Estate Planning Mistakes to Avoid in Pennsylvania

Pennsylvania's estate planning rules are unusually punishing. The state is one of only six that levies an inheritance tax on every dollar transferred at death — no threshold, no exemption (except for spouses). The power of attorney execution requirements are among the strictest in the country. And the absence of transfer-on-death deeds for real estate forces homeowners into more complex probate-bypass strategies than residents of most other states.

These are the mistakes that cost Pennsylvania families the most — ranked by financial impact.

1. Executing a Power of Attorney Without Following Act 95

A power of attorney that does not comply with Pennsylvania's Act 95 requirements is unenforceable. Financial institutions will reject it, and the family's only recourse is an Orphans' Court guardianship proceeding — $3,000 to $10,000 in fees and 30 to 90 days of delay.

The requirements: mandatory capitalized statutory notice signed by the principal, two independent witnesses, notary acknowledgment, and a signed agent acknowledgment page. The notary cannot be a witness. The agent cannot be a witness. Many form-based POAs from out-of-state sources or free templates fail at least one of these requirements.

The fix: Use a Pennsylvania-specific POA template that follows the statutory format and includes all four required components.

2. Ignoring the Stepchild Remarriage Tax Trap

If a surviving stepparent remarries, the stepchild relationship is legally severed under Pennsylvania law. Bequests to those former stepchildren jump from 4.5% to 15% — a 233% tax increase. On a $200,000 inheritance, that is an additional $21,000 per stepchild.

Most stepparents do not realize this until the Department of Revenue processes Form REV-1500 and sends the bill.

The fix: Name stepchildren as beneficiaries on life insurance policies (completely exempt from inheritance tax), make lifetime gifts more than one year before death, or pursue formal adult adoption to permanently lock in the 4.5% rate.

3. Assuming Your Home Avoids Probate

Unlike 30+ other states, Pennsylvania does not recognize transfer-on-death deeds for real estate. A house titled solely in one person's name goes through probate — period. The executor must file at the Register of Wills, wait out the one-year creditor claim period, and navigate the Orphans' Court if any disputes arise.

The fix: Title the home as joint tenancy with right of survivorship (JTWROS), use a life estate deed, or transfer it into a revocable living trust. Each option has different tax, control, and Medicaid implications.

4. Missing the 5% Inheritance Tax Prepayment Discount

Pennsylvania offers a 5% discount on inheritance tax paid within three months of death. On a $500,000 estate passing to adult children (taxed at 4.5%), the tax is $22,500 — and the discount saves $1,125.

For larger estates or those with non-lineal beneficiaries, the savings are more significant. The discount applies to whatever portion is paid within the three-month window, so even a partial estimated payment captures proportional savings.

The fix: Executors should calculate a conservative estimated tax payment and submit it to the Department of Revenue within 90 days of death, even if the full inventory is not complete.

5. Failing to Coordinate Beneficiary Designations With the Will

A will only controls probate assets. Life insurance, retirement accounts, POD bank accounts, and TOD brokerage accounts pass by beneficiary designation — and those designations override the will.

The most common coordination failure: a divorced person updates their will to remove their ex-spouse but forgets to change the beneficiary on their 401(k). Federal law (ERISA) treats the designation as controlling, and the ex-spouse receives the retirement account.

The fix: Run a beneficiary audit across every financial account, insurance policy, and retirement plan. Confirm that each designation matches the intent expressed in the will.

6. Not Planning for Medicaid Estate Recovery

The Pennsylvania Department of Human Services can recover Medicaid costs from the probate estate of deceased recipients aged 55 or older. Families who did not structure assets to pass outside of probate can lose the family home to a state recovery claim.

Critically, non-probate assets — JTWROS property, life insurance, retirement accounts with named beneficiaries — are entirely exempt from Medicaid recovery.

The fix: If a family member is likely to need long-term care, restructure asset titles at least five years before a potential Medicaid application to move the home and major assets outside the probate estate.

7. No Guardian Designation for Minor Children

If a parent dies without naming a guardian in their will, the Orphans' Court appoints one — and the court's choice may not be who the parent would have selected. The court proceeding itself can take months, during which children may be placed in temporary care.

The fix: Name a testamentary guardian (and an alternate) in your will under 20 Pa.C.S. § 2519. Pennsylvania courts give substantial weight to a parent's written designation.

8. Using Out-of-State Documents

Pennsylvania's execution requirements for wills and powers of attorney differ from most other states. A POA valid in Florida may be rejected in Pennsylvania. A will valid in California may lack the self-proving affidavit form that Pennsylvania's Register of Wills expects.

The fix: If you moved to Pennsylvania, have your estate planning documents reviewed for compliance with Pennsylvania law. At minimum, execute a new self-proving affidavit and a new POA under Act 95.

The Cost of Getting It Right vs. Getting It Wrong

Every mistake on this list is preventable. The Pennsylvania Basic Estate Planning Kit covers the complete execution protocol, inheritance tax worksheets, beneficiary audit, and the specific Pennsylvania traps that national templates miss.

See more Pennsylvania guides →