What is the name of your state?I am from Pennsylvania. I need to know if the distribution of a 401K to beneficiaries is taxable to the state. My wifes brother passed away and the family is looking for a lawyer to do all the paper work and final out the estate. One of the family asked a lawyer that he has used before what his fees would be to take care of this for the family. His reply was 5% on the first $150000 and 4% on the remainder. This is a simple estate. My brother-in-law was single and never married. He owned his house and car. He had a checking account and a savings account. The items just mentioned would add up to approx. $165000. Here is where I am concerned. He had a 401K that is still held by his former employer. It is worth $1,000,000 in stock. There is also a life insurance policy with the company worth $135,000. Remaining pension benefit to beneficiaries
might be $20,000. My brother-in-law indicated on his beneficiary form that 25% each was to be distributed to his four brothers and sisters. On his death the company will distribute the money in the stock,life insurance and pension to the beneficiaries. Now, is the money that is being distributed by the company going to be charged the 12% inheritance tax that Pennsylvania charges when money is left between siblings? If this is true then I would assume that the lawyer that quoted 5% as his fee would use the money from the company in the calculation of his fee and this fee would not be far from $50,000. This is my concern and is the reason for me wanting to know if the money being distributed is considered part of my brother-in-laws estate and is taxable. I have indicated to my wifes brothers and sisters that this would be an excessive amount and they should look for a lawyer that would charge by the hour instead of a percentage. My brother-in-law was 59 and one heck of a nice guy.
might be $20,000. My brother-in-law indicated on his beneficiary form that 25% each was to be distributed to his four brothers and sisters. On his death the company will distribute the money in the stock,life insurance and pension to the beneficiaries. Now, is the money that is being distributed by the company going to be charged the 12% inheritance tax that Pennsylvania charges when money is left between siblings? If this is true then I would assume that the lawyer that quoted 5% as his fee would use the money from the company in the calculation of his fee and this fee would not be far from $50,000. This is my concern and is the reason for me wanting to know if the money being distributed is considered part of my brother-in-laws estate and is taxable. I have indicated to my wifes brothers and sisters that this would be an excessive amount and they should look for a lawyer that would charge by the hour instead of a percentage. My brother-in-law was 59 and one heck of a nice guy.