Pennsylvania Inheritance Tax Has Changed For Some Children

PA Inheritance Tax Has Changed For Children, Age 21 or Younger, Who Inherit Money From a Parent

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Pennsylvania has relieved the tax burden from a class of beneficiaries who inherit from their parents. The class is narrowly defined as a child of a parent who was 21 years or younger at the death of the parent. If the child was over 21 years of age at the time of the death of the parent, the child, or the estate depending on the terms of distribution, will remain responsible for payment of the 4.5% inheritance tax. Children under 21 years of age are still taxed, but at a rate of 0%.

This new 0% tax rate is established in Section 21 of Act 13 of 2019 (House Bill 262) and applies to property transferred by a natural parent, an adoptive parent, or a stepparent who dies after December 31, 2019. Notably not included are grandparents and step-grandparents.

This change is similar to the change enacted by the Pennsylvania legislature in January 1995, in which the 6.0% inheritance tax that applied on assets transferred to a living spouse was eliminated and married beneficiaries were provided a new tax rate of 0% on assets left by their spouse.

There are only six states which collect inheritance taxes, Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

Inheritance tax is imposed on each share of the estate going to certain beneficiaries, whether in accordance with the terms of a Will or Trust or by state law if no such documents exist. Inheritance tax in Pennsylvania is due nine months after a person dies. If the tax is paid within three months of death, a 5% discount is permitted.

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Author:
Benjamin Scott Johns is a passionate estate planning and elder law attorney who aggressively represents his clients to ensure that former in-laws, creditors and the government are kept far away from the assets they want their beneficiaries to receive. Over the past ten years, Benjamin has helped hundreds of clients ensure the private, secure and safe passage of assets in a manner that is easily understood and cost-effective.
 Contact Benjamin at bjohns@lynchlaw-group.com or (724) 776-8000 for more information on inheritance tax laws in Pennsylvania or other estate planning matters.
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