Q: Question regarding priority of claims and a home equity loan that was in both dad and mom's name when dad passed.
My dad died intestate. Bank accounts were jointly owned with my mom (his spouse). Only one account was in his name solely, a holding in a mutual fund, approx 50,000. He also had a credit card in his name solely, approx 10,000. After funeral expenses, etc there is enough left to pay the unsecured credit card claim. My dad and mom also had a home equity loan, approx 60,000 in both names on a jointly owned principal residence. I've read from the PA-1500 instructions I can include 1/2 of the joint debt on the return (no attorney - I'm preparing it), or 30,000. After subtracting this 30,000, say $0 is left; is this only for inheritance return purposes, though? Does the credit card company still need to be paid the $10,000, since dad's half of the home equity loan isn't actually required to be paid? Or would 'no estate assets' be left after considering dad's half of the home equity loan debt, and therefore no assets to pay the credit card debt? Thank you
A:
Two different questions here. PA Inheritance Tax return you usually report assets in decedent's name alone at 100% of value, and then there is a Joint Asset schedule where (in case of husband and wife) you would report 1/2 of total of joint assets.
The credit card would be deducted as debt at 100% of balance due, and the mortgage on house at 1/2 of the balance due. Also deduct funeral expenses, etc.
Since dad died intestate not all of the assets automatically go to mom. you and your siblings may be entitled to a portion of the estate, and if so, any net estate at that point is taxable at 4.5%
as to credit card it appears there are sufficient assets to pay it, but you would want to calculate the net estate, and you could argue that there is no liquidity and negotiate a lower payoff with the credit card company. 50% of balance would not be uncommon with the above figures
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