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Aisling207 t1_jbh4zor wrote

Not true. A living trust avoids probate, but does not shield assets from inheritance tax.

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Creative_Camel t1_jbh5kbu wrote

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hippata2023 t1_jbhl03i wrote

That's bad information, which is surprising come from a law firm.

While joint assets will avoid probate, they're still subject to PA inheritance tax. My grandmother got nailed with this because she comingled (joint bank account) her monies with my aunt (my aunt had a long, hard road to death through severe dementia and multiple strokes). She did it because she found it easier to manage my aunt's estate while she was alive. When my aunt died, my grandmother was on the hook on paying tax on the half the balance of this account -- even though, by this time, most of the funds in the account were my grandmothers, not my aunt's. Yes, she was taxed on her own money.

Joint assets held by spouses will avoid the inheritance tax, but that's it. Only spouses.

Regarding irrevocable trusts, I researched this awhile ago and can't quite get back to it. While most states do observe irrevocable trusts as a way to avoid probate, PA is a weird one in that in order to do so, the trust has to meet certain conditions. 2 common conditions found in irrevocable trusts: the right to income and the right to change beneficiaries, will make the irrevocable trusts subject to inheritance tax, even if it avoids probate.

TL;DR: talk to an estate lawyer

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Aisling207 t1_jbh5xjp wrote

And most people won’t do those because they lose control of their assets.

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Creative_Camel t1_jbh6v1z wrote

Understood and some will instead choose a life insurance policy to pay the taxes or move to Florida or NH

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Aisling207 t1_jbh7b89 wrote

Which makes it a tax that falls disproportionately on those without the means to afford those options.

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