Perhaps your grandmother plans to leave you significant inheritance after she passes away. You may know that you may have to pay taxes on the estate to receive the inheritance. Yet many individuals do not know that their relationship with their deceased loved one determines how much of the inheritance you can keep in full, and how much Pennsylvania tax laws will acquire.
It is important both for grantors and beneficiaries to understand these tax laws. Grantors can determine the best document related to estate planning to allocate their assets, while beneficiaries can prepare for the assets’ associated taxes.
Taxation of inheritances
According to Pennsylvania law, your inheritance faces taxation based on your blood relationship with the grantor. The closer your relative to you, the less taxes you may need to pay from your gift. The law states that:
- You will pay no taxes if you receive money from your spouse.
- You will pay 4.5 percent of your money received if you are your grantor’s direct heir, such as a grandchild.
- You will pay 12 percent if you receive money from your sister or brother.
- You will pay 15 percent if you receive money from any other blood relative.
If your grandmother were to leave inheritance to a charity or non-taxable institution, Pennsylvania government cannot obtain taxes from these entities.
Whether you want to contest a will document, create a will for your own assets or even have questions regarding inheritance taxation in Pennsylvania, you may wish to speak with an experienced estate planning attorney. These attorneys can help you determine your exact inheritance tax and help those drafting a will document to determine how much of their generous gift will be subject to taxation.