Q: My brother passed away with no will and my mother inherited his estate property, a $53,000 house property, and $88,000 from 401k. My question I need to know about how much she pays out on taxes and will this affect her Medicare in the future. She lives in assisted living section 8 which her rent will go up on this inheritance? (Bentleyville, PA)
A: As long as he had no children or spouse, his parents will be his intestate heirs.An inheritance tax bill will not magically come to you in the mail, unfortunately. You will need to file an inheritance tax return and pay inheritance tax. The law requires this to be filed within 9 months of the date of death. The law also provides a 5% discount if you pay an estimate of inheritance tax within 3 months of death. The applicable tax rate for your mother because she is a lineal heir is 4.5%. Deductions are permitted to be taken on the inheritance tax return for funeral expenses, filing fees, attorney and executor fees and reasonable expenses involving the sale of the home as well as other bills and debt. Depending on how this house and 401K are titled, you may need to open an estate. I would recommend gathering as many documents as you can for his assets, expenses and debts and sitting down with an estate attorney to discuss what you need to do.