Klenk Law

Can I fund my son’s Special Needs Trust under my Will without paying the Pennsylvania Inheritance Tax?

Posted on Fri Oct 9, 2015, on Probate and Estate Administration

From our “Ask a Question” mailbag: My son is a special needs child and I have formed a Special Needs Trust in my will for his care. How do I fund this Trust without paying the Pennsylvania Inheritance Tax?

If you are unable to fund the trust until your death, then the only way to fund the trust without paying the 4.5% Pennsylvania Inheritance Tax on transfers to children (or to trusts for children) is to use life insurance.

Thanks to a skilled lobbying group, life insurance is exempt from the Pennsylvania Inheritance Tax. If you have life insurance, simply name the Special Needs Trust under your will for your son as beneficiary of all or a portion of the policy. If you do not have life insurance, consider the cost of purchasing life insurance, as the tax savings might pay for the premium.

If you have any other questions about Special Needs Trusts, feel free to contact our office for a free consultation with one of our Estate Planning Lawyers.

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Pennsylvania, Philadelphia

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