12Law Arrow 12Law Arrow  Easy Questions  
12Law Arrow 12Law Arrow Instant Legal Documents
 
 
FINANCIAL & MARITAL

Cohabitation Agreement coming soon!
Separation Agreement coming soon!
No-Fault Divorce coming soon!
Bankruptcy coming soon!
 
 

A Primer on Estate & Inheritance Taxes in Southampton, PA

A Primer on Estate & Inheritance Taxes in Southampton, PA


Me and my dad are the biggest promoters of an estate tax in the US. It's not a popular position.
 
- Bill Gates


When you die, you leave your home, your possessions, your money, and other things of monetary value to spouses, children, family members, friends, charity or religious institutions. The government wants its share. Some argue that estate taxes can provide for future generations. Others argue that is robs inter-generational businesses of the capital they need to keep growing.

Your estate may be subject to inheritance tax, estate tax, state and federal tax statutes, and a host of exemptions that can pass more of the estate to inheritors of your choosing.

What are the differences between Estate Taxes and Inheritance Taxes?

Let's start with estate tax. Your estate is the total of your possessions and debts left behind when you die. An executor, either named in the will or appointed by law, will pay off outstanding debts, cover funeral expenses, and administrative costs (e.g. executor's fees). If necessary, executors may liquidate property to pay taxes, debts, or fees. After federal and state estate taxes are paid, the remainder goes to the heirs. So, the estate tax is a tax on the total amount of the estate, after creditors are paid but before any heirs get their bequest. The tax is paid by the estate itself.

Inheritance tax occurs after the heirs receive their payouts. It is a tax on the amount received and is paid by the heir. Inheritance taxes are levied by the states. This means that in many cases an estate is taxed twice -- first by the federal estate tax, then by the state inheritance tax.

The estate includes cash on hand, bank accounts, financial assets (stocks, bond, mutual funds, etc.), real estate, automobiles, boats, art pieces or rare collections, personal property, debts owed to the estate, business interests, etc. An estate is made up of all of these things. An appraiser will determine the fair market value of everything to determine the taxable value of the estate.

Inheritance Tax Exemptions

For large estates, sophisticated estate planners will work with the family and utilize trusts, charitable donations, non-taxable gifts and other techniques to meet the family's needs and minimize the tax burden.

For small estates, there are exemptions are applied to the taxable amount before estate taxes are collected. Exemptions can be relation based and amount-based.


There is an exemption when the estate is passed from a deceased person to their US citizen spouse. It will not be subject to any federal estate tax. States that levy an estate tax generally follow the federal government's rules for this, as well. If the estate is passed to children, siblings or golfing buddies, the exemption doesn't apply.

Amount-based exemptions are $5.34 million for an individual, $10.68 million for a couple as of 2014. It is indexed for inflation, so it will probably grow over time.

State inheritance taxes vary a great deal and can make things much more complicated. There might be exemptions for some family members, or different tax rates depending on whether you are a spouse, a child or just a friend. Many states tie their inheritance tax directly to the federal estate tax and exemption rate. Some have much lower thresholds than the federal threshold.

There are a few other miscellaneous deductions, such as a mortgage, usually deducted from the estate's value before taxation. Family businesses and farms may be taxed at a lower rate. Inheritance taxes tend to be set up on a progressive scale, meaning as the value of the estate increases, the tax rate rises and the taxes increase exponentially.

 
Personalize & Print a Free PA Last Will Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
 
Personalize & Print a Free PA Power of Attorney Create This Document
Page 1
Page 2
Page 3
Page 4
Page 5
Related Legal Services near Southampton, PA
Andrew B Peltzman
95 James Way Ste 120
Southampton, PA 18966
(215) 953-9555
General Practice Attorneys, Attorneys
Sternberg Michael J
737 2nd Street Pike # 1
Southampton, PA 18966
(215) 953-8955
Attorneys,  Accident & Property Damage Attorneys,  Corporation & Partnership Law Attorneys,  Busines
Brush Steven H
606 Lakeside Park
Southampton, PA 18966
(215) 322-7596
Attorneys, General Practice Attorneys
Excell Bnan
744 Sycamore Dr
Southampton, PA 18966
(215) 355-7479
General Practice Attorneys
Abramson Harvey
86 Buck Rd
Southampton, PA 18966
(215) 355-7260
Elder Law Attorneys, Attorneys, Legal Service Plans
Needles Stephen L
80 2nd Street Pike
Southampton, PA 18966
(215) 364-4529
General Practice Attorneys, Attorneys, Legal Service Plans
Law Offices
510 Lakeside Park
Southampton, PA 18966
(215) 364-4500
General Practice Attorneys, Attorneys
Wolfe Steven E
295 Buck Road, Suite 202
Southampton, PA 18966
(215) 364-4450
Accident & Property Damage Attorneys, Personal Injury Law Attorneys, Business Law Attorneys
Danziger R David
1111 Street Rd Ste 200
Southampton, PA 18966
(215) 322-4202
Michael S. Schwartz, Bankruptcy Specialist
707 Lakeside Office Park Dr
Southampton, PA 18966
(866) 741-3273
Attorneys, Bankruptcy Law Attorneys, Debt Adjusters
Emil L Iannelli & Assoc
928 Jaymor Rd Ste C190
Southampton, PA 18966
(215) 322-2606
Estate Planning Attorneys,  Attorneys,  Estate Planning, Probate, & Living Trusts,  General Practi
Pointman Law Group
95 James Way # 120
Southampton, PA 18966
(215) 953-1801
Attorneys, Legal Service Plans
Paul Brownstein
702 Lakeside Park
Southampton, PA 18966
(267) 608-1650
Legal Service Plans,  Bankruptcy Services,  Bankruptcy Law Attorneys,  General Practice Attorneys,  
12Law.com   |  NASHVILLE, TN USA   |  CONTACT US