Rules and Regulations
If a person dies without a Will, the Intestate Process begins with the Orphan's Court appointing a Personal Representative or Administrator to receive and manage any legal claims against the Estate, pay creditors, and manage the Estate's expenses. Estate expenses range from the decedent's (person who has died) unpaid bills, loans, administrative fees, costs, and payments to the Administrator of the Estate for services rendered.
After the Court appoints the Administrator and the expenses are paid, the assets will be distributed according to the Laws of Intestate Succession.
Having knowledge of the laws of Intestate Succession can be a valuable tool in the Estate Planning decision-making process.
If you die without a Will in Pennsylvania, your assets will go to your closest relatives under the State's “Intestate Succession” Laws.
Which Assets Pass by Intestate Succession?
First, only assets that would have passed through your Will are affected by Intestate Succession Laws. Usually, that includes only assets that you own alone, in your own name.
Second, it is crucial to understand that many kinds of assets need not, and are not, passed through a Will and therefore, are not affected by Intestate Succession Laws, including the following:
- Life insurance proceeds
- Real Estate, Bank Accounts, and other assets held in Joint Tenancy, Tenancy by the Entirety, or Community Property with the Right of Survivorship
- Funds in an IRA, 401(k), or other Retirement Plan(s) for which a Beneficiary was named
- Funds in a Payable-on-Death (POD) Bank Account
- Stocks or other Securities held in a Transfer-on-Death (TOD) Account, and
- Real Estate or Vehicles held with a Transfer-on-Death (TOD) Deed or Title Document
- Property held in a Living Trust
In most instances, these assets pass to the Surviving Co-owner or to the Named Beneficiary in the 'contracts' or 'documents' relevant thereto, whether or not there is a Will. To determine who inherits the assets, you will need to locate the documents in which the Co-ownership or Beneficiary designation was established.
Who Gets What in Pennsylvania?
Under Intestate Succession, who gets what depends on whether or not you have a Spouse, Living Children, Parents, or other close Relatives when you die. Here's a quick overview:
The Spouse's Share in Pennsylvania.
In Pennsylvania, if you are married and you die without a Will, what your Spouse receives depends on whether or not you have living Parents or Descendants, i.e., Children, Grandchildren, or Great-grandchildren. If you have no living Descendants, your Spouse inherits all your Intestate Property or Assets.
If you have living Descendants, they and your Spouse will share your Intestate Property, as follows:
If you die with Parents but no Descendants - Your surviving Spouse inherits the first $30,000 of your Intestate Property, plus fifty (50%) Percent of the balance of the Assets in your Estate.
Example: Mary is married to John, and her father is still alive. Mary owns a house in joint tenancy with John, and John is also the named beneficiary of Mary's retirement account. When Mary dies, John automatically inherits the house and any remaining retirement funds; those things are not Intestate Property. Mary also has $350,000 worth of additional Property that would have passed under a will if she had made one. John inherits $190,000 worth of that Property – that is, $30,000 plus $160,000 worth of the remaining $320,000. Mary's father inherits $160,000.
If you die with Children or other Descendants from you and the surviving Spouse - Your surviving Spouse inherits the first $30,000 of your Intestate Property, plus one-half (50%) of the balance of the Estate's Assets.
Example: Bill is married to Karen, and they have two grown Children. Bill and Karen own a large bank account in joint tenancy, and Bill took out a life insurance policy naming Karen as the beneficiary. When Bill dies, Karen receives the life insurance policy proceeds and inherits the bank account outright. Bill also owns $450,000 worth of Property that would have passed under a Will, so Karen inherits $240,000 worth of that Property – that is, $30,000 plus $210,000 of the remaining $420,000. The two Children inherit $105,000 each.
If you die with Descendants who are not the Descendants of your surviving Spouse - Your Spouse inherits 1/2 of your Intestate Property.
Example: Bob is married to Jane and also has a 12-year-old daughter from a previous marriage. Bob owns a house in joint tenancy with Jane, plus $200,000 worth of additional, separate Property that would have passed under a Will if Bob had made one. When Bob dies, Jane inherits the house outright and $100,000 worth of Bob's Property. Bob's daughter inherits the remaining $100,000 share of Bob's Property.
