When your loved one passes away and leaves a large estate, there are many concerns for you to address. You will have to locate and secure all of the assets in the estate.
More assets often means more debt, so you will have to take steps to locate and notify creditors about the death. You may also have to pay estate taxes if the value of the estate is high enough.
When will estate taxes apply to the property that a loved one leaves behind when they die?
Pennsylvania does not assess an estate tax
An estate tax is a tax directly on the assets within an estate. Although Pennsylvania does not currently assess an estate tax, it does assess an inheritance tax that the beneficiaries of the estate will have to pay. The closer the relationship, the lower the inheritance tax rate. However, the estate itself is not subject to estate taxation at the state level.
The federal estate tax will apply to the states in Pennsylvania worth $11.7 million or more. That exemption amount has risen in small amounts over multiple years but could potentially shrink back down to $5 million.
If the estate contains large investment accounts, real property or business assets, then there may be an estate tax obligation. The greater the amount by which an estate exceeds the exemption threshold, the higher the tax rate that applies. Currently, the maximum federal estate tax rate is 40%, which could drastically reduce the value of the estate.
Learning more about the probate rules in Pennsylvania can help ensure that you properly manage a large and complex estate.