The Commonwealth of Pennsylvania created the Family Exemption to help the children or surviving spouse who lived with the deceased and relied on that person’s assets or income to take up to $3,500 from the decedent’s bank account until the estate account is opened. At death a person’s assets are frozen until the Executor goes to the Register of Wills with the will and death certificate to open an estate. During this time the surviving spouse or child might find himself or herself without a way to pay for household expenses. In the alternative, if the estate is small, an executor might hesitate to distribute any assets to a dependent child until the Pennsylvania Inheritance Tax was paid in full making the child wait months for a distribution. To guard against this possibility the Pennsylvania legislature created the Family Exemption, which is a right of a person living in the same household with the decedent to retain or to claim real or personal property of a decedent up to $3,500.00 under the theory that this is enough to allow the person to survive until the estate account is opened. Executors can feel comfortable distributing this amount to a dependent child knowing that it will not be subject to the Pennsylvania Inheritance Tax.

Beneficiaries that are members of the decedent’s household are eligible for the Family Exemption. They include grandparents, parents, children including adopted children and step-children, and an un-remarried spouse of a child of the decedent.

Since its inception, the family exemption was legally payable only from the probate estate of the decedent. Furthermore, this exemption can be taken as a deduction on line 3 of Schedule H of the Pennsylvania Inheritance Tax Return Form REV-1500.

If you have any questions about the REV- 1500 or the family exemption you should contact Gregory J. Spadea of Spadea & Associates, LLC at 610-521-0604.