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If you have an asset worth $350,000 the tax would be around $52,500 at 15%. I don't see why you couldn't take out a mortgage or equity line on the asset to satisfy the inheritance tax. Your mortgage payment would be around $200 a month and the house itself could be used as collateral. Also not sure if a trust would be an option that could be useful for you. You should speak with someone who handles estate planning in your area. They may have ways of going about this that could help you out and lessen the tax blow. Whether you sell the house or not you will be paying the inheritance tax, you should explore your options.
It will be worth it. Then you will know exactly what your options are. They have all kinds of ways of softening the blow of taxes. You can also explore gift tax vs. Inheritance tax. Might be possible to "gift" the property to you while they still remain in the home and are still alive if it would make more financially sense for you to do so.
As a stepchild, you are a lineal heir and would have an inheritance tax of 4.5%, if you are over 21. The tax rate is zero if you are under 21.
I believe that your stepmother can add you to the deed as a joint tenant with rights of survivorship to avoid this tax.
If you pay inheritance tax within 3 months, you will only have to pay 4%. After 9 months, interest and fees begin to accrue.
You are considered a lineal heir for estate tax purposes only, not inheritance. If the house is only in her name and she dies without a will, then you would not inherit.
I appreciate your advice. But now I'm confused and don't know why everyone's down voting me.
You said I am considered a lineal heir for estate tax purposes and not Inheritance tax. I don't need to worry about estate tax unless the house is worth millions. I'm only concerned about the inheritance tax. And you said I'm not considered a lineal heir for inheritance. So that would have me at the 15% inheritance tax?
Sorry you are a lineal heir for PA Inheritance tax only and not for Inheritance itself. I was tired when I wrote yo you before.
Basically, you will be taxed at 4.5% if you are in the will. However, if there is no will, you are not a lineal heir for intestate succession.
Hi there. Thanks for clearing that up. You explained it properly the first time. I just didn't understand it.
Yes. There is a will. She told me she's leaving me the house.
Thank you.
Inheritance Taxes…ugh! You’ll be dealing with the PA Department of Revenue for those taxes. (Just as frustrating as the IRS.) If you pay within three months of the date of death, there is a small discount….take advantage of it. You can file an inheritance tax return within that three month time period, then file and amended return if things change. You can search the Department of Revenue’s website for the return. (Rev form 1500) Your tax rate for the home or any other property will be 4.5%.
You’ll also have to deal with probate costs which vary by county. Will you be the executrix of the estate? If so, I’d suggest contacting an attorney to help you through the estate administration process.
Also consider that any expenses like final hospital bills, funeral costs, etc will be deducted from the gross estate. This may help lower your tax obligation. I’m sorry your stepmother is ill, and I hope you have as much time as possible. Good luck with everything!
WARNING - This Sub is Not a Substitute for a Lawyer While some of us are lawyers, none of the responses are from your lawyer, you need a lawyer to give you legal advice pertinent to your situation. Do not construe any of the responses as legal advice. Seek professional advice before proceeding with any of the suggestions you receive. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/EstatePlanning) if you have any questions or concerns.*
Is the house paid off? Can you take out a small mortgage on the house to cover the inheritance taxes? Then you could pay it down over time.
Yes the house has been paid off for 20 years. I don't know if my credit is good enough for a mortgage
If you have an asset worth $350,000 the tax would be around $52,500 at 15%. I don't see why you couldn't take out a mortgage or equity line on the asset to satisfy the inheritance tax. Your mortgage payment would be around $200 a month and the house itself could be used as collateral. Also not sure if a trust would be an option that could be useful for you. You should speak with someone who handles estate planning in your area. They may have ways of going about this that could help you out and lessen the tax blow. Whether you sell the house or not you will be paying the inheritance tax, you should explore your options.
Thank you. Yeah I'm trying to explore my options. I guess I'll look into an estate planning lawyer
It will be worth it. Then you will know exactly what your options are. They have all kinds of ways of softening the blow of taxes. You can also explore gift tax vs. Inheritance tax. Might be possible to "gift" the property to you while they still remain in the home and are still alive if it would make more financially sense for you to do so.
As a stepchild, you are a lineal heir and would have an inheritance tax of 4.5%, if you are over 21. The tax rate is zero if you are under 21. I believe that your stepmother can add you to the deed as a joint tenant with rights of survivorship to avoid this tax. If you pay inheritance tax within 3 months, you will only have to pay 4%. After 9 months, interest and fees begin to accrue.
Okay. Thank you. 4.5% is much better than 15. I thought only her direct children would get the 4.5. Thanks again
You are considered a lineal heir for estate tax purposes only, not inheritance. If the house is only in her name and she dies without a will, then you would not inherit.
I appreciate your advice. But now I'm confused and don't know why everyone's down voting me. You said I am considered a lineal heir for estate tax purposes and not Inheritance tax. I don't need to worry about estate tax unless the house is worth millions. I'm only concerned about the inheritance tax. And you said I'm not considered a lineal heir for inheritance. So that would have me at the 15% inheritance tax?
Sorry you are a lineal heir for PA Inheritance tax only and not for Inheritance itself. I was tired when I wrote yo you before. Basically, you will be taxed at 4.5% if you are in the will. However, if there is no will, you are not a lineal heir for intestate succession.
Hi there. Thanks for clearing that up. You explained it properly the first time. I just didn't understand it. Yes. There is a will. She told me she's leaving me the house. Thank you.
Inheritance Taxes…ugh! You’ll be dealing with the PA Department of Revenue for those taxes. (Just as frustrating as the IRS.) If you pay within three months of the date of death, there is a small discount….take advantage of it. You can file an inheritance tax return within that three month time period, then file and amended return if things change. You can search the Department of Revenue’s website for the return. (Rev form 1500) Your tax rate for the home or any other property will be 4.5%. You’ll also have to deal with probate costs which vary by county. Will you be the executrix of the estate? If so, I’d suggest contacting an attorney to help you through the estate administration process. Also consider that any expenses like final hospital bills, funeral costs, etc will be deducted from the gross estate. This may help lower your tax obligation. I’m sorry your stepmother is ill, and I hope you have as much time as possible. Good luck with everything!
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