FOR IMMEDIATE RELEASE
February 22, 2006
Contact:  Erin K. Kelly
(717) 846-2828
ekelly@pasen.gov
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Governor Signs Waugh Legislation to Establish Debt Payment Order for Estates of Decedents

HARRISBURG – Senator Mike Waugh's (R-York) Senate Bill 509, which amends the Probate Code to further provide for classification and payment of debts when the assets of an estate are insufficient to cover them, was signed into law by Governor Ed Rendell as Act 17 of 2006. 

Senate Bill 509 adds the Commonwealth and its political subdivisions to the list of parties that may lodge a claim against an estate for outstanding obligations, such as taxes.  Previously, the Commonwealth and municipalities were grouped under the "all other claims" section of the statute, which increased their difficulty in collecting from the estate. 

The legislation was originally introduced at the request of Jefferson Mayor Robb Green, who is also York County Controller. The borough experienced difficulty in collecting an outstanding obligation from a decedent's estate. If the municipality cannot collect the obligation from the estate, the unpaid balance is then spread across the tax base of the local government entity that is owed the money, meaning that local taxpayers ultimately end up absorbing these unpaid balances. 

 "Mayor Green's experience prompted him to contact my office and request a legislative solution to this matter," Waugh said. "His assistance in getting this legislation to this point in the General Assembly has been greatly appreciated." 

Added Mayor Green, "The signing of Senate Bill 509 into a law is a small but encouraging step towards easing the tax load of Pennsylvanians. This legislation gives municipalities status in the claims against estates. The measure passed unanimously in both chambers and is a sign of the hard work and determination of its sponsors. We genuinely appreciate their efforts!" 

According to the National Conference of State Legislatures, 42 states put taxes on a list of priority debts to be paid, but Pennsylvania is one of a few states that does not assign a priority of any kind for claims against estates for taxes.

Some states rank taxes as high as second; most prioritize them between third and sixth.  Waugh's legislation would put debts owed to the state or political subdivisions sixth on the list of priorities. 

"It is important for us to ensure that the claims against an estate by both the Commonwealth and the municipal governments are paid in full, and adding such claims to the priority list of payments will do just that," said Waugh.