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Inheritance tax

In some states you must pay an inheritance tax on any money or property you inherit. This is different from the estate tax, which is paid by the estate.

Kenneth Albert Vercammen | Dec 3, 2018

If unmarried and die without a Will

If you leave no Will or your Will is declared invalid because it was improperly prepared or is not admissible to probate: The procedure to distribute assets becomes more complicated. It will require all of the children to select someone to be the Administrator, then all the children to sign a Renunciation Affidavit in front of a notary. If all the children do not sign the Renunciation Affidavit if front of notaries, then a Complaint and Order with have to be filed in the Superior Court. Cost over $3,000. The preparation of a Will for under $400 eliminates these costs. Additional expenses will be incurred and extra work will be required to qualify an administrator-Surety Bond, additional costs often over $1,000 and legal fees State law determines who gets assets, not you. People who dislike you or don’t care about you can get your assets If you have no spouse or close relatives the State may take your property. Most people who rather have charities or friends get their money. It often causes fights and stress within your family and sometimes lawsuits If there are minor children a Judge determines who gets custody of grand children You lose the opportunity to reduce State inheritance taxes and Federal estate taxes without improper planning When loved ones are grieving and dealing with death, they shouldn’t be overwhelmed with Financial concerns and estate problems if there is no Will or not prepared or signed properly. Who don’t you want to receive your assets? Who is not the best choice to raise your children, or safeguard your children's money for college? Do you want children, or grandchildren, to get money when they turn 18? Will they invest money wisely, or go to Seaside and play games? Beware of online documents not prepared by an attorney. Never use a form on line. No one tries to do their own electrical work on their home anymore or change their own oil. Have a professional do it right. Make sure it is a Self-proving Will and says no bond required. THE FOLLOWING IS A SAMPLE OF A VARIETY OF CLAUSES AND ITEMS WHICH SHOULD BE INCLUDED IN A WILL: 1ST: DEBTS AND TAXES 2ND: SPECIFIC BEQUESTS 3RD: DISPOSITION TO SPOUSE 4TH: DISPOSITION OF REMAINDER OF ESTATE 5TH: CREATION OF TRUSTS FOR SPOUSE 6TH: CREATION OF TRUST FOR CHILDREN 7TH: OTHER BENEFICIARIES UNDER 21 8TH: EXECUTORS 9TH: TRUSTEES 10TH: GUARDIANS 11TH: SURETY OR BOND 12TH: POWERS 13TH: AFTERBORN CHILDREN 14TH: PRINCIPAL AND INCOME 15TH: NO ASSIGNMENT OF BEQUESTS 16TH: GENDER 17TH: CONSTRUCTION OF WILL 18TH: NO CONTEST CLAUSE A will must not only be prepared within the legal requirements of the New Jersey Statutes but should also be prepared so it leaves no questions regarding your intentions. Kenneth Vercammen Esq. 732-572-0500 2053 Woodbridge Ave. Edison, NJ 08817 https://njlaws.com/index.asp

John B. Whalen Jr. | Jan 20, 2018

Pa Estate Law - 3 - Taxes

The Federal Estate Tax Historically, the Federal Estate Tax has begun at a wealth threshold. If you possess less than the wealth threshold at your death, the federal estate tax will not be applicable. If it is applicable, the tax is imposed on a percentage scale according to the amount of your wealth (i.e., potentially 47% of the value of your assets above the wealth threshold). The current wealth threshold of the Federal Estate Tax has been changing drastically throughout the last decade. It has increased, disappeared, and reappeared in 2011. In 2005, the threshold was $1,500,000.00; in 2006, 2007, and 2008, the threshold was $2,000,000.00; in 2009, the threshold was $3,500,000.00; and in 2010, the Federal Estate Tax was scheduled to be, and in fact was, eliminated. However, and although the Federal Estate Tax was scheduled to return with a wealth threshold of just $1,000,000.00, in 2011, it did not. The Internal Revenue Service changed that law and "announced the 2015 estate and gift tax limits [...] and the federal estate tax exemption rises to $5.43 million per person, and the annual gift exclusion amount stays at $14,000." "IRS Announces 2015 Estate And Gift Tax Limits" The federal estate tax exemption--that's the amount an individual can leave to heirs without having to pay federal estate tax--will be $5.43 million in 2015, up from $5.34 million for 2014. That's another $90,000 that can be passed on tax-free. The top federal estate tax rate is 40%. The Pennsylvania Inheritance Tax The Pennsylvania Inheritance Tax has no wealth threshold and starts immediately. It is imposed on a percentage based on the relationship of the beneficiary. Spouses and Charities are taxed at a 00.00% tax rate, lineal descendants are taxed at a 04.50% tax rate, brothers and sisters (but not brothers-in-law nor sisters-in-law) are taxed at a 12.00% tax rate, and everyone else is taxed at a 15.00% tax rate.

