Estate Planning in Pennsylvania: What Every Family Should Know About Trusts, Wills, and Inheritance Tax
Learn how to protect your legacy in Central PA. From the 2026 $15 million federal exemption to the specific Pennsylvania inheritance tax rates for siblings and children, PAC Financial helps Harrisburg families avoid probate.
If you own anything and have anyone you care about, you need an estate plan. That is the bottom line. PAC Financial, a family-owned financial advisory firm in Harrisburg, Pennsylvania, works with families across Central PA to make sure their assets go where they want, when they want, without unnecessary taxes or legal delays.
Pennsylvania has its own rules. Here is what you need to know.
Will vs. Trust: Which One Do You Need?
A will tells the court what you want to happen after you die. A trust lets you skip the court entirely.
A will goes through probate. In Pennsylvania, probate can take 6 to 12 months. The fees typically run 3% to 5% of the estate value. On a $500,000 estate, that is $15,000 to $25,000 in probate costs. The will also becomes a public document. Anyone can look it up at the county courthouse.
A revocable living trust avoids probate completely. Assets held in the trust pass to your beneficiaries without court involvement. The successor trustee you named takes over immediately. There is no waiting period, no court fees, and no public record. This is often the primary vehicle used in comprehensive wealth planning for our clients in Mechanicsburg and Hershey.
What Is the Pennsylvania Inheritance Tax?
Pennsylvania does not have a state estate tax, but it does have an inheritance tax. The rate depends on who receives the assets:
- Surviving spouse: 0%
- Children and grandchildren: 4.5%
- Siblings: 12%
- Others: 15%
If paid within three months of the date of death, heirs receive a 5% discount on the tax. As we noted in our guide on what to do when you inherit money in PA, this early-payment discount is "free money" for organized families.
The 2026 Federal Landscape: The OBBBA Impact
Under the One Big Beautiful Bill Act (OBBBA), the federal estate tax exemption has been permanently increased to $15 million per person ($30 million for married couples) for 2026. This means for the vast majority of families in Central PA, federal estate taxes are not the concern—state inheritance taxes and probate avoidance are the primary goals.
How to Avoid Probate in Pennsylvania
- Revocable Living Trust: Assets pass directly to beneficiaries.
- Beneficiary Designations: Retirement accounts and life insurance bypass probate. (Learn how to calculate your life insurance needs with specialist Christian Joseph Marrazzo).
- Joint Ownership: Real estate held jointly passes to the survivor automatically.
- POD/TOD Designations: Bank and brokerage accounts can name a beneficiary directly.
The Biggest Estate Planning Mistake
Outdated beneficiary designations. Your 401(k) and life insurance beneficiaries override your will. Whether you are funding a Trump Account for a grandchild or managing a 529 plan, you must ensure your beneficiaries are current. Review every designation today.
Talk to PAC Financial
Call PAC Financial at (717) 564-6400 for a free consultation. We help families across Harrisburg, Mechanicsburg, Camp Hill, Hershey, and Carlisle build estate plans that protect their legacy. We coordinate with your attorney and tax advisor to ensure your "offensive line" is solid.
Compliance Notice
This information is for educational purposes only. PAC Financial is a financial advisory firm serving Central Pennsylvania. Securities and advisory services offered through Osaic Wealth, Inc., member FINRA/SIPC.