Inheritance Taxes

Whether a person passes away with or without a will, the personal representative is required to file an inheritance tax return as a critical step in the estate administration process. Inheritance taxes are owed on nearly all of a decedent’s probate and non-probate assets. However, a few items that don’t trigger inheritance taxes include life insurance proceeds, qualified retirement accounts such as an IRA or 401(k) if the decedent was under 59 ½ years old, and certain real estate located outside of Pennsylvania. With that said, the inheritance tax rate for a surviving spouse and for children under 21 years old is 0% which means these individuals won’t pay any inheritance taxes on the assets they inherit. The inheritance tax rate for lineal descendants (children, grandchildren, parents, etc.) is 4.5%. While the inheritance tax rate for siblings is 12% and for all others the rate is 15%.