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From James J. Conte, Esq., WBA Real Estate Law Committee Chair:
The Real Estate Law Committee and the joint Orphans’ Court/Elder Law Committees want to inform attorneys about the major change in policy adopted by most national title insurance companies. Title insurance agencies have been advised that it is no longer permissible to accept letters from counsel promising that they will see to the filing of the PA Inheritance Tax Return and payment of taxes post-closing.
Although your practice may have been not to issue these indemnification letters, the real impact of this change in policy by the major title companies is the further requirement that the closing agent must hold in escrow a sum equal to the estimated gross value of the estate times the applicable percentage tax rate times 150%.
Please be prepared to advise your personal representative to expect this requirement when the personal representative is selling real estate prior to an acceptance of the PA Inheritance Tax Return by the Department of Revenue.
Although a title agency may give credit for any previous payments made on account, you should check with the closing company conducting the closing on the purchase of the real estate for the estate you are representing to determine what the specific requirements will be so you can properly prepare your client in advance of the execution of the Agreement of Sale and prior to the scheduled closing.