Usually one of the first questions that people ask when they start Estate Planning whether it be a Will, Revocable Living Trust, or other means of probate avoidance is something like “how much estate tax will I have to pay?” or “how can I avoid taxes?” or “how can I help my kids inheritance from being taxed?”. It is easy to understand why the subject of tax is so important to so many of us. It can really take a bite!
The good news for the vast majority of us is that Federal Estate Tax won’t be an issue. However, living in San Diego especially, and Southern California in general, can push some of us closer to the Federal Estate Tax. This is so because of the higher value of our home. Many different steps are used to compute the Federal Estate Tax, and there are many variables that affect what property is includible in a person’s gross estate in making such a computation. For 2016, the Federal Estate Tax Exemption is $5,430,000. This means that an individual can leave $5.43 million to their heirs and no Federal Estate Tax will be imposed. A married couple can essentially leave $10,860,000 to their heirs without triggering the Federal Estate Tax. This Exemption amount is indexed for inflation which means that the Exclusion amount increases each year. As of now, the top federal estate tax rate is 40%. These rules and amounts have changed quite a bit over the last 16 years, and there is no guarantee that they will remain where they are. Democrats and Democratic candidates have suggested they would like to lower the Exclusion amount and increase the top federal rate to as much as 65 percent! I won’t leave Republicans out of the discussion in saying who knows what goes through any politician’s head!
Because many actions (such as gifts, selling property, etc.) and different types of property can influence taxes, you should consult an attorney and potentially a tax professional.
Please see the rest of my Blog for more on Federal and California Estate Tax
See lots of estate planning information on my website at: www.myestate-plan.com
My most important job is to listen to you and your goals, then create the best estate plan to achieve these results. Call me today and let’s start planning!
Thank you for reading!
William Daniel Powell
Just like my website, nothing in this blog is intended as legal advice. If you need legal advice, contact an attorney licensed to practice in your jurisdiction. I am licensed to practice law in California. Further, please remember that I speak in generalities in my blog (and on my website). There are so many different factors that can contribute and completely change the outcome that it would not be practical to discuss all of them here. This is why I speak in generalities. Thanks again for reading.
This document is for informational purposes only. Nothing in this is to be considered legal advice. Nothing in this shall create an attorney/client relationship, nor shall it create a confidential relationship. If you need legal advice (in California), feel free to contact me or someone licensed to practice in your jurisdiction. I assume no liability or responsibility for actions taken, or not taken, as a result of reading this information.