In Pennsylvania, learning about the taxes your estate and inheritors will endure upon your passing may make it seem like no good deed goes unpunished. However, with careful planning and consulting Pennsylvania estate planning attorneys, you can reduce these taxes to give your beneficiaries as much support as possible. Keep reading to learn more about these methods and why connecting with a lawyer is critical during this process.
What are estate taxes?
When someone passes away in Pennsylvania, either the estate itself or the beneficiaries of an estate will be taxed upon the transfer of assets from the estate to their inheritors. Regardless, this means that the beneficiaries will effectively receive less than what was left for them, depending on their relation to the head of the estate. For example, if you pass property to a surviving spouse, there is a 0% tax on this property, but if you want to leave property to your siblings, there will be a 12% tax.
Is It possible to reduce estate taxes?
If you want to help minimize or even fully avoid estate taxes, carefully planning your estate is critical. Generally, one of the most effective ways to do this is to gift assets. This is because assets gifted one year before your passing are exempt from the estate tax. Though it is easy, you may face complications, as it can impact your eligibility for Medicaid and you may be subject to Federal gift taxes.
Another option to help you reduce or eliminate estate taxes is to set up a joint account. This is because Pennsylvania will only tax a portion of the assets owned by the deceased party rather than the full amount. However, issues can arise if you have more than one child as it may lead to the unintentional disinheritance of your other children, and you should ensure that the beneficiaries will not take the money out of the account so you may not use it.
One of the most effective ways, however, to reduce your estate taxes is to establish a trust fund. If you establish an irrevocable trust, for example, you can help avoid the federal estate tax your assets may be otherwise subject to. However, this typically only applies to those with 13.61 million dollars in assets as of 2024.
Can an attorney help me?
As you can see, there are many considerations you must make during this process to help ensure that your assets and beneficiaries are protected upon your passing. That’s why it’s imperative to work with an experienced attorney who can help guide you through this complex process.
At Friedman Schuman, we understand how important protecting your loved ones is, even after passing. That’s why our dedicated team of attorneys can help you determine the best course of action for your specific needs. Connect with us today to learn more about these matters.
