Can You Avoid Estate Taxes?

Estate planning allows you to protect the financial legacy you’ll leave for your loved ones when the time comes, and an essential element of this is estate taxes. The fact is that there are steps you can take to help you avoid or reduce the estate taxes that apply, and an experienced estate planning attorney in Harrisburg, PA, can help you accomplish this.

Pennsylvania’s Inheritance Tax

An estate tax is imposed on the estate of the person who has passed, or the decedent, before it passes to their heirs. Instead of imposing an estate tax, Pennsylvania has an inheritance tax, which applies to those who inherit. This tax ranges from 0 to 15 percent, depending on the relationship between the decedent and the heir. The breakdown is as follows:

• No inheritance tax applies to your spouse or to a child of yours who is under the age of 21.
• The inheritance tax rate is 4.5 percent for direct descendants, such as your adult children and any grandchildren.
• For any siblings, the inheritance tax rate that applies is 12 percent.
• For any other heir, excluding charitable organizations, government entities, and exempt institutions, there is a 15 percent inheritance tax.

You’ve worked hard to amass your wealth, and now your goal is to pass as much of it as possible to your loved ones. A savvy estate planning lawyer will help you take the steps necessary to ensure that this happens.

Trusts

Trusts are legal arrangements that hold assets for distribution according to the directions that you include. Many people turn to trusts to help streamline the inheritance process and to avoid probate. As a result, trusts help save time and legal fees while limiting the involved inconvenience.

Revocable trusts can be revoked or changed at any point before your death. This means you can retain control over the distribution of the assets included during your lifetime. These assets, however, will not avoid any applicable inheritance tax.

Irrevocable trusts, on the other hand, can’t be altered or revoked once they are established unless the beneficiaries agree or you obtain a court order to do so. Trustees manage irrevocable trusts, and they generally shield recipients from Pennsylvania’s inheritance tax as well as the federal inheritance tax that applies to large estates.

Additional Measures

Additional measures that can help you minimize your loved one’s tax burden in relation to their inheritance include all the following:

• Work closely with a skilled estate planning attorney
• Take advantage of deductions
• Consider lifetime gifting, which allows you to make yearly tax-free gifts of up to $19,000 per person as of 2025

Our Harrisburg Estate Planning Lawyers are in Your Corner

The formidable Harrisburg estate planning attorneys at Mette Attorneys at Law recognize the considerable difference that careful estate planning can make when it comes to the tax implications for your heirs. In response, we will carefully guide you through the process in our focused efforts to limit the inheritance tax your loved ones will owe or to avoid this expense altogether. Learn more by contacting us online or calling us at 717-232-5000 today.