Pennsylvania has provides an inheritance tax break for transfers of businesses to certain family members for estates of someone who died on or after July 1, 2013.
To qualify for this Qualified Family Owned Business exemption under new Section 9111(t), the following criteria must be met:
engaged in a trade or business;
This tax break is not available to entities with a principal purpose of “management of investments or income producing assets” held by such entity. Section 9111(t)(5). The principal purpose of an entity cannot be simply managing its own investments.
A cursory look at the new law appears to show that transfers to trusts would not be eligible for exemption. Those attempting to do estate planning where they own an active business in Pennsylvania may have a very difficult choice to make. They can either give the business outright to children to save inheritance taxes or they must give up this exemption if family issues, financial reasons or federal estate tax considerations dictate the use of trusts.
1420 Walnut Street Suite 300
Philadelphia, PA 19102
Telephone: 215-735-2336
In order to help you more quickly, please
fill out the form and click “submit”.
A representative of the firm will call you shortly.
From their offices in Philadelphia, PA, the law firm of Steven J. Fromm & Associates, P.C. provides a full range of estate planning, probate and estate administration, tax, business and corporate legal services to clients throughout eastern Pennsylvania and the Delaware Valley, the Lehigh Valley Area, the Five-County Area, Bucks County, Delaware County, Montgomery County, Chester County, Philadelphia County, Berks County, Lehigh County, Lancaster County, York County, Harrisburg, Norristown, Doylestown, Media, West Chester, Allentown, Lancaster, and Reading.