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| INHERITANCE TAXES Various states have laws that establish an inheritance tax, the amount due, exemptions and allowable deductions. In Pa. for deaths after January 1, 1995, the inheritance tax for surviving spouses has been eliminated. The inheritance tax is still applicable, however, to linear ascendants and descendants, i.e. children, grandchildren and parents. The tax rate for this class of heirs or beneficiaries is 4 ½ % ( reduced from 6% effective for deaths occurring after July 1, 2000 ) in Pennsylvania. In New Jersey there is no state inheritance tax for spouses or children and grandchildren. In Pennsylvania, the tax rate for siblings is 12% ( reduced from 15% effective for deaths occurring after July 1, 2000) and for all others, i.e. , nieces, nephews, aunts, uncles, friends the rate remains at 15%. There is no inheritance tax due for gifts to charitable institutions. Inheritance tax can not be avoided by transferring assets to a "Revocable Living Trust." If assets are transferred to an "Irrevocable Trust" and that trust was created one year or more prior to the death of an individual and provided certain other conditions under the law are met, the assets in an irrevocable trust will be exempt from inheritance tax. Applicable federal laws may extend the period of time to safely shelter assets from taxation depending on various factors. There are exemptions and allowed deductions under the inheritance laws in most states that reduce or in some cases eliminate the inheritance tax. Pennsylvania and New Jersey require that the Inheritance Tax Return be filed with respect to any assets that were in the decedent's name only even if no inheritance tax is due. NOTE: As of July 1, 2000 the state of Delaware no longer has an Inheritance Tax. Ó 2000 James
W. Pearson, Jr., All Rights Reserved FOR ADDITIONAL INFORMATION CALL THE TOLL FREE HELP LINE 1-800-232-1477 E-mail: lawyer@lawwalk.com JAMES
W. PEARSON, JR. Chair of the Federal & State Credit Union Department & Coordinator of legal consultations under the Family Legal Care Plans offered to credit union members. |
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