Note: These rules do not apply if your Spouse has “willfully neglected or refused to perform the duty” of supporting you for at least one year. They also do not apply if you die in the State of Pennsylvania during divorce proceedings with your Spouse. (20 Pa. Cons. Stat. § 2106.)
Children's Shares in Pennsylvania.
If you die without a Will in Pennsylvania, your Children will receive an “Intestate Share” of your Property. The size of each Child's share depends on how many Children you have and whether or not you are married. (See the table above.)
For Children to inherit from you under the Laws of Intestacy, the State of Pennsylvania must consider them your Children, legally. For many Families, this is not a confusing issue, but it's not always clear. Here are some situations that might arise:
- Children born during your marriage. Any child born to your wife during your marriage is assumed to be your child and will receive a share of your estate.
- Grand-Children. Your Grand-Children will receive a share only if their parent (your child) has died before you do.
- Adopted Children. Children you legally adopted will receive an Intestate share, just as your biological Children do.
- Foster Children and Step-Children. Foster Children and Step-Children you never legally adopted will not automatically receive a share.
- Children placed for adoption. Children you placed for adoption and who were legally adopted by another family will not receive a share. However, if your biological Children were adopted by your Spouse, that won't affect their Intestate Inheritance. (20 Pa. Cons. Stat. § 2108.)
- Other relatives placed for adoption. A relative other than your Child -- for example, your Grand-Child -- who was legally adopted by another family may receive a share of your Estate if the relative would otherwise be entitled to inherit from you and you have “maintained a family relationship.” (20 Pa. Cons. Stat. § 2108.)
- Posthumous Children. Children conceived by you but not born before your death will receive a share. (20 Pa. Cons. Stat. § 2104.)
- Posthumous Relatives. Relatives conceived before -- but born after -- you die inherit as if they had been born while you were alive.
- Children born outside of marriage. If you were not married to your Children's Mother when she gave birth to them, they will receive a share of your Estate if (1) you and their Mother get married later, (2) you acknowledged your paternity, or (3) your paternity is otherwise proved under Pennsylvania Law. (20 Pa. Cons. Stat. § 2107.)
Are Step-Children Your Legal Heirs?
Step-children are the children of your partner or spouse; you have not adopted them. (If you have adopted them, your adopted children are legally your children, with the same legal connections to you as children born to you.)
- protect children who are accidentally left out of a Will, and
- give a percentage of an estate to children whose parent dies without a Will.
But these laws do not apply to step-children. In effect, your legal relationship with your step-children is equivalent to someone with no familial relation - like a friend or neighbor.
The flip side is that if you want to ensure your step-children receive something when you die, you must make a Will or Trust and name them specifically. If you die without a Will, your step-children receive nothing of your Estate.
Are Step-Children Included in a Class of "Children?"
If you make a Will that leaves gifts to "my children," your non-adopted step-children will not be included in that group. Again, even if you might think of them as your children, they are not legally considered to be your children. Making gifts to categories of people opens up the possibility of confusion and is generally not advised.
See my Blog on this issue: Step-Children and Your Estate.
How to Leave Gifts to Your Step-Children.
If you want to make sure that your step-child receives an inheritance, consider the following.
Can You Leave an Inheritance to Your Step-Child?
First, if you want to leave a gift to a step-child, you certainly can, just as you would leave a gift to anyone else. Step-children can always inherit under your Will if you name them. Using your Will, you can leave your step-child a percentage of your entire Estate, or you can leave specific gifts - like $5,000, your computer, or your golf clubs.
How Should You Identify Your Step-Child in Your Will?
If you have other children, when you make your Will, do not use terms like ''issue,'' ''descendants,'' ''children,'' or ''heirs” to refer to them. Those terms are always subject to confusion, and they are additionally complicated for blended families with step-children. Instead, name each child and each step-child using their individual names.
Other Options Besides Wills.
