Estate taxes and inheritance taxes are necessary expenses that must be paid in a timely manner. Estate taxes are imposed as a percentage of the value of an estate transferred to beneficiaries. The rate can vary based upon the relationship of the heir to the decedent and some types of property are exempt. Having an experienced estate lawyer can help an executor with what estate taxes are due and how they will effect the estate. The Pennsylvania Inheritance Tax Rates are:
0%: transfers to surviving spouse or to a parent from a child under 21 years old;
4.5%: transfers to direct descendants and lineal heirs;
12%: transfers to siblings;
15%: transfers to other heirs, excluding transfers to charities, exempt institutions, and other exempt government entities.
Exempt from inheritance tax altogether is jointly owned property between spouses.
Estate taxes or “death taxes” are due upon death; however, timing can be critical as there are discounts available for paying quickly. If paid within three months of the decedent’s death, there may be a 5% discount applied. These taxes become delinquent after nine months following the decedent’s death.
Federal Transfer Taxes only affect those with an estate of more than $5.25 million (as of 2013). Those estates subject to federal estate taxes may face up to 40% on anything exceeding $5.25 million which is severe (and only affects around 1% of the population.)
If you are an executor or planning your estate, taxes should be a large consideration – especially for high-value estates. Consult with a Bucks County estate lawyer about which laws apply to your estate to see what planning options can help mitigate the tax burden. Contact our office today by calling (215) 486-8171 or submitting an online inquiry form for more information and to schedule a consultation with a Doylestown estate lawyer.