Estate planning basics in Pennsylvania

On Behalf of | Nov 11, 2021 | Estate Planning

Estate planning in Pennsylvania can be a bit more complicated than in other parts of the country due to the state’s inheritance tax. Pennsylvania is also stricter than other states when it comes to what is considered a valid will. If you live in Pennsylvania, it is important that you complete your estate plan documents carefully.

Inheritance tax

The inheritance tax in Pennsylvania is not levied on the estate but individually on each beneficiary. Inheritance tax rates vary depending on the relationship between the deceased person and their beneficiaries. There is no tax on assets that are left to a spouse or on assets that are left to a parent from a child that was 21 or younger. The other inheritance tax rates are:

• 4.5% for children or lineal heirs
• 12% for siblings
• 15% for others

The 15% tax rate for inheritances left to “others” could include people like cousins or friends. This category does not include government entities, charitable organizations, or tax-exempt institutions.

Valid will

A valid will in Pennsylvania could be handwritten or communicated orally, and there is no need for an official notarization. However, the signatures of two or more witnesses are required, and these signers must affirm that they were present when you signed your will. A valid will also require the names of heirs that will inherit certain property and the name of an executor that will handle probate and estate administration.

Probate requirements

Estates that are valued at less than $50,000 are considered small estates that do not have to be administered through the probate court. Larger estates will require a probate process that is overseen by a judge. If a person dies without a valid will, the probate court will make decisions about the distribution of their property based on intestacy laws.

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