Many people incorrectly assume that non-probate assets are exempt from inheritance tax because they don’t pass through the estate.

Alfonso Gambone
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Alfonso Gambone is a Philadelphia criminal defense attorney dedicated to protecting your rights.

 

 

An estate can be anything that a person leaves behind after they die including real and personal property. Real and personal property are assets.  An asset is anything that a person had ownership interest in at the time of their death. While in life the law only distinguishes between real property and personal property, after death, the law further categorizes assets into probate and non-probate categories.  This is just one of the topics discussed in my free book-Strong which available in my free download section   

Probate assets are those things which would pass through a person’s estate after death. Non-probate assets don’t pass through a person’s estate and aren’t controlled by a person’s Will or the law of intestacy (where there is no will).  Typically non-probate assets can include:

  • joint property payable on death “in trust” accounts
  • life insurance with a beneficiary designation
  • pension and retirement accounts with a beneficiary designation

 

 Many people incorrectly assume that non-probate assets are exempt from inheritance tax because they don’t pass through the estate. It’s very important to understand that non-probate doesn’t necessarily mean that Pennsylvania inheritance tax won’t be owed on the value of the item. While there are many situations where heirs don’t incur inheritance tax on non-probate assets, your attorney must evaluate each asset to determine any inheritance tax obligations.  

 

 In order to expedite the estate administration process, it’s very important that the deceased person’s personal representative (executor/or administrator (ix)) make a list of the deceased’s assets and liabilities. Liabilities are all debts that the deceased owed at the time of his/her death and would include the following:

  • credit card debt
  • personal loans
  • student loans
  • mortgages
  • lines of credit
  • judgments

 

            Liabilities are very important because they will reduce the amount of inheritance tax owed to Pennsylvania and possibly the federal government. Your attorney will guide you through this entire process but it’s important that you provide him/her with the proper information.

 

 

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