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Neuman drafting new law focused on living trusts

2 min read
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State Rep. Brandon Neuman is drafting legislation that would help Pennsylvanians by strengthening the tax-exempt status of property transfers made through living trusts.

Neuman, D-North Strabane, said families should be able to transfer their property without tax penalties.

“Properties in Pennsylvania are taxed enough already,” Neuman said in a news release. “My legislation would clarify the requirements for a living trust to serve as a substitute for a will so families can continue to transfer property without having to pay the one percent realty transfer tax.”

Neuman said the bill would “reinforce key estate-planning tools by providing definitions for a living trust and by codifying that a living trust need not be revocable for it to be considered similar to a will for tax purposes.”

“Helping families transfer property from one generation to the next without added tax liability strengthens families and makes for fairer taxes,” Neuman said.

A relatively recent legal case targeted the tax liability in a living trust when the state Revenue Department sought taxes, interest and fees after a couple transferred property to a family irrevocable trust that named only themselves and their daughter as beneficiaries.

In March 2011, the Commonwealth Court upheld the family’s exemption from the Pennsylvania Realty Transfer Tax in Miller vs. Commonwealth.That decision was overturned in 2013 by the state Supreme Court, and left others who used the Miller precedent in a precarious position.

“My bill would clarify the issues,” Neuman said. “It would provide a clear understanding of what is legally required to exempt property transfers from taxes.”

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