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Are annuities outside of probate subject to inheritance tax?

Glenolden, PA |

My mother passed away owning an annuity with a residual value that was paid to her heirs. Is the amount given to the heirs subject to this tax?

Attorney Answers 3

Posted

Hello ...

Annuities ares subject to the Pa Inheritance Tax. A bigger issue become the Tax Clause in the Will (especially with sizable annuities), and who is responsible for payment of that - the "death tax" - under the Will and for the Estate.

Good luck.

John

Although we invite you to contact us and welcome your calls, letters, and electronic mail, please remember that this information is for informational purposes only, and does not create an attorney-client relationship. This website is not intended to be the rendering of legal advice for specific cases, you should not act upon this information without seeking professional counsel, and you should consult an attorney for advice regarding your individual situation. Good luck. John

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Gary Roger Waitzman

Gary Roger Waitzman

Posted

I agree

Posted

Your best bet would be to seek advice from your tax advisor.
Often-you have some choices and the answer depends on several variables.

The answer given does not imply that an attorney-client relationship has been established and your best course of action is to have legal representation in this matter.

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Posted

I'm glad that you asked this question, because it brings up a key point to bear in mind -- the fact that an asset passes outside of probate does not determine whether or not it is subject to the PA Inheritance Tax, as that is a separate determination. Remember this point if a salesperson tries to sell you a revocable living trust. Most of these do not avoid Inheritance Tax.

Another point to keep in mind regarding annuities is that there may be a great deal of interest income built up by this time which has never been reported for income tax purposes. Therefore, the annuity company will likely withhold a percentage for income taxes.

I am sorry for your loss.

I hope this information was helpful to you.

Disclaimer: The information posted here is for general inforamtional purposes only and does not constitute legal advice for your specific situation, and no attorney-client relationahip is formed by the posting of information here.

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1 comment

Gary Roger Waitzman

Gary Roger Waitzman

Posted

I agree

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