When your spouse passes away, the loss and change in your life is enough to deal with, but we know there are other items that you must address. The items concerning your estate planning can wait for a bit in most cases. Here is a list of frequently asked questions and answers.
Do I have to change the deed on my personal residence and other real estate?
Typically, in Pennsylvania, the answer is no, but it depends upon how the real estate is titled. If you and your spouse owned the real estate as tenants by the entireties or joint tenants with right of survivorship at the time of your spouse’s death, the real estate automatically is owned by you. There is no need for a new deed. If you sell your residence or other real estate in the future, the date of death of your spouse will be referenced in the deed of sale. If there was a tax planning or other reason to title the real estate as tenants in common, then upon your spouse’s death, the interest would pass according to your spouse’s will.
We have joint accounts. Do I own them now?
Joint accounts or joint investments at a bank or credit union typically become yours upon your spouse’s death. However, it depends upon how you initially set up the account. You should not assume that because both names are on the account, you are now the sole owner of the funds.
My spouse had an annuity. What happens to it?
Most investments like life insurance, annuities, and retirement accounts have a named beneficiary. A beneficiary designation is part of the investment contract. When the owner of the investment dies, the beneficiary owns the investment. If there is no beneficiary listed, in most situations, the proceeds will be paid to the decedent’s estate. If the latter is the case, then an estate will need to be opened for your spouse and the probate process followed.
If all the assets come to me, do I have to worry about date of death values?
It is also prudent to have date of death values for investments or real estate as there is often a step up in basis to date of death value of your deceased spouse’s half of the investment. For example, if both you purchased stock for $10,000.00 and at your spouse’s death the stock was worth $20,000.00, you would get a step up in basis of half of the $10,000.00 growth, or $5,000.00, resulting in a new adjusted tax basis of $15,000.00.
Do I have to file an inheritance tax return and pay inheritance tax?
If all your assets were jointly owned and you were the beneficiary of other assets owned by your spouse, then you do not have to file a Pennsylvania inheritance tax return or pay inheritance tax. In Pennsylvania, the rate of inheritance tax between spouses is 0%. If your spouse had an asset in their name alone without a beneficiary, then the named executor would have to open an estate, and an inheritance tax return filed. If you were the sole beneficiary of the residuary estate under your spouse’s will, then no inheritance tax is due.
What about federal estate tax? Do I have to worry about portability or a disclaimer?
If you have a large estate totaling millions of dollars, you should consult your estate planning attorney and accountant. Everyone has a lifetime exemption from an onerous federal estate tax. For those who die in 2025, the exemption from that tax is $13.99 million with a maximum tax rate of 40%. There have been proposals to end the federal estate tax. You have a certain time to file for portability of the unused deceased spouse’s exemption from federal estate tax or to disclaim certain assets if your spouse has a specialized type of will.
My spouse was my agent. Do I have to update my Powers of Attorney and other legal documents?
It is always prudent to review your legal documents with your attorney when a death occurs. If you have named a successor agent under your Power of Attorney, and you still want that person as your agent, it may be as simple as that person signing an acknowledgement of agent form. If you have not named successor agents, executors or your estate planning objectives have changed, you may need to update your documents. Remember that your beneficiary designations complete your estate plan puzzle. You may want your will and beneficiary-driven assets to match, or you may want them treated differently for tax reasons
