Pa. Realty Transfer Tax on Life Estates and Remainders

When there is a transfer of a residence or other real estate with a retained life estate (which is usually not recommended, because it does not avoid any inheritance tax and can restrict the ability of the transferor to sell the property during his or her lifetime), the retained life estate is not subject to tax but the remainder interest may be taxable if the transfer is not to a spouse, child, or other family member to whom transfers are exempt. See Example 3 of 61 Pa. Code § 91.165 and 61 Pa.Code § 91.193(b)(6).

When the remainder is taxable, the taxable value is usually determined by multiplying the value of the entire property by an actuarial factor, based on a current interest rate and the age of the life tenant. When a remainder is retained and a life estate is transferred that is taxable, the value of the life estate is determined by multiplying the value of the property by a life estate factor.

The Pa. Department of Revenue is required to periodically publish notice of the life estate and remainder factors to be used in valuing life estates and remainders for realty transfer tax purposes, using the table of factors published by the Internal Revenue Service for an interest rate that is the average of the rates published by the IRS for the previous 36 months.

The following chart summarizes the interest rates and mortality tables that have been published since 2019, with citations (and links) to the tables of factors that have been published in the Pa. Bulletin.

Effective DateInterest RateMortality TablePa. Bulletin
7/1/20192.6%2000CM 49 Pa.B. 3023
7/1/20221.4%2000CM52 Pa.B. 5877
7/1/20234.8%2010CM55 Pa.B. 4467 (6/28/2025)

[Note on Revisions: An earlier version of this article was originally published on 2/7/2020, but it was rewritten on 6/27/2025 to present a summary of both new and past tables of factors in the form of a chart.]

Application of Cy Pres Denied for Nonprofit Corporation

Although a nonprofit corporation formed as a volunteer fire company had been decertified and could no longer fight fires in accordance with its original charitable purposes, the Attorney General could not enforce the application of cy pres in the absence of a showing as to what assets of the corporation were “donated, granted, or devised” from an outside source “in trust.” In re: Independent Fire Co. No. 1, No. 1489 C.D. 2018 (Cmwlth Ct. 2/5/2020), aff’g on other grounds, 9 Fid.Rep.3d 20 (Lycoming Co. O.C. 2018).

Lawyers Must Retain Original Wills Indefinitely?

Posted on by February 1, 2020

The New York State Bar Association has released an ethics opinion stating that a lawyer may not dispose of wills even when the testators’ locations and circumstances are unknown, and that the lawyer must safeguard the wills indefinitely unless the law provides an alternative. New York State Bar Association Committee on Professional Ethics Opinion 1182 (1/23/2020).

A few comments:

  • The opinion discusses the possibility of filing wills with the Surrogate’s Court, which is allowed by statute in New York. There is no comparable statute in Pennsylvania, and there is no authority requiring (or allowing) a Register of Wills to accept a will when the testator might be living, might have died outside of Pennsylvania, and might have revoked the will by a later will.
  • The opinion relies on Model Rule of Professional Conduct 1.15, which relates to safeguarding property. But is the “property” the physical will or the testamentary intent expressed in the will? At a recent southeast Pennsylvania regional meeting of the American College of Trust and Estate Counsel, a fellow of the college reported that her firm, after repeated attempts to contact the testator, and after a suitable period of time, will destroy the testator’s will but will also create a contemporaneous record of the destruction of the will so that a copy of the will (saved electronically) could be admitted to probate in the unlikely event that the will was ever actually needed.

New (and Old) Minimum Required Distribution Rules Summarized

Posted on by July 21, 2024

[DBE (7/21/2024): This article has not yet been updated to reflect the final regulations published at 89 F.R. 58886 (7/19/2024)., the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act of 2023, P.L. 117-328), or Notice 2023-54, 2023-31 I.R.B….

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Writing “2020” and Not “20”

Posted on by January 15, 2020

I’ve seen more than one article recommending that, when we (meaning the public generally and not just lawyers) write the year on checks and other documents, we should write out the whole year, “2020,” and not just the last two digits, “20.”

The reasons is that, if you write only “20,” the date can be altered by just adding two more digits at the end, so that “20” could easily become “2019” or “2021.” (There was reportedly a similar concern in 1919.)

I’m not sure what advantage there could be in backdating (or postdating) a check by one year, but writing out the full year does no harm, and takes very little in the way of time or ink (or printer toner), and so seems like a good idea.

Login/Logout Confusion

Posted on by January 7, 2020

I recently learned that, when subscribers log onto this site, they don’t see the home page, but a “profile” or “dashboard” page which I found to be both confusing and useless.

