Legal Question in Wills and Trusts in Pennsylvania

My father inlaw is 79 and is in the hospital and may not survive. We have power of attorney and was wondering if we should gift money to ourselves to save on Inheritance\Estate taxes. We live in PA. He has approx $400,000 in his 401k that he wants us to have.

Asked on 5/30/13, 9:11 am

1 Answer from Attorneys

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No!

An agent cannot use a POA to make gifts unless this is specifically allowed by the POA. And it will not save on inheritance taxes. If a person dies within a year of the transfer there are still taxes owed if your father-in-law lives in PA. Any transfers made while alive are subject to tax. See below statute:

72 P.S. 9107 - Inheritance Tax - Transfers subject to tax

(a) The transfers enumerated in this section are subject to the tax imposed by section 2106.

(b) All transfers of property by will, by the intestate laws of this Commonwealth or, in the case of a transfer from a nonresident, by the laws of succession of another jurisdiction are subject to tax. The transfer of property of a person determined by decree of a court of competent jurisdiction to be a presumed decedent is subject to tax within the meaning of this section and section 2108.

(c) (1) All transfers of property specified in subclauses (3) through (7) which are made by a resident or a nonresident during his lifetime are subject to tax to the extent that they are made without valuable and adequate consideration in money or money's worth at the time of transfer.

(2) When the decedent retained or reserved an interest or power with respect to only a part of the property transferred, in consequence of which a tax is imposed under subclauses (4) through (7), the amount of the taxable transfer is only the value of that portion of the property transferred which is subject to the retained or reserved interest or power.

(3) A transfer conforming to subclause (1) and made within one year of the death of the transferor is subject to tax only to the extent that the value at the time of the transfer or transfers in the aggregate to or for the benefit of the transferee exceeds three thousand dollars ($3,000) during any calendar year.

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5/30/13, 12:43 pm

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