Benefits of Inheritance Tax Law – Advice From an Estate Attorney
An estate attorney can advise you on the various types of taxes that can apply to your estate. One such tax is the inheritance tax. It is a 4.5 percent tax that is payable on a deceased person’s assets. Unpaid tax constitutes a lien against the decedent’s real property. This tax may also be avoided by paying the tax within three months of the decedent’s death.
Immediate family members pay 4.5 percent inheritance tax
Immediate family members pay 4.5 percent of the decedent’s estate when they inherit a share of the estate. However, if the decedent has a spouse, they are exempt from paying the tax. The remainder is taxed at a rate of up to 16 percent.
The surviving spouse and children under the age of 21 in Pennsylvania are not subject to inheritance tax. However, all other heirs of a deceased person are taxed at a maximum of 15 percent. Generally, the tax rate applies to direct descendants, as well as siblings and non-immediate family members.
The tax rate is higher for siblings–by blood or adoption–than for other inheritors. For example, the daughter of a decedent will pay 4.5 percent tax on her share, but will pay a maximum of 12 percent. In contrast, John Doe’s sister will pay up to 15 percent, while her cousin will pay the maximum of 15 percent.
Unpaid inheritance taxes constitute a lien on real property
The estate of a person who has passed away will have to pay the inheritance tax on the real estate he or she leaves behind. Normally, the estate has 15 years to pay the tax. However, the estate can choose to pay the tax earlier, and can even secure the tax by securing it with a bond. However, if the tax is not paid, it will continue to be a lien on the real estate until the Pennsylvania Department of Revenue issues an appraisal and releases the property from the lien.
In some cases, a tax lien on real property can be avoided through a partition sale. The joint tenants who jointly own the property can agree to pay the tax on their share of the property, and the taxes will be excluded from the sale. However, in the event of a divorce, the joint tenants may not agree to pay the inheritance taxes on their own.
In addition to being a lien on real property, unpaid inheritance taxes are a lien on personal property. While a lien on personal property is inferior to a mortgage, it has priority over other liens and rights.
Farmland is exempt from inheritance tax
If you own a farm, you may be wondering whether farmland is exempt from inheritance tax. While the answer is ‘yes’, there are some important conditions to meet before the land is exempt. For example, the property must be primarily used for agriculture for at least seven years after the deceased owner’s death. It must also generate a minimum income of $2,000 annually. In addition, the surviving family members must report the farm’s income to the Department of Revenue every year. If they fail to do this, the estate may be subject to inheritance tax and interest.
The proposal is designed to protect farms, ranches and other assets owned by farmers. While the government is considering the idea of extending the stepped-up basis to other types of assets, it is not yet clear whether the legislation will be adopted. In some cases, a farmer may want to consider selling his land after he dies in order to avoid paying inheritance taxes. However, if the farmland isn’t sold, the proceeds would be subject to estate tax, which is already a major concern.
Making individualized plans with an estate attorney
Inheritance tax law – estate attorney allows for certain strategies to minimize estate taxes. A professional estate attorney will help you create plans that will minimize estate taxes. Some of these strategies include naming healthcare powers of attorney, creating a trust for your children, and protecting your home from long-term care. You should also consider whether or not you wish to set aside a portion of your estate to benefit your children and grandchildren.
Estate planning is essential to protect your assets. An estate plan reflects your wishes for your estate, such as who will inherit your property and how your assets will be divided. It can also designate who will raise your children. Whether you have a small estate or a large one, estate planning can help you preserve your assets.
Having an estate attorney review your plans can help you make sure they are in compliance with the law and explain better options. These experts can help you design an estate plan that is tailored to meet your specific needs.