I’ve reconfigured the site so that, after logging in, subscribers will next see the home page.

I also found that there was no way to log out after logging it, and so I added a “Log Out” choice on the main menu.

I hope that these changes improve the experience of using this site.

Problems with New Forms for Register of Wills

Posted on by January 3, 2020

It was previously reported that new Orphans’ Court forms, and new forms for use before the Register of Wills, had been posted to the collection of Orphans’ Court forms on the pacourts.us website, to be effective January 1, 2020. It now appears that there is a problem with two of the forms.

New Form RW-04 (“Oath of Non-subscribing Winess(es)”) and new Form RW-05 (“Oath of Witness(es) to Will Executed by Mark”) include both jurats for execution of the oaths in the Register’s office and jurats for execution of the oaths before a notary public outside of the Register’s office. However, the relevant statute, 20 Pa.C.S. § 3154, requires that those oaths be taken either before the Register or, if taken outside of Pennsylvania, by a public officer of the other jurisdiction having duties similar to those of the Register.

The new forms are still usable, but practitioners should not be misled into thinking that the oaths can be taken before a notary public outside of the Register’s office.

New Pa.O.C. Rule 1.40 for “In Forma Pauperis”

The Supreme Court has entered an order adopting a new Pa.O.C. Rule 1.40 which applies Pa.R.C.P. 240 (“In Forma Pauperis“) to Orphans’ Court proceedings, to be effective April 1, 2020. Rule 14.8, on guardianship reporting, has also been amended to include a note that cross-references Pa.R.J.A. 510, which governs the filing of inventories and reports under the Guardianship Tracking System. The report of the Orphans’ Court Procedural Rules Committee has also been published. “In Re: Order Adopting Rule 1.40 and Amending the Note to Rule 14.8 of the Pennsylvania Orphans’ Court Rules,” No. 820 Rules Doc. (1/2/2020), 50 Pa.B. 306 (1/18/2020).

Retirement Plan Mandatory Distribution Changes

Posted on by January 5, 2020

Among the more significant tax law changes made by the “Setting Every Community Up for Retirement Enhancement Act of 2019,” also known as the SECURE Act, enacted as Division O of P.L. 116-94, H.R. 1865, the “Further Consolidated Appropriations Act,…

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Applicable Federal Rates for 2019

← Previous Year | Current Year | Following Year →

HTML Version Copyright 2018-2025 Daniel B. Evans. All rights reserved.

— Short Term Rates for 2019 —

MonthAnnualSemiann.QuarterlyMonthly
Jan.2.72%2.70%2.69%2.68%
Feb.2.57%2.55%2.54%2.54%
March2.55%2.53%2.52%2.52%
April2.52%2.50%2.49%2.49%
May2.39%2.38%2.37%2.37%
June2.37%2.36%2.35%2.35%
July2.13%2.12%2.11%2.11%
Aug.1.91%1.90%1.90%1.89%
Sept.1.85%1.84%1.84%1.83%
Oct.1.69%1.68%1.68%1.67%
Nov.1.68%1.67%1.67%1.66%
Dec.1.61%1.60%1.60%1.59%

— Mid Term Rates for 2019 —

MonthAnnualSemiann.QuarterlyMonthly
Jan.2.89%2.87%2.86%2.85%
Feb.2.63%2.61%2.60%2.60%
March2.59%2.57%2.56%2.56%
April2.55%2.53%2.52%2.52%
May2.37%2.36%2.35%2.35%
June2.38%2.37%2.36%2.36%
July2.08%2.07%2.06%2.06%
Aug.1.87%1.86%1.86%1.85%
Sept.1.78%1.77%1.77%1.76%
Oct.1.51%1.50%1.50%1.50%
Nov.1.59%1.58%1.58%1.57%
Dec.1.69%1.68%1.68%1.67%

 — Long Term Rates for 2019 —

MonthAnnualSemiann.QuarterlyMonthly
Jan.3.15%3.13%3.12%3.11%
Feb.2.91%2.89%2.88%2.87%
March2.91%2.89%2.88%2.87%
April2.89%2.87%2.86%2.85%
May2.74%2.72%2.71%2.70%
June2.76%2.74%2.73%2.72%
July2.50%2.48%2.47%2.47%
Aug.2.33%2.32%2.31%2.31%
Sept.2.21%2.20%2.19%2.19%
Oct.1.86%1.85%1.85%1.84%
Nov.1.94%1.93%1.93%1.92%
Dec.2.09%2.08%2.07%2.07%