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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