Elspeth Gray Crawford | Jul 20, 2017

Remarriages and Inheritances in North Carolina

Remarriage After a Divorce Couples navigating divorce in North Carolina must comply with a one year physical separation requirement before filing for a divorce decree. During this time the couple is still married, but living apart. Those who are contemplating divorce should review the terms of their wills and beneficiary designations with an estate planning attorney to determine whether it is prudent to amend any terms providing for the soon-to-be-ex-spouse. What if joint accounts are still held in both spouses' names? Do Transfer-on-Death (TOD) forms name a soon-to-be-ex-spouse? Pre-divorce estate planning helps to identify these concerns so that necessary steps can be taken to protect the inheritance one plans to leave to loved ones. This is also a prime time to review a prenuptial agreement, if present, so that asset distribution occurs according to the agreement's terms. Pre-nuptial Agreements in Remarriages A prenuptial agreement is an important item to discuss when planning to remarry. Although people of any age may fall victim to a financial scam during their lifetimes, the number of marriage scams targeting elderly victims has grown in recent years. A marriage scam could rob family of the inheritance an individual intends to leave them. Prenuptial agreements help to safeguard the respective assets of each spouse and provide a detailed plan for how pre-marital assets and assets acquired during marriage would be managed and divided in the event of divorce. Protecting Inheritance of Non-spouses In the event of a spouse's death, North Carolina elective share law provides that a portion of the deceased spouse's estate may be provided to the surviving spouse if what was bequeathed to the surviving spouse did not meet the statutory minimum. A spouse's right to an elective share may be waived before or during marriage in North Carolina in certain circumstances. Legislative changes in 2013 revised the statute to make length of the marriage the sole determining factor in calculating the share to which a surviving spouse is entitled, with the largest share capped at 50 percent if the marriage lasted 15 years or more. Click here for elective share rates. To ensure non-spouses are provided for, an individual may choose to establish an irrevocable trust for the benefit of intended non-spousal heirs, although such trusts must be established at least one year prior to death to exempt the assets from inclusion for elective share purposes. New Marriages New marriages should also trigger discussions about providing inheritances for stepchildren or adopted children. Beneficiary designations on retirement accounts and life insurance policies, Payable-on-Death (POD) forms, and other documents should be updated regularly to ensure new or former family members are named as desired. Conclusion Whether one has remarried following a spouse's death or divorce, one should take time to review existing estate planning documents and asset titles or beneficiary designations with an estate planning attorney to ensure that inheritances are structured as intended.

