On February 25, 2015, the Pennsylvania Department of Revenue released Inheritance Tax Bulletin 2015-01: Realty Transfer Tax Bulletin 2015-01 (Policy Concerning Same-Sex Marriage for Inheritance and Realty Transfer Tax Purposes). The portion related to inheritance tax among married same sex couples is as follows:
“Purpose
“This bulletin is issued to explain the effect of the May 20, 2014 Whitewood v. Wolf (992 F. Supp. 2d 410 (M.D. Pa. 2014) decision (“Whitewood”) for PA Inheritance Tax and Realty Transfer Tax purposes.
“Inheritance Tax
“(1) For an estate in which the decedent was party to a same-sex marriage, legally recognized within Pennsylvania as a result of the May 20th, 2014 Whitewood decision, the surviving same-sex spouse shall be treated as a “husband” or “wife” for purposes of establishing rights and responsibilities under the Inheritance and Estate Tax Act. Further, a natural or adopted child of any individual and that individual’s spouse shall be considered a lineal heir for purpose of establishing tax rates. A step-descendant shall also be recognized as a lineal heir for purposes of establishing tax rates.
“(2) Financial institutions shall treat joint accounts titled in the names of individuals in a same-sex marriage as accounts held by “husband” and “wife.”
“(3) Refund applications may be filed within the limitations period under 72 P.S. §9181 (d).”
Because the statute uses the term “husband and wife” in Section 9111(m), the Department of Revenue’s Bulletin removes any uncertainty which might have arisen over inheritance and subsequent taxes among same sex married couples.
Of course, legal questions can still arise:
What of a same sex common law marriage prior to abolition of that status after 2004? Will that union be recognized for inheritance tax purposes, or not recognized because it (arguably) was not a “legal” marriage when it occurred?
What of a common law marriage – same sex or heterosexual – occurring now in a state which recognized it, with the spouse dying a resident of Pennsylvania?
Every same sex married couple should consult an experienced estate attorney to protect their assets. This will assure that the decedent’s assets will be distributed in a timely manor according to their wishes, and will minimize taxes for the heirs.
For more information on inheritance taxes and estate planning for same sex married couples, contact Attorney Matz.