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ESTATE MARY BAKER (12/17/81)

decided: December 17, 1981.

IN RE ESTATE OF MARY BAKER, A/K/A MARY XIDAS BAKER, A/K/A MARY S. BAKER, DECEASED. APPEAL OF COMMONWEALTH OF PENNSYLVANIA


No. 80-1-111, Appeal from the Order Entered April 25, 1980, of the Court of Common Pleas of Westmoreland County, Orphans' Court Division at No. 65-75-1762

COUNSEL

Vincent J. Dopko, Deputy Atty. Gen., Harrisburg, for appellant.

George W. Lamproplos, Cassidy & Lamproplos, K. Lawrence Kemp, New Kensington, for appellee.

O'Brien, C. J., and Roberts, Nix, Larsen, Flaherty and Kauffman, JJ. Wilkinson, J., did not participate in the consideration or decision of this case.

Author: Kauffman

[ 496 Pa. Page 579]

OPINION OF THE COURT

The Commonwealth appeals from an order of the Orphans' Court of Westmoreland County awarding a refund to appellee, Pittsburgh National Bank ("PNB"), of an alleged overpayment of inheritance tax assessed under the Inheritance and Estate Tax Act of 1961 ("Inheritance Tax Act").*fn1 At issue is whether PNB, as coexecutor of the estate of Mary Baker ("decedent"), is entitled to a refund of the inheritance tax it paid on a non-testamentary joint bank account maintained by decedent and her brother on deposit with PNB at the time of her death.*fn2 Because PNB, as executor, had the duty to retain in the joint account sufficient funds to pay the inheritance tax undeniably due and ultimately to remit those funds to the Commonwealth, we conclude that PNB is not entitled to the refund sought. Accordingly, we reverse the order of the Orphans' Court.*fn3

Decedent died testate on October 19, 1975, naming her husband and PNB as co-executors of her estate. At the time of her death, decedent and her brother maintained a joint bank account with right of survivorship on deposit at PNB. On October 28, 1975, in accordance with its duties under the Inheritance Tax Act as a depository bank, PNB duly reported decedent's death and the existence of this account to the Department of Revenue.*fn4 Nevertheless, PNB

[ 496 Pa. Page 580]

    thereafter permitted decedent's brother to withdraw the entire balance, totaling $10,339.12, without retaining funds sufficient for payment of the inheritance tax due.*fn5

On December 7, 1977, the executors filed an inheritance tax return for decedent's estate and properly included therein the joint account shared with her brother.*fn6 After appraising the assets listed in the executors' return, the Commonwealth assessed the total inheritance tax due. Using estate funds, PNB then paid an amount sufficient to satisfy the tax attributable to the transfer of both the testamentary estate and of decedent's interest in her joint accounts. Thereafter, the executors filed their first and final account.

Mellon Bank, N.A., which had been appointed by the Orphan's Court as decedent's residuary trustee, objected to the final account and sought to surcharge the executors, inter alia, because (1) the inheritance taxes paid on the joint account should have been paid by the surviving joint tenant and (2) the executors failed to collect the amount of the tax due from the surviving joint tenant.*fn7 PNB denied that it intended to pay any tax on the joint account, and claimed that the overpayment by the estate occurred because it was necessary to make tax payments without knowing what the ultimate liability would be. PNB then appealed the Commonwealth's assessment, claiming that since the estate was ...


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