Discussion:Pennsylvania Inheritance Tax Idea

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Discussion Forum Index --> Tax Tips --> Pennsylvania Inheritance Tax Idea

Podolin (talk|edits) said:

16 November 2011
My first post on TA, about 8 months or so ago, was this: Discussion:Save State Inheritance Tax at No Fed Gift or Estate Tax Cost? . Then, it was the germ of an idea. Now, I have an actual situation in which to use it, so would really appreciate a critique from a PA professional. Widow, 1 child, estate about $1,000,000 (so no Federal estate tax probably) will leave entire estate to adult daughter and son. PA inheritance tax would be 4.5% of that, or roughly $45,000. To the extent she feels OK doing it, in the sense of trusting her daughter and son, she can add them both as co-owners of various accounts (cash, CDs, stocks, etc>) and the result would be that on her death, the state views her taxable estate to be 1/3 of the total such accounts. So, if she has, say, $500,000 in cash and stocks and does this, it reduces PA inheritance tax by 2/3 of 4.5% of $500,000, or $15,000. Not a fortune, but easy to do and better in their pockets than PA's. Thanks.

KatieJ (talk|edits) said:

17 November 2011
Len, I'm not in PA, but I can refer you to Pa. Stat. Ann. 72 ยง9107(c)(3), which provides that a transfer of property within one year of the transferor's death is considered a transfer in contemplation of death, and is included in the taxable estate to the extent it exceeds $3,000. I would guess that this will work as long as the transferor survives more than one year after the transfer.

Podolin (talk|edits) said:

17 November 2011
Thank you, Katie. I was aware of the 1-year issue (and mentioned it in my long-ago posting). But did you, even though not in PA, research this and agree that is the only concern? If so, that is service beyond the call of duty, and I thank you.

Podolin (talk|edits) said:

21 November 2011
Be sure to read Discussion:Pennsylvania Inheritance Tax Planning for some important caveats.

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