When you pass on and you leave your IRA to a spouse, your spouse can elect to roll the IRA over into your own name, or take the IRA as an inherited IRA. If you are legally married in Pennsylvania, transfers of assets to a spouse upon your death means there is 0% Pennsylvania Inheritance Tax. Previously, there used to be a widows tax in Pennsylvania until 1994. Obviously, the law can change again, but bringing back the widows tax would surely be deeply unpopular across political lines. Bottom line is, for spouses, there should be no probate and no inheritance tax if your estate is setup properly. Domestic partners, gay couples, and non-married couples are taxed at 15% for Pennsylvania Inheritance Tax purposes. 

If a child or non-spousal beneficiary inherits your IRA, they can elect to either take a lump sum distribution (not a good idea, as they pay ALL income taxes up front!) or keep it as a Beneficiary IRA. This is also known as a "stretch-out" IRA. IRA's are non-probate assets, but they are subject to Pennsylvania Inheritance Tax at a rate of 4.5%. Even if your beneficiary does not take a lump sum distribution at your death, they still must pay inheritance tax on the entire value of the IRA. If the IRA was worth $100,000, the would pay $4,500 at your death.

In Pennsylvania, all counties, including Philadelphia, Bucks County and Montgomery County all follow the same Pennsylvania Inheritance Tax code.

There are Pennsylvania Inheritance Tax savings strategies that our firm can assist you with. To schedule your consultation, please email jeremy@jawatlaw.com or call us at (215) 706-0200. We offer appointments at our Willow Grove, PA office, at your home or office. We also offer evening and weekend appointments. 

• Transfers wealth tax-free to your spouse and/or your heirs (that includes Pennsylvania inheritance tax, federal estate tax, federal income tax and state income tax).
• Ensures that any income loss as a result of your death does not affect your spouse or family negatively.
• Provide safety of investment from market risk or market loss.
• Provide you with long term care coverage if you need it.

Certain life insurance policies can achieve all of those goals! Yes, not everyone can get covered or is eligible, but you'd be surprised how insurance companies are rapidly changing and covering more individuals under these types of policies.

One of the greatest benefits of these policies is providing you with long term care coverage if you ever require it. Your death benefit would be used towards your long term care costs. That means no traditional long term care policy is needed, and your estate won't be diminished if you need care, leaving nothing for your family.

Interested in learning more about this type of life insurance? Call us today at (215) 706-0200 to schedule your complimentary consultation. 

Now, Ms. Clark's estate is embroiled in litigation with no end in sight. She had no close family members, only distant relatives. She wrote two wills, only a couple of months apart. The first one left part of her estate to the distant relatives, and the second will cut out the relatives.

Although Ms. Clark left a large estate of $300 million, we can all learn from the mistakes she made. For more information about the estate planning mistakes she made, check out this New York Times article here.

Why worry about putting your IRA into a trust? More and more families are putting in place a Retirement Asset Protection Trust today, and we give you a few reasons why here.

5 – IRA’s are Valuable: Your IRA’s may be a significant portion of your estate. If you protect other portions of your estate, why would not consider protecting your IRA?

4 – IRA’s are Tricky: You can’t put an IRA into an ordinary living trust. IRA’s work differently, and for your heirs to take advantage of the special tax benefits, you must use a special trust, the Retirement Asset Protection Trust.

3 – Stretch-Out: IRA’s can grow tax-deferred or tax-free. That means you get more compounding and less principal withdrawal. This works the same when your heirs inherit the IRA. The younger the beneficiary, the less required minimum distribution they have to withdraw annually. The benefits of stretch-out over many years is astounding and can provide a pension for life for your beneficiaries.

2 – Control From The Grave: You can ensure that the IRA is spent the way you want it to be spent, and given to whom you want it to be given to. For instance, if you pass your IRA down to your children, and they eventually pass, would you rather the IRA go to your favorite son-in-law or daughter-in-law, or directly to your grandchildren? Without a trust, you have no say in what happens to the IRA.

1 – Asset Protection: Without a trust, your beneficiary and his or her inherited IRA is not protected from divorce proceedings, creditor problems, lawsuits, bankruptcy and a beneficiary’s own spendthrift habits. A trust can provide a shield of asset protection to such an important asset.

The top five reasons to use a trust for your IRA is just scratching the surface. If you’d like our special report on the Retirement Asset Protection Trust, email us at info@jawatlaw.com today.

