Klenk Law

Explaining Special Needs Trust and Inheritance Tax

Posted on Tue Oct 27, 2015, on Special Needs Trust

From our “Ask a Question” mailbag: I want to form a Special Needs Trust for my daughter in my will, to be funded at my death. Will the money I put into the Special Needs Trust be subject to the Pennsylvania Inheritance Tax? Please explain special needs trust and inheritance tax?

Most Recently updated June 30, 2018.

Explaining special needs trust and inheritance tax.

Explaining Special Needs Trust and Inheritance Tax:

The Pennsylvania Inheritance Tax rate for transfers to children is 4.5%. This tax is payable whether you give the child money outright or if you place the money in a trust. A Special Needs Trust is an Irrevocable Trust that has the added language allowing the money to be available for a Special Needs Person’s care but still allows that person to qualify for Medicaid.

Though the purpose of the Trust is a noble one, the tax must still be paid. Please contact me if you would like to talk about other techniques that can avoid the Inheritance Tax, such as forming an Irrevocable Trust during your lifetime or an Irrevocable Life Insurance Trust. These trusts are not for everyone, but they do avoid the Pennsylvania Inheritance Tax if designed and funded correctly.

More Planning Questions?

The Special Needs Trust 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: Explain special needs trust and inheritance tax

I hope that this article was helpful. My hope was to explain special needs trust and inheritance tax. 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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Special Needs, Special Needs Estate Planning, Special Needs Planning Attorney, Special Needs Trust

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