Many people want to take care of their loved ones, even after they are long gone. A proper estate plan can help in those efforts.
Now among the things a person’s death can trigger are certain taxes. Here in Pennsylvania, there is an inheritance tax.
Who the beneficiaries are matters
An inheritance tax can apply to a wide range of transfers of a deceased’s assets to beneficiaries. This includes transfers to relatives, such as parents. Now there are some beneficiaries that have an exemption from the inheritance tax here in Pennsylvania. Some get a full exemption, while others get a more limited exemption. Whether a given beneficiary would get an exemption, and the size of the exemption, depends on the specifics of the beneficiary, such as how exactly they are related to the deceased. Spouses are one example of a group that gets a full exemption.
The specifics of the beneficiary receiving a transfer also impacts what inheritance tax rate would apply to the transfer.
When inheritance taxes are paid can also impact their size. Taxes paid in the three-months period following the deceased’s passing are generally eligible for a 5 percent discount.
Inheritance vs. estate tax
There are different types of inheritance tax; however, an estate tax is not one of them. This may be confusing for some people, but these are two different types of taxes. In short, an estate tax applies to the entire estate, while inheritance taxes are applied to the specific shares given to the different beneficiaries. Currently, in the state of Pennsylvania, there is only a state inheritance tax, there is no state estate tax.
These are just a few of the important facts about Pennsylvania’s inheritance tax. For individuals who are estate planning who have concerns or questions about the inheritance tax, it may be beneficial to research the laws. For explanations of the various concepts and issues connected to inheritance taxes, individuals should consider speaking with a knowledgeable attorney.