meierlde
Thinks s/he gets paid by the post
What about move to a state that does not have the such taxes?
Inheritance tax
- Thread starter Refresher
- Start date
What about move to a state that does not have the such taxes?
Sunset
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
PA should offer low cost nursing home care to get more folks to go there in their final years, then slam them with the inheritance taxes. 
PA should offer low cost nursing home care to get more folks to go there in their final years, then slam them with the inheritance taxes.
Maybe on the interest only, this says no inheritance on principle
Inheritance Tax
The value of your savings bonds – the principal of the investment – passes to you tax-free. Interest earned by the bonds is another matter entirely, however. Depending on where you live, the interest might incur an inheritance tax. The federal government doesn't impose such a tax, but seven states do: New Jersey, Nebraska, Maryland, Pennsylvania, Kentucky, Iowa and Indiana. In these jurisdictions, the interest – but only the interest – is subject to inheritance tax, a levy on individual bequests to certain beneficiaries.
Dash man
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
This is one reason we will be Florida residents by the end of this year.
Enjoying life!
smurray5991
Recycles dryer sheets
- Joined
- Nov 4, 2012
- Messages
- 103
In our case, the bonds were in a Living Trust, and had already matured, so were redeemed shortly after the decedent's death. But proceeds still remain in the estate account, as distribution to heirs has not occurred, and can't occur until the estate/inheritance taxes have been paid in NJ (we are below the federal threshold, so no tax there).
If I understand what our estate attorney has told us, the full value of the bonds will be included in the calculation of the entire DoD estate value for estate tax purposes (of course minus all expense deductions for the estate), and that tax will be paid by the estate prior to asset distribution to heirs. The accrued interest from these bonds will also not be paid by the beneficiaries as part of our income tax. Redemption occurred prior to distribution to heirs, and under the estate/successor trust's assigned tax id, and interest was fully earned prior to date of death. Our understanding is that federal and state tax on that savings bond interest will therefore be paid as part of the decedent's final income tax returns so the beneficiaries would not see any tax consequences there either.
I guess we'll see what actually happens when everything is finally filed!
If I understand what our estate attorney has told us, the full value of the bonds will be included in the calculation of the entire DoD estate value for estate tax purposes (of course minus all expense deductions for the estate), and that tax will be paid by the estate prior to asset distribution to heirs. The accrued interest from these bonds will also not be paid by the beneficiaries as part of our income tax. Redemption occurred prior to distribution to heirs, and under the estate/successor trust's assigned tax id, and interest was fully earned prior to date of death. Our understanding is that federal and state tax on that savings bond interest will therefore be paid as part of the decedent's final income tax returns so the beneficiaries would not see any tax consequences there either.
I guess we'll see what actually happens when everything is finally filed!
The bonds do not need to be fully matured for the accrued interest to be paid on the final return of the deceased. It's an option that the personal rep can choose in preparing the deceased final return.
That would seem wise since the interest is subject to inheritance tax although the info I am getting is the. Principle is not subject to state inheritance taxes at all.
For PA regarding savings bonds and inheritance tax, see:
http://www.revenue.pa.gov/FormsandPublications/FormsforIndividuals/Documents/Inheritance%20Tax/rev-1503_inst.pdf
Winemaker
Thinks s/he gets paid by the post
PA should offer low cost nursing home care to get more folks to go there in their final years, then slam them with the inheritance taxes.
CURRENTLY, PA does not tax pensions, 401k, and tIRA distributions as income.
Dash man
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Not for income tax purposes, but inheritance tax is a whole different kind of tax.
Enjoying life!
Winemaker
Thinks s/he gets paid by the post
My point was they don't tax the distributions now, attract us rich geezers, then tax our heirs when we croak!
Souschef
Thinks s/he gets paid by the post
PA Inheritance tax
Thank you for the information. When my MIL passed, we cleaned out all the savings accounts and took the checks home to CA with us. I had a notion at the time to tell PA to pound sand about the tax, but they are apparently very aggressive about collecting it.
I opted to pay the tax and sleep nights without worrying.
Thank you for the information. When my MIL passed, we cleaned out all the savings accounts and took the checks home to CA with us. I had a notion at the time to tell PA to pound sand about the tax, but they are apparently very aggressive about collecting it.
I opted to pay the tax and sleep nights without worrying.
