Working To Minimize Inheritance And Estate Taxes
When you die and leave property to someone, your estate will be taxed on the amount that you pass on. Whether you’ve left money, jewelry, cars, or real estate, both the federal and Pennsylvania authorities may assess a tax.
Pennsylvania Inheritance Tax
Pennsylvania taxes its residents for any property they pass on upon their death. As a result, it is important to consider tax consequences during the estate planning and administration process. Additionally, even for out-of-state residents, any real estate located in Pennsylvania will be subject to an inheritance tax.
Under current law, the tax rates vary depending on who receives the property. If property is left to a spouse, there will be no tax due. For children and grandchildren, the rate increases to 4.5 percent. For siblings, nieces and nephews of the deceased, the rate increases again to 12 percent. For everyone else, such as unmarried partners, domestic partners, friends and acquaintances, the rate is set at 15 percent. Without proper planning, the inheritance tax bill incurred by an estate can get very high. Pennsylvania inheritance tax is, for residents and real property owners, inevitable.
Federal Estate And Gift Tax
The federal estate and gift tax has been revised countless times over the years. Today, only the very wealthy are subject to a federal estate and gift tax.
In 2017, a single person can pass on up to $5.49 million at their death, or as part of lifetime gifts, without being subject to federal estate taxes. A married couple can pass on double without being subject to taxation.
Once that exemption limit is hit, however, the tax rates are high. In fact, in 2017 the rate is 40 percent. While most people today are not subject to federal estate and gift taxes, failure to plan properly can result in huge tax consequences for the unsuspecting decedent’s estate.
Get The Experienced Assistance You Need
Consideration of estate and inheritance taxes is a key component of all estate plans. Additionally, an estate is not properly administered unless all necessary inheritance and estate tax returns have been completed and filed.
If you need to discuss the tax implications of your estate, or if you are an executor and would like to learn more about Pennsylvania inheritance taxes, contact the experienced Pittsburgh Estate Administration attorneys at McMorrow Law, LLC, at 724-940-0100 or 724-940-0100 for a free consultation.