A Pennsylvania couple in their late 80s added their daughter’s name to their bank accounts so she would have access in case of their sudden deaths. Unfortunately, the daughter died a few months later.
Then the couple received a Pennsylvania inheritance tax bill for thousands of dollars. It seems the state calculated that one-third of the money in the bank accounts was their daughter’s and the rest was taxed as an inheritance to them. They had to pay a tax on their own money. After they paid the tax, the bank told them it would have been better to give their daughter power of attorney, but no one mentioned that to them before.
Six other states also tax such inheritances. They are Indiana, Iowa, Kentucky, Maryland, Nebraska and New Jersey. Four of them, however, exempt parents of decedents, according to the National Conference of State Legislators.
Please check out your state and ask your advisors.
