Parent transferrs property 2 child by deed with life estate interest, lives in home dies unexpectedly who pays the inher tax

The answer to your question depends on a number of factors. First, on the state level, if the property was transfered within one year of the death of the parent than the transfer is ignored for inheritance tax purposes and the property is considered part of the parent's taxable estate. Second, on the state level, if the property was transfered more than one year prior to the death of the parent than the transfer, or gift, was competed and the only interest credited to the parent would be the life interest. Third, if the estate is large enough to pay federal inheritance taxes, than you must consider the above on the Federal Level. The only difference is the look back period is 3 years. Last, as to who pays the taxes, it depends. If there is a will, and the property was transferred within the look back period, it will govern who pays the taxes. If there is no will and If there is no designation as to who pays the taxes, you have the option of the Department of Revenue seeking payment from those who have the property. I would highly recommend that you seek the advice of a probate attorney. This is a complicated tax issue that should be addressed by someone with adequate knowledge on the subject.

I respectfully disagree with the prior attorney. PA case law indicates that where a life estate is reserved and the parent was living in the home, the full value of the real estate is included in the estate for PA inheritance tax purposes. The one year rule is irrelevant. The estate is primarily liable for the estate tax in most cases and if the estate cannot pay the inheritance tax the transferee namely the remainderman of the life estate would be liable. Also, the will's tax allocation clause needs to be reviewed as this provision may indicate a different result. You need to get the assistance of an estates attorney on these issues and on the estate administration generally. For a sense of what is involved in administering an estate in most states, please see the following two articles: Estate & Probate Administration: Do Not Try This On Your Own at http://www.sjfpc.com/page1.html and Pennsylvania Probate & Estate Administration: Executor Duties at http://www.sjfpc.com/Pennsylvania_Probate_Estate__Administration_Duties_of_Executor_and_Administrator.html Hope this helps. Please remember to designate a best answer to your question. Mr. Fromm is licensed to practice law throughout the state of PA with offices in Philadelphia and Montgomery Counties. He is authorized to handle IRS matters throughout the United States. His phone number is 215-735-2336 or his email address is [email protected] , his website is www.sjfpc.com. and his blog is

All questions regarding your Inheritance Tax Return should be directed to the PA Department of Revenue. The Register of Wills Office is a filing office for your Tax return and can not give advice or assistance in completing your return. Inheritance Tax Division PA Department of Revenue Bureau of Individual Taxes Dept. 280601 Harrisburg, PA 17128-0601 Office (717) 787-8327 Fax (717) 772-0412 Internet: www.revenue.state.pa.us Email: [email protected]