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PA Bulletin, Doc. No. 97-1306

STATEMENTS OF POLICY

DEPARTMENT OF REVENUE

[61 PA. CODE CH. 94]

Disclaimers of Nonprobate Taxable Assets

[27 Pa.B. 4115]

   Under the authority contained in § 3.2 (relating to statements of policy), the Department of Revenue (Department) hereby adopts the statement of policy regarding disclaimers of nonprobate taxable assets which appears in Annex A. This statement of policy sets forth the Department's interpretation of Commonwealth Court's decision in In Re Estate of Bernecker, 654 A.2d 246 (Pa. Cmwlth. 1995).

   The statement of policy adds § 94.1 (relating to disclaimers of nonprobate taxable assets) and shall take effect upon publication in the Pennsylvania Bulletin.

   Based on the decision and order received from the Commonwealth Court in In Re Estate of Bernecker, the Department is revising its policy on the effectiveness of disclaimers of nonprobate taxable assets for Pennsylvania Inheritance Tax purposes.

   Subsection (b) of § 94.1 sets forth specific conditions which the Department will utilize in determining whether a disclaimer executed in regard to nonprobate taxable assets and nontrust assets of resident decedents is valid for Pennsylvania Inheritance Tax purposes when made either by the disclaiming party or the personal representative of the deceased individual or the guardian or attorney-in-fact of the incapacitated person or minor to whom the interest, absent the disclaimer, would have devolved.

   Specific questions relating to information provided in this statement of policy may be directed to the Department of Revenue, Office of Chief Counsel, Dept. 281061, Harrisburg, PA 17128-1061.

   (Editor's Note:  The regulations of the Department, 61 Pa. Code, are amended by adding a statement of policy at § 94.1 to read as set forth in Annex A.)

ROBERT A. JUDGE, SR.,   
Secretary

   Fiscal Note:  15-383. (1) General Fund;

   (2)  Implementing Year 1996-97 is minor revenue losses;

   (3)  1st Succeeding Year 1997-98 is $; 2nd Succeeding Year 1998-99 is $; 3rd Succeeding Year 1999-00 is $; 4th Succeeding Year 2000-01 is $; 5th Succeeding Year 2001-02 is $;

   (4) Fiscal Year 1995-96 $ not applicable; Fiscal year 1994-95 $; Fiscal year 1993-94 $;

   (8) recommends adoption. This statement of policy is in response to a Commonwealth Court decision that makes disclaimers of nonprobate taxable assets valid in certain instances. Properly executed disclaimers could result in refunds of the Pennsylvania Inheritance Tax. The revenue loss from these refunds is not expected to be significant.

Annex A

TITLE 61.  REVENUE

PART I.  DEPARTMENT OF REVENUE

Subpart B.  GENERAL FUND REVENUES

ARTICLE IV.  COUNTY COLLECTIONS

CHAPTER 94.  INHERITANCE TAX PRONOUNCEMENTS--STATEMENTS OF POLICY

§ 94.1.  Disclaimers of nonprobate taxable assets.

   (a)  General. The Department is revising its policy on the validity of disclaimers of nonprobate taxable assets for Pennsylvania inheritance tax purposes to reflect the decision and order received from Commonwealth Court in In Re Estate of Bernecker, 654 A.2d 246 (Pa. Cmwlth. 1995).

   (b)  Scope.

   (1)  Disclaimers executed with regard to nonprobate taxable assets of resident decedents, including rights of survivorship interests in multiple-party accounts, titled tangible personal property or real estate, beneficial interests in third-party beneficiary contracts (that is, retirement benefit plans, annuity contracts, individual retirement accounts, Keogh plan proceeds, matured endowment insurance policies and certain out-of-State government lottery contracts) and intervivos gifts are valid for Pennsylvania Inheritance Tax purposes if the following conditions are met:

   (i)  They are made either by the disclaiming party or the personal representative of the deceased individual or the guardian or attorney-in-fact of the incapacitated person or minor to whom the interest, absent the disclaimer, would have devolved.

   (ii)  The applicable conditions in paragraphs (3)--(7) have been met.

   (2)  The same rule applies to nonresident decedents with nonprobate taxable assets subject to Pennsylvania Inheritance Tax.

   (3)  The disclaimer shall be in writing and shall satisfy the requirements of 20 Pa.C.S. Chapter 62 (relating to disclaimers) in effect at the time the disclaimer is made.

   (4)  The disclaimer shall be signed and dated within 9 months of the date of death of the decedent whose interest is being disclaimed. (See In Re Pomerantz' Estate, 28 D. & C.3d 521 (Montg. 1983)).

   (5)  The disclaimer shall be signed and dated by the individual, the individual's personal representative if the individual seeking to disclaim has died or the guardian or attorney-in-fact of an incapacitated individual or minor.

   (6)  If the disclaimer is made by the personal representative, the guardian of an incapacitated or minor person, or the attorney-in-fact of the person whose interest is being disclaimed, the petition required by 20 Pa.C.S. § 6202 (relating to disclaimers by fiduciaries or attorneys-in-fact) shall be filed with the applicable county orphans' court within 9 months of the date of death of the decedent whose interest, absent the disclaimer, would have devolved. (See, McGrady Estate, 42 D. & C.2d 519, 17 Fiduc. Rep. 408 (O.C. Phila. 1967) and in In Re Pomerantz' Estate, 28 D. & C.3d 521 (O.C. Montg. 1983)).

   (7)  A personal representative may make a disclaimer on behalf of a decedent without court authorization if the following conditions are met:

   (i)  The will of the decedent authorizes the personal representative to do so (See 20 Pa.C.S. § 6202).

   (ii)  A copy of the probated last will and testament is attached to the inheritance tax return filed with the Department.

   (iii)  The disclaimer is signed and dated within 9 months of the date of death of the decedent as provided in section 2116(c) of the TRC (72 P. S. § 9116(c)) and paragraph (4).

   (8)  Notice of the filing of an estate's first and final account and of its call for audit or confirmation shall include notice of the disclaimer of the decedent's devolved interest, including the written disclaimer of any nonprobate taxable assets of the decedent, under section 2116(c) of the TRC. The notice shall be given to:  Office of Chief Counsel, Department of Revenue, Department 281061, Harrisburg, Pennsylvania 17128-1061.

[Pa.B. Doc. No. 97-1306. Filed for public inspection August 15, 1997, 9:00 a.m.]


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