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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?

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Attorney answers 3


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.


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Gary Roger Waitzman

Gary Roger Waitzman


I agree


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.


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.

Gary Roger Waitzman

Gary Roger Waitzman


I agree

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