Legal Question in Wills and Trusts in Pennsylvania

A creditor must come forward and file a claim with the estate if he or she has one. Since this is a debt, at the very latest, the creditor has to raise the issue by the time of audit or confirmation as per 20 Pa.C.S.A. � 3386:

If any claimant whose claim is not reported to the court by the personal representative as an admitted claim shall fail to present it at the call for audit or confirmation, he shall not be entitled to receive any share of the real and personal estate distributed pursuant to such audit or confirmation, whether the estate of the decedent be solvent or insolvent.

Otherwise, it is either one year after death (if the statute of limitations has already expired) or whatever time is left on the statute of limitations as per 20 Pa.C.S.A. � 3383:

The death of a person shall not stop the running of the statute of limitations applicable to any claim against him, but a claim which otherwise would be barred within one year after the death of the decedent shall not be barred until the expiration of one year after his death. Nothing in this section shall be construed to shorten the period which would have been allowed by any applicable statute of limitations if the decedent had continued to live.

You should not disburse all remaining assets. You should retain enough for any contigent claims and move forward with the account and confirmation. If the claim is not presented at audit, its barred as noted above.

No, you are not personally liable. But you do not want to be in the position of having to ask the beneficiaries for the money back. That is why you hold back on disbursing all of the funds. Really, if you know about the liability, then hold back on just enough to pay the claim if it is timely presented. Personally, I would have given the creditor personal notice and directed them to come forward if they have a claim.

You are asking about taxes. Is this even a taxable estate? The federal estate tax threshold is zero this year. If your uncle died before 2010, then it was several million dollars. Pennsylvania follows the feds in that there would be state estate tax if there is federal estate tax. There is inheritance tax on whatever is inherited by a beneficiary, whether land or something else. The rate of tax depends on who the beneficiary is.

Under 72. P.S. � 9127 you can deduct:

The following expenses may be deducted from the value of the property transferred:

(1) Administration expenses. All reasonable expenses of administration of the decedent's estate and of the assets includable in the decedent's taxable estate are deductible.

(2) Bequest to fiduciary or attorney in lieu of fees. A transfer to an executor, trustee or attorney in lieu of compensation for services is deductible to the extent it does not exceed reasonable compensation for the services to be performed.

(3) Family exemption. The family exemption is deductible.

(4) Funeral and burial expenses. Reasonable and customary funeral expenses, including the cost of a family burial lot or other resting place, are deductible.

(5) Tombstones and gravemarkers. Reasonable and customary expenses for the purchase and erection of a monument, gravestone or marker on decedent's burial lot or final resting place are deductible.

(6) Burial trusts or contracts. Bequests or devises in trust, or funds placed in trust after decedent's death or funds paid under a contract after decedent's death, in reasonable amounts, to the extent that the funds or income from the funds is to be applied to the care and preservation of the family burial lot or other final resting place in which the decedent is buried or the remains of the decedent repose and the structure on the burial lot or other final resting place, are deductible.

(7) Bequests for religious services. Bequests in reasonable amounts for the performance or celebration of religious rites, rituals, services or ceremonies, in consequence of the death of the decedent, shall be deductible.

I do not do taxes! If you are like me, hire a good CPA who is familiar with estate taxes to assist you. In the alternative, do you have an attorney assisting you with the probate of the estate? If so, then he/she should be worrying about this, not you.