Submitted by dissolutewastrel t3_11m94wq in Pennsylvania
hippata2023 t1_jbhl03i wrote
Reply to comment by Creative_Camel in Pennsylvania has No. 4 highest tax rates in U.S.: report by dissolutewastrel
That's bad information, which is surprising come from a law firm.
While joint assets will avoid probate, they're still subject to PA inheritance tax. My grandmother got nailed with this because she comingled (joint bank account) her monies with my aunt (my aunt had a long, hard road to death through severe dementia and multiple strokes). She did it because she found it easier to manage my aunt's estate while she was alive. When my aunt died, my grandmother was on the hook on paying tax on the half the balance of this account -- even though, by this time, most of the funds in the account were my grandmothers, not my aunt's. Yes, she was taxed on her own money.
Joint assets held by spouses will avoid the inheritance tax, but that's it. Only spouses.
Regarding irrevocable trusts, I researched this awhile ago and can't quite get back to it. While most states do observe irrevocable trusts as a way to avoid probate, PA is a weird one in that in order to do so, the trust has to meet certain conditions. 2 common conditions found in irrevocable trusts: the right to income and the right to change beneficiaries, will make the irrevocable trusts subject to inheritance tax, even if it avoids probate.
TL;DR: talk to an estate lawyer
Viewing a single comment thread. View all comments