Working with an attorney, a financial planner and family members to form an estate plan is critical to ensure your final wishes are completed. If you’re currently in the process of developing an estate plan or thinking about getting started, you may consider planning for estate tax savings too.
What does this mean? At Lodovico & Associates, we work together with attorneys, family members and others to create tax strategies and workable tax solutions to help minimize estate tax liabilities that impact your future beneficiaries.
Consider the following tips to ensure you have an estate tax savings plan in place.
Titling Property and Accounts
In certain situations, there may be tax benefits to titling assets and property in more than one name. If the asset is transferred into multiple names a year or more before death, only the percent of ownership of the total asset is subject to inheritance tax in Pennsylvania.
It’s important to note that should the others on a jointly titled asset predecease you, you would be responsible for inheritance tax.
If an asset is titled in multiple names less than a year before death, there is a $3,000 exemption.
The Tax Liabilities of Inheritors
Generally speaking, inheritance tax in Pennsylvania is the responsibility of the inheritor, not an estate. This is a common misconception we hear from our clients. At Lodovico & Associates, we often guide family members through tax saving approaches to inheritance tax. Did you know if inheritance tax in PA is paid within 90 days it is subject to a five percent discount? We also assist with final tax returns. They are a completely separate process and typically handled by an estate executor.
Gifts and Trusts
There may be benefits to gifting money to future inheritors to reduce inheritance tax. Keep in mind the 2018 annual gifting exclusion amount increased to $15,000 per individual.
A trust on the other hand doesn’t provide inheritance tax savings.
Considering gifts, trusts and other investments, such as a 529 plan, is important when planning for estate tax savings.
At Lodovico & Associates, our trusted tax advisers and consultants have more than 30 years of experience in developing estate tax strategies. To learn more, give us a call or visit https://lodovicotaxpros.com/services/estates/.