Berman & Asbel, LLP We offer quality legal services with a personal touch.
Call For a Free Initial Consultation
484-842-0276

Death is inevitable. Taxes don't always have to be

Pennsylvania is one of only 16 states, along with the District of Columbia, that seeks to impose taxes on inheritances. What that means is that one of the challenges in developing solid estate plans is understanding the tax landscape not in the here and now, but in the future, after you are gone.

As we all know, death is a given and close on its heels is taxes. But with proper planning there may be ways to limit the bite the government takes from the amount you want transferred to heirs. In fact, in some instances it may be possible to reduce the tax implications to zero.

Perhaps the major thing to remember related to inheritance taxes is that money going to charity or paid out as a life insurance benefit is exempt.

One strategy that might be considered in circumstances where the estate owner holds a large Individual Retirement Account is to set up a wealth restoration structure. In brief, what this might involve is using proceeds from an IRA inherited from a spouse to fund an irrevocable life insurance trust. This presumes that the minimum distribution from the IRA isn't all needed to cover the estate owner's living expenses.

Under the plan, the value of the inherited IRA would be willed to a favorite charity. Meanwhile, the distributions would be used to purchase a life insurance policy on the estate owner equal in value to the IRA. That would reside with the trust with children or other selected heirs designated as beneficiaries.

If properly structured, at the time of death, the inherited IRA would go to charity, tax free, and the heirs would receive the insurance payout, tax free.

This is obviously somewhat complicated. And it might not always be possible to do. State laws can and do change, which is why working with an experienced attorney is always recommended.

No Comments

Leave a comment
Comment Information
Contact Us Today

Contact Us Now For A Free Initial Consultation

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Berman & Asbel LLP
20 West Third Street
Media, PA 19063

Phone: 484-842-0276
Phone: 484-842-0276
Fax: 610-565-7083
Media Law Office Map

Review Us