What death taxes will my loved ones have to pay upon my death?
Depending upon the size of your estate, there are two (2) potential layers of death taxation that your Estate will face upon your death. The first is Pennsylvania Inheritance Tax. If your loved one passes away owning any interest in property or assets, including those that are jointly held or possess a beneficiary designation, it is subject to Pennsylvania Inheritance Tax. Proceeds from life insurance are not subject to Pennsylvania Inheritance Tax.
The Pennsylvania Inheritance Tax Rates are based on the relationship between the person who inherits as the person who died. Spouses pay at a 0% tax rate; children, grandchildren, and other lineal descendents pay at a 4.5% tax rate; siblings pay at a rate of 12%, and other relatives and non-relatives pay a rate of 15%. The Pennsylvania Inheritance tax return and full payment is due on or before the 9 month anniversary of a person’s death.
Federal Estate tax is owed for any estates with a value in excess of $12,060,000 for 2022. In 2023, this figure will increase to $12,920,000.
My loved one heard on the radio that going through probate was an expensive and time-consuming process, is this true?
Unlike other states, Pennsylvania has a very simplified probate system. Despite what talk-show hosts and misleading proponents of living trusts have stated, the overwhelming majority of probate estates in Pennsylvania are settled informally, without intervention of the courts. In fact, we frequently note to clients that typically the only time they will ever have to visit the courthouse during the probate process is when the Register of Wills appoints the Personal Representative, a process that takes about 15-20 minutes.
Of course, as with living trusts, the estate can expect to pay legal fees, inheritance taxes, and fiduciary commissions during its administration. The strongest advice in this regard is never follow estate planning advice from a talk-show program or door to door salesperson; rather, one should always seek competent legal counsel who has experience in estate planning matters. In addition, one should always use their common sense in this area and ask themselves the question, “if it sounds too good to be true, it probably is.”
Attorney Ashley Elias discusses Estate Planning.
Attorney Michael W. Nalli reviews Probate and Estate/Trust Administration.