Our firm can help create a "Protect Your Pet" plan, a pet trust, or make pet planning part of your Last Will & Testament or Living Trust. We can ensure your pets are taken care of, given the proper treatment, food, etc. Also, it is important to designate responsible guardians for your pet.

Many people think they will outlive their pet, but with pets being such an important part of our lives, why take the risk? Make sure your estate plan includes your pet. At our firm, we can help you achieve this goal.

Ever wonder what your legacy will be when you pass on? Having a well-drafted estate plan can ensure you leave a positive legacy.

Here are a few reasons why you need to put an estate plan in place:

1. Without a will or trust, the government will dictate what happens to your assets, real estate and personal belongings.

2. If you become incapacitated, you need to ensure that you appoint a person you trust to manage your affairs and make health care decisions for you.

3. Protecting your kids, grandkids or others from their own bad habits (spendthrifts, etc.) and external problems (creditors, divorcing spouses, bankruptcy, lawsuits) is more important than ever today. Do you really want your heirs to squander the inheritance you leave them?

4. You must have an Executor or Trustee appointed to manage your estate when you pass on. If you do not name an Executor, the state will appoint one for you.

5. By putting a plan in place, you may be able to reduce taxes and fees for your estate.

6. You can reduce or avoid conflicts in your family by having a well-crafted estate plan.

7. You can create trusts for your kids or grandkids to ensure the inheritance is spent as you wish, such as for college, a new house, etc.

8. An estate plan helps organize your affairs, accounts, and belongings, making it easier for your family to determine how to distribute your estate.

If your plan is not up to date, or you do not have a plan, please give us a call at (215) 706-0200 to schedule your consultation with Your Estate Planning Attorney Jeremy A. Wechsler.

https://www.cbsnews.com/8301-18560_162-57585140/michael-jacksons-lucrative-legacy/

• Five Year Rule: Has it been more than 5 years since you've reviewed your will, powers of attorney and trust? If so, it is time to crack that binder open and review whether any changes need to be made.
  
  
• Beneficiary Forms: Along with your wills and trusts, it is essential to review all of your beneficiary designation forms for any policies and accounts. Typically, these include IRA's, annuities, life insurance and other financial accounts.
  
  
• Life Insurance: Life insurance can be a great tool for estate planning. It potentially provides asset protection, tax free wealth transfer, a death benefit, and perhaps cash value. Also, certain life insurance policies can include long-term care coverage! Consider life insurance solutions with our firm. Contact us today to learn more.

Typically, but not always, the Executor or Administrator of the estate pays the inheritance tax on behalf of all beneficiaries of the estate before any of the property is distributed to beneficiaries.

ARE YOU AN EXECUTOR AND NEED ASSISTANCE WITH INHERITANCE TAXES? CONTACT US TODAY.

Pennsylvania mandates that inheritance tax be paid nine months after the decedent dies.

The estate can receive a discount if the Executor pays within 3 months.

Extensions can be granted, but interest starts to run after 9 months.

The PA Inheritance Tax rates for 2013 and beyond (at least as of now) are:

• 0%:    Legally married spouses (No common law marriage), Charities
• 4.5%: Children, Grandchildren (Direct Descendants)
• 12%:  Siblings
• 15%:  All others (Includes domestic partners, friends, etc.)

MAKE SURE YOU FILE YOUR INHERITANCE TAXES CORRECTLY THE FIRST TIME. CONTACT OUR FIRM TODAY FOR ASSISTANCE.

Most property is subject to inheritance tax.

Jointly owned property is taxed at the share the person owned (i.e., if a person owned 50% of a property, that 50% share would be taxable).

One way to avoid inheritance tax in PA is to establish an irrevocable trust, or simply gift assets (unconditional giving, no strings attached) to someone. You must outlive them at least one year in order for the gift or trust to be complete so that no inheritance tax is due on that property. Be careful what you gift to someone and do not make gifts without the advice of an attorney and financial professional. If you gift someone a house, and you still want to live in it while he or she owns it, you could be making a risky move, especially if that person gets in trouble.

Also, life insurance is typically inheritance tax free. Life insurance is a great wealth transfer tool, and our firm regularly helps individuals and families with their life insurance needs.

We would advise you not to do any inheritance tax planning without the assistance of a qualified estate planning attorney.  Please call our office today at 215-706-0200 or email us to schedule a complementary appointment.