Michael S. Haber | Nov 21, 2016

The Future of the Federal Estate Tax

Don't Die The best advice that the top experts have offered in the wake of Donald Trump's election to the Presidency can be summed up in two words: Don't die. That's because the estates of some very wealthy people could save quite a bit of money if they survive until repeal of the tax. What's Next The new President's website promises repeal of the estate tax. He, and other opponents of the tax, refer to it as the "death tax," an inaccurate but politically freighted terminology. Thus, there is an expectation that the federal estate tax may be repealed. But don't bet on the likelihood of repeal. The estate tax has weathered quite a few storms, but is still with us. In fact, it can be stated, ironically, that despite fervent opposition over the course of many years, the estate tax just won't die. I strongly believe that all of the talk about repealing the estate tax is just that: Talk. The estate tax isn't going anywhere. Why the Tax Is Here to Stay It's an easy source of income for the federal government. And its lack of popularity with citizens in general belies the fact that the threshold for estate tax has been raised so much and so high that today it only applies if an individual has assets of $5.45 million or if a couple has assets of $10.9 million. Even the new President's promise has to be viewed from a multi-dimensional approach: While the new Presidential Administration pledges to repeal the estate tax, there also has been discussion of perhaps imposing a capital gains tax on estates valued at more than $10 million. That can be seen as swapping the estate tax for a capital gains tax, which would hardly be worth the effort of a bruising political fight. Indeed, the most likely way for the estate tax to be eliminated is for repeal to be part of a deal that imposes new taxes. Ironically, such a deal would almost certainly impose new taxes on persons who are not likely to die wealthy enough to have to pay estate tax. Taxing persons who are not wealthy in order to make up for repeal of the estate tax would be, not surprisingly, tremendously unpopular. How Many Estates Pay Estate Tax? Experts estimate that the estate tax applies only to a tiny fraction of one percent of all estates. Only about 5,000 estates a year pay federal estate tax, but that minuscule amount still provides about $30 billion in revenues to the federal treasury. While $30 billion may not sound like a whole lot when compared to other federal tax sources, it still is real money. What About State Estate Taxes? Right now, approximately 15 states (including New York) have an estate tax. Another six states have an inheritance tax. State estate taxes are typically far lower than the federal estate tax and take a much smaller bite out of an estate. But, interestingly, many state estate taxes are pegged, in one way or another, to the federal estate tax, so that any legislative action on the federal estate tax would require changes to (or repeal of) state estate taxes. Conclusion There is likely to be great fanfare about the imminent repeal of the federal estate tax. But that is nothing new. The issue has been debated for decades. In my view, the federal estate tax may change in a variety of ways, but it will not disappear. And if I'm wrong, then this Guide will disappear.

Rosalie Lawlor Spelman | Aug 13, 2016

529 Plans and Pennsylvania Inheritance Tax 2016

529 Plans and Federal Estate Tax "529 Plans" are tuition programs adopted by individual states pursuant to federal law. (26 USC Section 529). Some 529 Plans involve pre-paid tuition accounts. Some 29 plans involve investment accounts. This guide only concerns 529 Plan investment accounts. These accounts provide a tax advantaged way for family members and friends to save for a child's college tuition. When someone deposits money into account with a state's "qualified" (under federal law) 529 Pan, with certain exceptions, the growth on the investment is free from federal free from federal income tax and the account also will be free from federal estate tax. Most States Have Their Own 529 Plan Programs The federal government set up the federal 529 Plan program, but the program was designed so that each state can administer its own plan. State 529 plans compete with each other. Investors can invest in almost any state's plan, regardless of whether or not they are residents of that state. Some state programs have a higher return on investment. Some states offer advantages to in-state investors. An investor should weigh the advantages and disadvantages to each state's plan. Some investors will weigh return on investment more highly than benefits for in-state investors. Some investors will not. Pennsylvania's 529 Plan and In-State Pennsylvania Investors Pennsylvania has its own 529 Plan. Upon the death of an account holder, the Pennsylvania 529 Plan Account is exempted from Pennsylvania Inheritance Tax. Out-of-State 529 Plans and the Pennsylvania Decedent Pennsylvania, however, imposes its Inheritance Tax its residents' out-of-state 529 Plan Accounts. As with other taxable "transfers" at death, Pennsylvania taxes out- of-state 529 Plan Accounts according to the relationship of the "transferee" to the decedent. A 0% tax is imposed on taxable transfers to a spouse. A 4.5% tax is imposed on taxable transfers to lineal descendants. A 12% tax is imposed on taxable transfers to siblings. A 15% tax is imposed on taxable transfers to all others. (Charities are exempt for Pennsylvania Inheritance Tax.) Opportunity for Estate Planning: Name Your Spouse as Your Out of State 529 Plan Successor 1. Most state's 529 Plans provide an account holder with the opportunity to designate a "successor account holder". (The person who opens up the account is the "account holder.") 2. The "successor account holder" is the transferee under Pennsylvania law, not the beneficiary of the account. 3. This is because, despite the death of an account holder, a beneficiary generally is not entitled to control the 529 Plan Account. 4. The "successor account holder", if one has been designated, is entitled to control the 529 Plan account. 5. Therefore, the "successor account holder" is the transferee for purposes of Pennsylvania Inheritance Tax, not the beneficiary. 6. If the account holder's spouse is named the "successor account holder", the Pennsylvania Inheritance imposed is 0%.