In addition to (or instead of) using a Will, you can also leave gifts to your step-child using a number of other Estate Planning tools. For example:
- If you use a Living Trust to avoid probate, you can name your step-child as a beneficiary of the Trust.
- If your step-child is eligible for government disability benefits, you can provide for your step-child using a Special Needs Trust.
- If you have a life insurance policy or a pay-on-death financial account, you can name your step-child as a beneficiary.
Of course, you'll need to keep in mind that any gift you leave to your step-child will reduce the amount of property available to your other beneficiaries - your other children and your spouse. For some people, this can be an area of concern. See “Leaving an Explanation of Your Decisions” below.
Will the State Get Your Property?
If you die without a Will and do not have any Family, your Property will “escheat” into the State's coffers. This old Common Law Doctrine transfers the Property of a person who dies without Heirs to the State. It serves to ensure that Property is not left in "limbo" without recognized ownership. This rarely happens, however, because the laws are designed to get your Property to anyone who was even remotely related to you.
For example, your Property will not go to the State if you leave a Spouse, Children, Grand-Children, Parents, Grand-Parents, Siblings, Nieces, Nephews, or Cousins.
It should be noted that before the Decedent's Estate is distributed, the Decedent's Debts, Taxes, Funeral Expenses, and Expenses of Administration are paid first, which is similar to what would happen if there was a Will. What remains is what makes up the Decedent's "Distributable Estate."
As noted, Joint Tenancy Property, Life Insurance payable to Beneficiaries other than the Estate, Bank Accounts Payable-on-Death to specified individuals, and other assets that have been decided under a form of contract beforehand will pass in accordance with their terms and will not be part of the Decedent's Estate to be distributed by the Laws of Intestate Succession.
TAXES: Pennsylvania has an inheritance tax, not an estate tax.
The Keystone State is among one of several States that still assess a separate State Inheritance Tax on certain Property owned by Pennsylvania residents and Real Estate and Tangible Personal Property located in Pennsylvania that is owned by a non-resident.
When is Estate Tax due? PA has NO Estate Tax. There is a Federal Estate Tax that may apply depending on the size of the Estate.
What is the Inheritance Tax Rate?
The rates for Pennsylvania Inheritance Tax are as follows:
- Zero (0%) percent on transfers to a surviving Spouse or to a parent from a child aged 21 or younger;
- Four and one-half (4.5%) percent on transfers to direct descendants and lineal Heirs (See chart above for examples);
- Twelve (12%) percent on transfers to siblings; and
- Fifteen (15%) percent on transfers to other Heirs, except Charitable Organizations, exempt institutions, and government entities exempt from tax.
For deaths occurring on or after June 30, 2012, working family farms and some related agricultural commodities are exempt from the Pennsylvania inheritance tax.
What Expenses Can Be Deducted From the Value of a Pennsylvania Estate?
- Funeral expenses
- Attorney's fees
- Personal Representative and Trustee fees
- Lawful debts owed by the Decedent, including mortgages
- Certain unpaid taxes
Note: State Laws are subject to change at any time, usually through enacting new legislation but sometimes through higher court decisions and other means. You should contact a Pennsylvania Estate Planning Attorney or Tax Attorney or conduct your own legal research to verify the State Law(s) you are researching.
Other Pennsylvania Intestate Succession Rules:
- Survivorship period. To inherit under Pennsylvania's Intestate Succession Statutes, a person must outlive you by five (5) days. Thus, by way of example, if you and your brother are in a car accident and he dies a few hours after you do, his estate would not receive any of your Property.
- Half-relatives. “Half” relatives inherit as if they were “whole.” That is, your sister, with whom you share a father, but not a mother, has the same right to your Property as she would if you had both parents in common.
- Immigration status. Relatives entitled to an Intestate Share of your Property will inherit whether or not they are citizens or legally in the United States.
- Slayer rule. Someone who “willfully and unlawfully” kills you will not receive a share of your estate. (20 Pa. Cons. Stat. § 2106.)
You can find Pennsylvania's Intestate Succession law here: Title 20, Pennsylvania Consolidated Statutes §§ 2101 to 2114.
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