clarity

First, let’s clarify a few things. In Pennsylvania the “probate tax” is the Pennsylvania Inheritance Tax. Because the estate is being divided up between the mother’s children, that rate is 4.5% on the date of death value of her entire taxable estate. 

The executor is given broad discretion to decide when the estate assets are distributed.

If he decides to make a distribution before paying the Pennsylvania Inheritance Tax, he is making an “At Risk Distribution”. This means, the executor is giving the beneficiaries estate assets prior to all the creditors being paid. The executor is “At Risk”, because if the assets he keeps in the estate to pay creditors are not enough, he is responsible for the shortfall out of his own funds. The executor is “At Risk” of being personally liable.

“At-Risk” Distributions

Some executors do not mind making At Risk distributions, as they are sure that the estate’s remaining funds are enough to pay the bills. You should consult with an attorney before doing this. 

Other Issues That Arise

Another wrinkle that the executor will face is that a good title company will not release the sales funds until he can prove that all Pennsylvania Inheritance Taxes are paid. They will escrow the entire sales proceeds…collecting the interest for themselves…until he provides them the Department of Revenue release.

Klenk Law has good experience negotiating this with Chester County title companies. Usually, we can obtain an agreement where a portion of the sales funds adequate to satisfy the Inheritance Taxes are held in our escrow accounts and agree to only release them to the estate once the Department of Revenue release arrive.

More Probate Questions?

Executors and Pennsylvania Inheritance Tax in Chester County, PA is only part of the overall probate process. By all means, if you wish to learn more, please read my more detailed article, The Probate Process All You Need to Know.

In Conclusion: Executors and Pennsylvania Inheritance Tax in Chester County, PA

I hope that this article was helpful in explaining Executors and Pennsylvania Inheritance Tax in Chester County, PA. Further, I included links to even more detailed information on my website. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Probate Lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced Probate Attorneys.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!

Wills, Trusts, Probate, and Estate Litigation, It’s All We Do

Peter Klenk, Probate Lawyer

 

 

Tags: Chester County, Executor, Fiduciary Duty, Inheritance Tax, Pennsylvania, Probate Attorney, Probate Lawyer, Standard of Care for Fiduciaries