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Same-sex unmarried couples and inheritance tax

AD438AEB-B3A0-4075-A66A-6064D3349EACSince May 20th, 2014, same-sex marriage has been legally recognized in Pennsylvania as a result of a federal district court judge ruling that the Commonwealth’s 1996 statutory ban on recognizing same-sex marriage was unconstitutional.

Unmarried same-sex couples, like all unmarried couples, now have to consider the pros and cons of marriage. In Pennsylvania, one consideration is the Pennsylvania inheritance tax. 

This issue arises for all unmarried couples, but is more at the forefront of discussions by same-sex couples because, until May 20, 2014, marriage was not available to same-sex couples, so they could not even consider this question. On the other hand, for heterosexual couples who were unmarried, their marital status was a choice, not a status forced on them by the law. 

Pennsylvania taxes assets on the transfer of wealth at death, and the tax rate is dependent on the relationship of the deceased to the recipient of the money. The tax rate for spouses in Pennsylvania is 0%.  All other non-related parties (including life partners or significant others) is 15%.

Pennsylvania imposes the inheritance tax from the first dollar, so it is certainly one factor about which we advise all unmarried couples when discussing estate planning. By no means is the 15% tax on its own a reason to get married, but since the recognition of same-sex marriage in Pennsylvania, many think that is one factor that same-sex couples are considering in deciding whether or not to get married.

All unmarried couples should talk to their attorney or advisor to discuss other implications that may arise, but certainly the inheritance package is a factor that faces unmarried couples.  If you want to talk to us more about your unique estate planning just fill out our simple form here and we’ll be in touch!

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Practice Area Guides

Smart-IM0GHpsjJic-unsplashI recently noticed a client in our office had something tucked under his arm. I greeted him and asked what he had. His response was, “It’s my probate guide and I never leave home without it.” That really got me thinking.

I created the Probate and Medicaid guides about three years ago for our existing clients, because we were finding that many people were very overwhelmed and could not remember from meeting to meeting what we said. In fact, I had a case where I dictated a letter to the client right in front her and a few days later she called into the office indicating that she didn’t remember what we talked about, but it certainly wasn’t what was in the letter.

My team member asked a client if she remembered me dictating the letter in front of her, and she said yes. I understand that when we meet with clients who are going through probate and/or Medicaid qualification, it means that a loved one has either just died or is going into a nursing facility or receiving long-term care, probably for the rest of his or her life. This is a very emotional and stressful time and it is not reasonable to expect somebody is going to remember everything that you discuss.  

These guides arose as a result of several of our team members suggesting that we create them in the practice areas where things are so overwhelming. I must say that it was probably one of the single most important and best decisions that we have made as a firm.

Clients in our Probate and Medicaid departments now have guides that tell them exactly what to expect in the process, who is doing what, and when is it expected to be done. It is something that I am finding more and more the clients carry with them everywhere, and, like our one client, they never leave home without it.

The guides were certainly not done because we don’t trust our clients or that we don’t think that our clients are intelligent, but because we acknowledge that the process that they are going through is extremely emotional and stressful, and it is just one small thing that we can do to help them to remind them of how to get to the end of the process and move on to the next chapter in their lives.

These guides have proven so successful that we have recently created one of the guardianship process. Thanks to that gentleman with his guide under his arm, and the fact that he never left home without it, for reinforcing the value of those guides.

If you’re wanting to start taking the next steps towards getting your estate planning and/or asset protection planning started, join us for any one of our upcoming workshop.  Just click here to find out more.  We hope to see you soon!