State inheritance tax?

[tacks]

My client's "significant other" just passed away.

The deed of the house lists owners as:

Joe Smith (recently deceased) in trust for:
Lorraine Russo (currently alive, former caretaker and girlfriend of deceased,
Joe Smith)

Her real estate person said she's going to need pay state inheritance tax on this property??? Paying inheritance tax on a property in which you're already listed as owner??

[albeit, they never were married]

Any thoughts on this?? Do you think that the real estate guy's assertion is correct?

Thanks in advance for your thoughts.

tacks

[JohnH]

So does the real estate guy moonlight as an estate expert? Sounds like your client needs to get a legal opnion on this one if there's any significant value at stake.

[thomtax]

The rules would vary state by state and by the value of the property. I didn't see either of these listed.

LT

[tacks]

Hi Thom and John,

Thanks for responding.

Thom, the state is Pennsylvania.

And a quick look at neighboring properties would lead me to believe that it won't sell for more than 100,000 -- market value is no more than 100,000 and probably less (it's right on the "edge" of two neighborhoods, so to speak).

thanks again.

[BP.]

Generally in PA , the unmarried remaining owner would need to pay PA Inheritance Tax on the 1/2 ownership received when the other owner passed away. (Unmarrieds are disadvantaged in this respect, as there is no inheritance tax for spousal beneficiaries.)

However, since there's a trust, the outcome may be different, so probably would consult atty.

[tacks]

Thanks for responding, BP

[Gary2]

What exactly is the meaning, in PA, of "A in trust for B" on a deed? Does it mean that B is already owner, but A controls it? Or is it the same as POD? Whatever it is, I'm guessing it's not the same as joint tenants with right of survivorship.

[tacks]

Hi everyone,

Thanks for the responses.

My client went to a lawyer who confirmed the fact that she will owe inheritance tax. He recommended gettting paperwork together to itemize deductions on the state inheritance tax forms. He'll also change the deed to read her name and her name only.

My client and i decided i best let the lawyer handle the whole thing given the fact that i'm already committed to other jobs.

tacks

[JohnH]

Wise decision on your part...

[Gretel]

Wise decision on your part...

Who knows. I certainly agree that a lawyer needs to be involved and if it is a good lawyer everything is well. However, I once encountered a lawyer who set up two revocable trusts for a couple, $7,500 a piece. When the first died he didn't know at all what to do (which became obvious in conversations with him), and waited for me to finish the 1041 before he did his job.

I feel it is pertinent for good service to clients to know enough of legal issues to at least have an opinion if the lawyer provides good service.