Our firm recommends a few different documents as part of a basic estate plan one of which is a Last Will and Testament. This document allows you to provide for what should happen to your probate assets after you pass. Pennsylvania does apply a tax on assets passed through probate or intestacy. The amount of tax depends on the value of the estate as well as the relationship of the beneficiaries to the decedent. Pennsylvania requires that an Inheritance Tax Return is filed with the Department of Revenue within nine (9) months from date of death disclosing all assets that passed through your estate and their values. Debts of the decedent and estate administration expenses can be deducted from total assets prior to determining tax due.
A good estate plan can minimize the tax consequence for your heirs. Presently, gifts can be made in the amount of $15,000 per year without tax assessed. Non-probate assets, i.e. assets with a beneficiary designation such as life insurance policies, are not assessed an inheritance tax. You may consider diversifying your portfolio to hold your assets in a variety of different vehicles. Another option is to place assets in trust during your lifetime. The trust can be drafted such that you can continue to support yourself during your lifetime with the assets held in trust. An irrevocable trust may also prove useful if you have long-term care expenses or need to seek subsidized healthcare. Consult with an experienced attorney to fully understand your options for a suitable estate plan.