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Monday, March 27, 2017

“My wife and I did and estate plan with a revocable living trust back in 2003, we’re good right?”

By Peter J. Gilbert, Esq.

I recently met with prospective clients who had moved to Bucks County from Georgia and they wanted to be sure their estate plan was still “good. You’d be surprised at how many people don’t have an estate plan at all, so I was happy to see they had something in place. For some, it’s because they think that only wealthy people or those with complex tax issues require estate planning.

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Tuesday, February 28, 2017

Add Tax Planning to the List of New Parent Tasks

The last thing most new parents are thinking about is taxes, but the addition of a new baby to your family has some nice tax perks, according to "The Most-Overlooked Tax Breaks for New Parents" from Kiplinger's. Read on to learn about the opportunities that can save on new parents on taxes, and those to avoid.

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Thursday, November 3, 2016

Is your Estate Plan up to Date with Technology?

One of the biggest complications in estate planning is that the law is forever catching up to technology. Obviously, for privacy concerns, access to the content of communications such as emails, text messages and social media accounts must be specifically given to an Executor or Power of Attorney Agent. These specific instructions should be placed in your will, trust, power of attorney or similar document. Does your Power of Attorney or Will or Trust mention access to digital access or on-line accounts?

There may come a time when someone needs lawful access to your online accounts and the current default (similar to laws of “intestacy,” when someone dies without an estate plan) is to follow a companies’ terms of services agreements. Some companies like Facebook, LinkedIn and Twitter have developed policies to deal with the accounts of deceased users, but many are still unaware of these policies.

Read more . . .

Monday, February 23, 2015

PA Inheritance Tax Exemption for Qualified Family Owned Business Interests

When a loved one passes away in Pennsylvania, the Commonwealth will impose an Inheritance Tax on all the beneficiaries of that estate. Typically a beneficiary may have to pay between 0 and 15 percent inheritance tax depending on their familial relationship to the decedent on everything that they receive from the decedent. (For a list of the inheritance tax scroll to the bottom of this post). But recently an exemption to the inheritance tax for those transferring an interest in a qualified family owned business to a qualified transferee was enacted by the Legislature.

For those people that pass away after 2013, who transfer an interest in a qualified family owned business to a qualified transferee, there could be no inheritance tax on that transfer if certain specific requirements are met. To understand how this exemption works, we must understand what the Commonwealth considers a qualified family owned business interest (QFOBI) and who is a qualified transferee (QT).

To be deemed a QFOBI, the business must meet certain criteria. The QFOBI is a sole proprietorship or an interest in an entity carrying on a trade or business that:

  1. has fewer than 50 full-time employees;
  2. has a net book value of less than $5 million (net book value, NOT net fair market value);
  3. has been in existence for five years prior to the decedent’s death (the decedent does not have to own the interest for all five years prior to death, ONLY that the business/trade was in existence for five years prior to death and the decedent owned their interest at the time of their death);
  4. is wholly owned by the decedent or the decedent and members of their family that will qualify as a qualified transferee; and
  5. is engaged in trade or business, the principle purpose of which is not the management of income producing assets or investments.

To be deemed a QT, the transferee must be either:

  1. a husband or wife of the decedent (same sex spouses qualify in PA);
  2. a son, daughter, grandchild or great grandchild of the decedent;
  3. a sibling of the decedent or a sibling’s lineal descendants (nieces/nephews); or
  4. an ancestor (parent/grandparent) or an ancestor’s sibling (aunt/uncle).

There are some stipulations that also must occur to receive the exemption such as:

  1. the interest must continue to be owned by a QT for seven (7) years after the transfer;
  2. the interest must be reported on a PA inheritance tax return;
  3. certification must be filed every year by the QT for the seven year period;
  4. the interest must be owned by a QT (not always the original QT, but a QT nonetheless) for the entire seven year period; and
  5. property transferred to the QFOBI within a period one-year prior to the decedent’s death is not eligible for the exemption.

If all these requirements are met, then the Commonwealth exempts the QFOBI from the inheritance tax. However, if one of these situations fails, perhaps the interest is not owned by a QT for the entire seven year period, then the inheritance tax will be imposed on the transferee(s) for the amount that would have been due at the time of death.

While this exemption is not applicable to everyone, those able to benefit from this exemption could garner an inheritance tax savings of zero for spouses, but $225,000 for children, $600,000 for siblings, or $750,000 for other beneficiaries (based on a transfer value of the QFOBI at the $5 million cap). If you think that you and your business qualifies for this exemption, you should speak with an estate planning attorney that can help you set up your plan to maximize this exemption.

*** PA Inheritance Tax Rates: 0% for spouses; 4.5% for children, grandchildren or parents; 12% for siblings; and 15% for all other beneficiaries. ***

Friday, November 14, 2014

There is only one certainty in life and death… TAXES.


Benjamin Franklin wrote that “There are only two certainties in life… death and taxes.” What Ben did not know then was that when you die in the United States today, you might still have to pay taxes in the form of either an Estate or Inheritance Tax. So maybe we should alter his quote a bit. Here is a quick primer on Estate and Inheritance Taxes.

Read more . . .

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