Philadelphia Estate Tax Planning Lawyer

Philadelphia Estate Tax Planning Lawyer

It was 1789 when Benjamin Franklin, one of Philadelphia’s most famous residents and prolific publishers, first coined the phrase: “In this world, nothing is certain except death and taxes.” Both are implicated under regulations established by the Pennsylvania Department of Revenue, but some clarification is necessary. There is no estate tax in the sense that a decedent owes the government money after passing away. However, the state does have an inheritance tax, which might apply to what a person receives from the estate. Any assets that pass to a beneficiary under a will, an heir under intestacy laws, or via operation of law could trigger a surprising financial burden when that person gets hit with taxes.

Fortunately, it may be possible to avoid the adverse implications with proper estate tax planning. There are strategies to eliminate or minimize what your loved ones may owe, enabling you to protect your legacy. For more information on options, please contact Scott Counsel, P.C. to set up a consultation with a skilled Philadelphia estate tax planning lawyer. We can provide details based upon your unique circumstances, though a summary may help you understand the importance of taking action.

How Estate Taxes Work

In Pennsylvania, an inheritance tax is imposed on the value of assets that someone receives after a person dies. Whether you inherited property through a will, acquired assets in an estate without a will, or obtained an item that does not go through probate, you may owe taxes. Some additional points may help you understand estate taxes:

Filing the Return: The executor of the will or personal representative in an intestate estate is responsible for filing an estate tax return. However, if this individual does not file a return, any person who acquires anything of value via the decedent’s passing must do so.

Payment of Estate Taxes: Because the laws impose an inheritance tax, the individuals who received the property are responsible for payment. This includes:

• Someone who was the designated beneficiary on pay-on-death (POD) and transfer-on-death (TOD) accounts;
• A person who was the joint tenant on real estate held as joint tenants with right of survivorship, but only to the extent of the decedent’s fractional share; and
• Nonresidents of Pennsylvania who receive real estate or tangible personal property located in the state.

Property Subject to Inheritance Tax: Almost all assets owned by the deceased are included in assessing estate taxes, including a primary home, other real estate, vehicles, household goods, collections, personal belongings, and more.

Tax Rates: There is no estate tax upon transfers to a surviving spouse or to the parents of a child who was under 21 years old at death. For other inheritances:

• A rate of 4.5 percent is levied against transfers to lineal descendants, including both younger and older generations. This includes children, grandchildren, parents, and grandparents.
• When you pass assets to a sibling, the rate is a flat 12 percent on the total value.
• If you bequest assets to a niece, nephew, friend, or another beneficiary, the rate is 15 percent.

When to File: Pennsylvania law requires the inheritance tax return to be filed with state officials within 9 months after the date of death. Note that you can get a 5 percent discount for filing and pay within 3 months.

Options for Minimizing Estate Tax Liability

You may not be able to change the inheritance tax laws, but you can take advantage of estate planning opportunities to either avoid or reduce the amount your loved ones will be required to pay. Some options include:

• Life Insurance: Because life insurance proceeds are not subject to estate taxes, you can purchase a policy and designate beneficiaries. Those who already have a policy could also opt to liquidate assets that would be taxed and purchase additional coverage. This strategy works especially well when you designate beneficiaries that would otherwise be taxed at higher rates.
• Joint Accounts: There will only be inheritance tax levied on the value of what the decedent owned at death, not the entire amount. For example, you could set up joint accounts with an adult child; an account holding $10,000 means the child will only pay tax on $5,000.

However, note that you must set up the account OR list a pay-on-death beneficiary at least one year before death.

• Trusts: Certain types of trusts are an option for avoiding estate taxes, such as an annuity trust or trust created to benefit a charity.

Legal Help with Estate Tax Planning

At Scott Counsel, P.C., we are dedicated to advising you on strategies, tactics, and estate planning options to minimize tax implications at death. Our process starts with conducting an in-depth consultation to learn about your assets, family situation, and other details that impact inheritance tax liability. Our Philadelphia estate tax planning attorneys will also:

• Explain options for minimizing estate taxes and guide you in making an informed decision about the right fit for your needs;
• Prepare essential documents for achieving your estate tax planning goals, including your will or a trust;
• Assist with the follow-up tasks necessary to put your plan into effect, which may include setting up new accounts and adding designated beneficiaries; and
• Help transfer assets into a qualifying trust.

In addition, you can trust our team to advise you on changes to Pennsylvania estate tax laws and other developments that may necessitate a review of your estate tax planning. We can assist with making necessary changes to leverage these opportunities to reduce inheritance tax liability.

A Philadelphia Estate Tax Planning Lawyer Will Explain Options

Few people are content with doing nothing about inheritance taxes and having over money to the government, so it is important to avoid such a result with the right strategy. Since estate planning is our core practice area at Scott Counsel, P.C., we have meticulous knowledge of the estate and inheritance tax laws that apply. Please contact our firm today to schedule a consultation with a Pennsylvania estate tax planning attorney. You can reach our firm by calling (856) 485-4585 or visiting us online.