Inheritance Taxes

Before any assets can be distributed to the beneficiaries of the estate, the decedent’s debts, taxes, funeral expenses, and the expenses of administration must first be paid.

PA imposes estate taxes on real estate owned by a decedent within the state, and on the personal property of deceased residents of the state at the time of death.

PA also imposes taxes on the person who receives the inherited property (as opposed to estate taxes which are paid from the decedent’s estate). Inheritance tax exemptions and rates vary depending on who receives the property, i.e. the decedent’s spouse or child may be taxed at a lower rate than a friend of the decedent.

Inheritance taxes must be prepared and filed within (9) nine months of the date of death to avoid the accumulation of interest and penalties. An inheritance tax return is similar in preparation to an income tax return, allowing deductions for estate related expenses.