From our “Ask a Question” Mailbag: Philadelphia Special Needs Trust and PA Inheritance Tax

Most Recently Updated July 22, 2018.

“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?”

Philadelphia Special Needs Trust and PA Inheritance Tax

Philadelphia Special Needs Trust and PA 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.

More Planning Questions?

Planning for special needs children is only a piece of the Estate Planning process. By all means, if you want to learn more, please read my more detailed article, Estate Planning Everything You Need to Know.

In Conclusion: Philadelphia Special Needs Trust and PA Inheritance Tax

I hope that this article was helpful in explaining how to avoid the PA Inheritance Tax with special needs planning. Further, I included links to even more detailed information on my website so you can learn more. Therefore, please contact me and let me know how I did. Certainly, your comments and questions are welcome!

Let our Estate Planning lawyers help walk you through what can be a confusing process. To begin with, call to speak to one of our experienced estate planning lawyers.  By all means, our lawyers are ready to answer your questions. In fact, feel free to contact our office for a free consultation. Ultimately our goal is to make the process as painless as possible!

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