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Inheritance Tax – Snyder & Wiles, PC

INHERITANCE TAX ATTORNEYS

DEATH AND TAXES! WHEN A LOVED ONE DIES, WE WILL HELP YOU TRANSFER ASSETS AND MAKE EVERY EFFORT TO MINIMIZE THE TAX CONSEQUENCES OF THEIR DEATH

What is the PA Inheritance Tax?
While Pennsylvania does not impose an estate tax due after the death of an individual, PA is one of only seven states that imposes an inheritance tax upon individuals receiving assets from a decedent living in Pennsylvania or a non-resident decedent who owned real estate or tangible property in Pennsylvania.  The Pennsylvania Inheritance Tax is assessed on almost all property owned by an individual at the time of death and has differing tax rates depending on the recipient’s relationship to the decedent.

Protecting what matters most to Lehigh Valley families.

The PA Inheritance Tax rates for 2016 are as follows:

  • Assets to Legally Married Spouses and Charities = 0%
  • Assets to Children, Grandchildren, and Direct Descendants = 4.5%
  • Assets to Siblings = 12%
  • Assets to Others (Includes Nieces/Nephews, Cousins, Friends, etc.) = 15%

What Must be Filed?
The PA Inheritance Tax return, or the REV-1500, must be filed and the necessary taxes must be paid by the Personal Representative within nine months from the date of death to avoid a penalty of 25% of the tax due or $1,000 (whichever is less) from being assessed on the estate. The Pennsylvania Department of Revenue provides the REV-1500 and a 27-page REV-1500 instructional guide for anyone to access.  Personal Representatives are encouraged to review these documents as soon as possible with a knowledgeable PA estates attorney, as a 5% tax discount will be applied if an estimated tax payment is made within three months of the date of death. Even if the required tax return is timely filed, it must be properly completed as well.When completing the return, it is important to attach copies of any referenced documents, including copies of the Will, expense and bank statements, and property appraisals. As with any tax return, audits are a real possibility if an estate’s tax return is improperly completed.  The tax return is a complex document and preparing an error-free return can be difficult and confusing without the help of a lawyer. It is wise for any Personal Representative in Pennsylvania to speak with a qualified Pennsylvania probate administration or estate attorney before attempting to file the REV-1500 in order to avoid penalties and to ensure proper and timely completion.

What Property is Taxable?
All real property located in Pennsylvania and all personal property of a Pennsylvania resident is taxable under the Inheritance Tax. This includes cash, cars, furniture, antiques, jewelry, etc., located in Pennsylvania at the time of death as well as intangible property, including stocks, bonds, bank accounts, and certain retirement benefits, IRA accounts, and annuities, regardless of location. Jointly owned property is taxable (except between husband and wife) to the extent of the decedent’s interest in the joint property, including real estate, securities, and bank accounts. For example, if a house in Pennsylvania is owned equally between brother and sister (both residents of PA) for 10 years and then brother dies, his 50% interest in the property is part of his taxable estate. However, if the decedent created the joint interest in the property within one year of his or her death, the full value of the property is taxable. In the case of a non-resident, only the real property and tangible personal property located in Pennsylvania at the time of death is taxable.

How is the PA Inheritance Tax Amount Determined?
In order to determine the amount due under the PA Inheritance Tax, a Personal Representative must first ascertain the value of each of the decedent’s assets as of the date of death.  With real estate, the value is typically determined by having an appraisal performed, while bank account values are obtained directly from the financial institutions. A Personal Representative’s failure to identify and value every asset of the estate will not only create an inaccurate tax return and potential liability as the fiduciary, but may also create problems after the estate is distributed to the heirs. Furthermore, the PA Inheritance Tax is not imposed on the gross value of an estate, as deductions may be made before taxes are assessed. A knowledgeable PA estate attorney can advise Personal Representatives on what deductions are allowed (including debts which are owed, funeral expenses, certain estate costs, and possibly a $3,500 “family exemption”) and how to calculate the total tax due.

Once the estate is valued and deductions are taken, the Personal Representative must look to whom the assets are passing to, either through the decedent’s Will or through Pennsylvania’s Intestacy Laws (if there is no Will). As stated above, the Pennsylvania Inheritance Tax rate depends on the relationship of the beneficiary to the decedent. At Snyder & Wiles, our estate and probate administration attorneys are here to assist you through the entire process.

In every area of law, it is important to have a strong personal connection between attorney and clients, and this connection is especially key when it comes to your family. When it comes time to take action, you need to be comfortable with the advice you receive is essential.  Contact Snyder & Wiles, PC for a consultation regarding your estate planning, probate and inheritance tax needs, or fill out the form on this page.  610-391-9500.

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