Estate Planning Still Matters in Pennsylvania Despite Federal Tax Changes
- Ashley Sharek
- 11 hours ago
- 5 min read
The federal estate tax exemption has increased to fifteen million dollars per person as of 2025. This change has led many families to believe that estate tax planning is no longer necessary. For married couples, that exemption doubles to thirty million dollars. On the surface, that seems like good news for most Americans.
However, for families living in Pennsylvania, there are still critical tax and probate issues to consider. Pennsylvania has its own inheritance tax, and the probate process in the state can be slow, costly, and emotionally taxing.
Even if you are not concerned about federal estate taxes, your family may still face avoidable financial consequences if you do not plan ahead. This article will walk through what you need to know about Pennsylvania inheritance tax, probate, and how proper planning can protect your legacy.
What Are the Federal Estate Tax Changes?
The federal estate tax is a tax on the transfer of property after someone passes away. It only applies if the value of the estate exceeds a certain threshold, which in 2025 is fifteen million dollars per individual. Married couples can combine their exemptions, allowing them to pass up to thirty million dollars tax-free at the federal level.
With this high threshold, most Americans are no longer affected by federal estate taxes. This has created a false sense of security for many families, especially those who believe estate planning is only necessary for the very wealthy.
The truth is that the federal estate tax changes are only one part of the picture. For Pennsylvania residents, state inheritance taxes and the probate process can still present significant challenges.
Understanding Pennsylvania Inheritance Tax
Pennsylvania is one of the few states that still imposes an inheritance tax. This tax is based on the relationship between the deceased person and their heirs, and it is applied to nearly all assets passed on to beneficiaries.
Here are the current Pennsylvania inheritance tax rates:
0 percent for transfers to a surviving spouse or to a parent from a child aged twenty-one or younger
4.5 percent for direct descendants such as children, grandchildren, and stepchildren
12 percent for siblings
15 percent for all other beneficiaries, including nieces, nephews, and friends
This means that even if your estate falls well below the federal threshold, your heirs could still be responsible for paying thousands of dollars in state inheritance tax.
For example, if a parent leaves five hundred thousand dollars to a child, the child would owe twenty-two thousand five hundred dollars in Pennsylvania inheritance tax at the 4.5 percent rate. That tax must typically be paid within nine months of the date of death, often before the estate has been fully settled.
These taxes are not avoidable without proper planning. The good news is that there are legal ways to minimize or eliminate this burden on your family.
What Is Probate and Why Does It Matter in Pennsylvania?
Probate is the legal process of validating a will, settling debts, and distributing assets after someone passes away. In Pennsylvania, the probate process can be both time-consuming and expensive.
Some of the most common challenges families face during probate in Pennsylvania include:
Court fees and attorney costs
Delays in accessing accounts or real estate
Public disclosure of the estate and beneficiaries
Family conflict or confusion
Uncertainty about asset distribution
Probate can take several months or even more than a year, depending on the complexity of the estate. During this time, family members may not have access to important resources or clear direction about what comes next.
Many families are caught off guard by how stressful and expensive probate can be. This is especially true if the estate includes real estate, business interests, or accounts spread across multiple states.
The emotional toll can be just as significant as the financial cost. At a time when families are grieving, the legal process can add layers of complexity and uncertainty.
How Estate Planning Helps Minimize Taxes and Avoid Probate
Estate planning is not just for the ultra-wealthy. It is a necessary step for any Pennsylvania family that wants to protect their assets and ease the burden on loved ones.
Here are several ways that estate planning can help:
1. Using Trusts to Avoid Probate
By placing assets in a properly structured trust, you can avoid the probate process entirely. A trust allows you to pass on property directly to your beneficiaries, without court involvement. This provides privacy, speed, and clarity for your family.
2. Planning Gifting Strategies
Pennsylvania inheritance tax is based on the value of assets at the time of your passing. Strategic gifting during your lifetime can reduce the size of your taxable estate. With the right plan, you can transfer wealth to your family while avoiding future tax burdens.
3. Structuring Accounts and Property Ownership
Some forms of ownership, such as joint tenancy with right of survivorship, can help assets transfer automatically outside of probate. Similarly, using transfer-on-death or payable-on-death designations for bank and investment accounts can help streamline the distribution process.
4. Coordinating Your Will with Your Plan
A will is important, but it is not enough on its own. Without the right supporting documents and strategy, a will may still require full probate and fail to address inheritance tax exposure. A coordinated estate plan ensures that all your documents and strategies work together.
5. Creating a Personalized Tax Reduction Plan
Every family’s financial picture is different. That is why we offer customized planning services that run the actual numbers for your estate. We can show you how different decisions affect your inheritance tax exposure and your family’s overall burden.
Why Early Planning Makes a Difference
One of the most common regrets we hear from families is that they waited too long to plan.
Once someone becomes seriously ill or passes away, many planning tools are no longer available. By planning early, you gain access to the full range of strategies that can protect your assets and make life easier for your loved ones. You also gain peace of mind knowing that your affairs are in order.
Here are some of the benefits of starting early:
More control over how your assets are handled
Ability to structure long-term gifting and trusts
Reduced tax exposure
More flexibility in coordinating care or Medicaid planning
Less stress and confusion for your family
Even if you are young, healthy, or not concerned about taxes today, life can change quickly.
Estate planning is not just about what happens when you pass away. It is about making sure your wishes are respected and your family is supported no matter what the future holds.
How Entrusted Legacy Law Helps Pennsylvania Families
At Entrusted Legacy Law, we understand that estate planning can feel overwhelming. That is why we approach every conversation with warmth, clarity, and a heart-centered focus.
We do not wear suits or use complex legal jargon. Instead, we take the time to educate you about your options and help you make informed decisions. We work on a flat fee model so that you know the full cost of your plan before getting started.
Whether you are looking to protect your family from inheritance tax, avoid probate, or simply get peace of mind about your legacy, we are here to guide you every step of the way.
Schedule a Free Consultation
If you would like to learn how Pennsylvania inheritance tax and probate could affect your family, we invite you to book a free consultation. We will walk through your current situation, answer your questions, and help you understand what your estate may face in the future.
Schedule your call today at the link below: