Estate Planning & Probate

TOD, POD, and Joint Accounts in Pennsylvania: What Passes Outside Your Will

Pennsylvania does not allow transfer-on-death deeds for real estate. A property owner cannot name a beneficiary to automatically receive title at death without probate using a TOD deed. To pass real estate outside of probate in Pennsylvania, other legal tools must be used, including joint ownership with right of survivorship, life estate deeds, or trusts.

Pennsylvania Does Not Allow Transfer on Death Deeds

Pennsylvania law does not recognize transfer-on-death deeds for real estate. A beneficiary cannot be named on a deed to receive property automatically at death. Unlike some states, Pennsylvania requires other legal structures to transfer real estate outside of probate.

Under Pennsylvania law, property that passes through a TOD account, POD designation, or joint account passes directly to the named beneficiary or surviving co-owner outside the will. The beneficiary or surviving owner is generally responsible for the Pennsylvania inheritance tax attributable to that transfer. The executor must still report the asset on the inheritance tax return and may be left addressing the consequences if the tax is not paid.

Lebovitz & Lebovitz, P.A. advises Pittsburgh and Western Pennsylvania families and estates on how transfer-on-death designations, payable-on-death accounts, and jointly held property interact with wills, trusts, and Pennsylvania inheritance tax. These mechanisms are widely used and widely misunderstood. The problem is usually not the document itself. The problem is that beneficiary designations, joint titles, and estate documents were never reviewed together.

How Transfer-on-Death and Payable-on-Death Designations Work

A payable-on-death designation on a bank account allows the balance to pass directly to the named beneficiary at the account holder’s death without going through probate. A transfer-on-death designation works the same way for brokerage and investment accounts. The beneficiary presents a death certificate to the financial institution and receives the funds. The executor has no authority over that account, and the will has no effect on who receives it.

POD and TOD designations are easy to establish and even easier to forget. A designation made when an account was opened years ago may still name an ex-spouse, a deceased sibling, or one child when equal distribution was later intended. The designation on file at death controls. The institution does not look to the will for a different answer.

Who Gets the Money and Who Pays the Tax

The beneficiary named on the account gets the money. The bank or brokerage firm usually releases the funds directly to that beneficiary after receiving the required paperwork. The executor does not control that transfer and cannot redirect it simply because the will says something different.

The tax question is separate. Pennsylvania inheritance tax still applies based on the relationship between the decedent and the person receiving the asset. The beneficiary who receives the TOD or POD account is generally responsible for the tax attributable to that transfer. The institution pays out the account first. The tax obligation follows afterward. For a full explanation of how liability and payment interact, see our Who Pays Pennsylvania Inheritance Tax page.

Joint Accounts and Joint Tenancy With Right of Survivorship

A joint account with right of survivorship passes entirely to the surviving account holder at death. This is true regardless of who contributed the funds and regardless of what the will says. A parent who adds an adult child to an account for convenience may unintentionally leave that entire account to that child while the other children receive nothing from that asset.

Joint tenancy with right of survivorship works the same way for real estate. When title is held in that form, the surviving owner takes the property automatically at death. No probate is required for that transfer, and the will does not control it. A title decision made years earlier can therefore override a later estate plan. For how Pennsylvania inheritance tax applies to real estate that passes by joint tenancy, see our page on inheritance tax on real estate in Pennsylvania.

Another option is a life estate deed. This allows you to retain the right to live in and control the property during your lifetime, while naming a remainder beneficiary who automatically receives full ownership at death. Unlike a joint tenancy, the beneficiary does not have a present ownership interest during your life.

However, a life estate also limits flexibility. Selling or refinancing the property typically requires the consent of the remainder beneficiary, and the structure is difficult to unwind once created. It solves the probate issue, but it introduces other constraints that need to be considered carefully.

Tenancy by the Entirety in Pennsylvania

Pennsylvania recognizes tenancy by the entirety for married couples. Property held by the entirety belongs to both spouses as a single legal unit. At the death of one spouse, the surviving spouse takes full ownership automatically. During life, neither spouse can transfer or encumber the property without the other’s consent.

Entireties ownership also carries asset protection consequences during life because a creditor of only one spouse generally cannot reach entireties property to satisfy that spouse’s individual debt, subject to narrow exceptions. At the first death, that protection disappears when the surviving spouse becomes sole owner. Planning for the second death matters just as much as planning for the first.

Pennsylvania Inheritance Tax on Accounts Passing Outside Probate

Accounts and property that pass outside probate through beneficiary designations or survivorship rights are still subject to Pennsylvania inheritance tax. The tax rate depends on the relationship between the decedent and the person receiving the property. A TOD brokerage account passing to a sibling is taxed at 12 percent. A joint account passing to an unrelated co-owner may be taxed at 15 percent. The tax is based on the date-of-death value and is generally due nine months after death.

Transfers to a surviving spouse are exempt. The REV-1500 inheritance tax return still requires these non-probate transfers to be reported. Executors who assume that assets passing outside the estate can be ignored on the return create avoidable exposure for tax, interest, and penalties.

What Happens When the Beneficiary Does Not Pay

The practical problem is easy to see. A beneficiary receives a TOD or POD account directly, spends the funds, and then ignores the inheritance tax obligation. The executor still has to file the inheritance tax return and account for the transfer, and may then face pressure from other beneficiaries or from the estate administration process to resolve a tax problem tied to money the executor never controlled.

Pennsylvania law gives the executor a right of contribution against beneficiaries who received taxable assets, but that does not make collection easy. It may require separate legal action. The better approach is prevention: reviewing the designations before death, coordinating them with the estate plan, and ensuring the people who will receive these accounts understand the tax obligation that follows the transfer — before the transfer happens. For a complete guide to everything the executor is responsible for during administration — including tax reporting for non-probate assets — see our page on executor duties in Pennsylvania.

Transfer-on-Death Deeds for Pennsylvania Real Estate

Pennsylvania does not recognize transfer-on-death deeds for real estate. A property owner cannot name a beneficiary to receive title automatically at death through a TOD deed. Unlike some states that have adopted statutes permitting TOD deeds, Pennsylvania requires other legal mechanisms to transfer real estate outside of probate.

The alternatives available in Pennsylvania include joint tenancy with right of survivorship, a life estate deed, and a revocable living trust. Each carries different implications for control, tax, and flexibility during life, and each needs to be evaluated against the client’s full plan before title is changed.

Coordination Is the Step Most Estate Plans Miss

The most common estate planning failure is not the absence of a will. It is a will that was drafted carefully while account titles, beneficiary designations, TOD instructions, and jointly held assets were never coordinated with it. A will controls only the assets that actually pass through the estate. If most of the wealth passes by beneficiary designation or survivorship, the will may govern far less than the family assumes.

A complete review means listing every account, every titled asset, and every beneficiary designation and making sure each one matches the current plan. That review should also confirm that a power of attorney is in place so that someone has authority to manage these accounts if the owner becomes incapacitated. Without that coordination, the law of account registration and beneficiary designation may control more than the will you thought governed everything.