Estate Issues – Joint Accounts

What if you had a joint account with a decedent? How the account will be treated depends on a number of factors. First, when was the account made joint? Pennsylvania requires that a joint account have been created at least a year before the death of one of the owners for it to be treated as a joint account. If meeting this one year requirement, only half of the account is potentially subject to inheritance tax. If the account was made joint within a year of death, the entire account is subject to tax. Second, what was your relationship with the decedent? If you were their spouse, the account would not be taxed at all since there is no inheritance tax for assets passing to a spouse.

If you have a different degree of kinship or no relationship at all, the decedent’s half is subject to inheritance tax and the account should be reported as a joint asset on the inheritance tax return for the decedent’s estate. Third, how was the account titled? If the account was titled as joint tenants with rights of survivorship then the balance of the account automatically goes to the surviving owner. This just means that the account does not need to go through probate. Again, depending on the relationship between the co-owners, the half of the account belonging to the decedent may still be subject to applicable inheritance tax. It is important to consider all of these scenarios if you intend to make joint titling of accounts a part of your estate plan.