![]() ![]() Inheritance taxes can be minimized or avoided by leaving heirs money via trusts or insurance policies, or by gifting sums during one's lifetime.Īn inheritance tax is not the same as an estate tax.Whether you will pay inheritance tax depends on the amount of the inheritance and your relationship to the deceased-with lower amounts inherited from close relatives more likely to be exempted.There is no federal inheritance tax, but inherited assets may be taxed for residents of Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.Unlike the estate tax, which is levied on the value of an estate and is paid by it, an inheritance tax is levied on the value of the inheritance received by the beneficiary, and it is the beneficiary who pays it.Inheritance tax is a levy on assets inherited from a deceased person.Should I Transfer my Family Home to my Child?ġ Decedent is the legal term for a person who has died. Making Medical Choices – Lessons from the Schiavo Case Related estate planning and estate administration articles: If you desire more information on this topic, please email a Pennsylvania estate planning lawyer now or phone us at 72 in Greensburg or toll free at 88.įor more information please visit our Wills, Estate Planning, Estate Administration and Probate Information page. We are here to assist you at that time and hope that you will consult with us so as to insure a timely tax filing and tax payment that has not only considered the appropriate valuation of the assets, but also taken advantage of all of the expenses and deductions that the department permits. This article merely scratches the surface concerning the proper filing and payment of Pennsylvania inheritance tax. If payment is made within 90 days of the date of death, the department discounts the amount by 5%. If it is not paid within that period of time, the Pennsylvania Department of Revenue may assess penalties and interest. In Pennsylvania, the inheritance tax must be paid within nine months of the time of the decedent’s death. However, if that account was established using only the decedent’s funds, and the decedent dies within one year, then the whole value of the account is taxed, not just a portion of it. For example, where a decedent owns a bank account which is titled in the decedent’s name and, let us say, two of his children’s names, the decedent’s one-third interest would be taxed at a rate of 4.5%. Sometimes, jointly held property is ignored for tax purposes at the time of death. Further, an IRA account held in the decedent’s name, if the decedent had not reached the age of 59 ½, is also exempt. As an example, life insurance proceeds which are paid directly to a beneficiary or are paid to the estate of the decedent are exempt. Many people do not realize that there are certain types of assets that are exempt from inheritance tax. Property passing to other individuals would be taxed in Pennsylvania at a rate of 15%. ![]() If property would be passing to a brother or sister, the tax rate would be 12%. Once the net value has been calculated, the Pennsylvania inheritance tax, as it pertains to children, is 4.5% of that net value. ![]() These expenses typically include the cost of the funeral, the debts of the decedent (including mortgage loans, credit cards, home equity loans, etc.), bills and expenses incurred as the result of a last illness, all fees that are paid to the Register of Wills Office, legal fees for processing the estate, and miscellaneous expenses and fees. Further, the internet can be very helpful to value stocks and/or vehicles.įrom the value of these resources, we are permitted to deduct certain expenses to arrive at a net valuation for the estate. With bank accounts and the like, date of death values are obtained from the financial institution. With real estate , the value is often arrived at by having an appraisal performed. The value of these assets must be ascertained as of the date of death. For instance, if a widow dies owning real estate in her own name, a checking account, a certificate of deposit, an automobile, some stocks and/or bonds, all of those items are taxable, as they would transfer to her beneficiaries, let us presume, her children. Pennsylvania inheritance tax is assessed on virtually all property owned by the decedent 1 himself or with others at the time of death. That was true only until 1994 - it has now been abolished. One common misconception is that spouses have to pay inheritance tax on property that they obtain from their deceased mate. The Pennsylvania inheritance tax is a tax on property at the time of someone’s death and is imposed upon the transfer of that property. Frequently, in our practice, we are confronted with many misconceptions concerning Pennsylvania inheritance tax. ![]()
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