Joint Trust Not Subject to Inheritance Tax

A joint trust created by a husband and wife which remained revocable by the surviving spouse (who was also the sole trustee) following the death of one spouse did not qualify as a “sole use trust” but was not a transfer subject to inheritance tax tax under 72 P.S. 9111(m), which exempts property owned by husband and wife with right of survivorship. In Re: Estate of Edward J. Potocar, ___ A.3d ___, 662 C.D. 2020 (Cmwlth. Ct. 9/30/2022).

[DBE Note: Not cited by the court is Miller Estate, 4 Fid.Rep.2d 346 (1984), which held that entireties property transferred to a joint trust remained entireties property, or McEwen’s Estate, 348 Pa. 23, 33 A.2d 14 (1943), which held that separate property transferred to a joint trust of husband and wife was fully taxable at the second death, and not the first, because the beneficial interests in the trust were held as tenants by the entireties. How the property that was transferred to the Potocar trust was held before the trust was created was not discussed by the Commonwealth Court.]

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