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California proposes state-level estate tax

if you've been following the news, it has been consistently dominated by the various actions of the Trump administration, which has been making a number of controversial moves in its first 100 days. One of the areas that President Trump has promised to address in the near future is the federal estate tax, which currently commands 40 percent of an estate's value above $5.49 million per person. If Trump has his way, the law may shift from a tax on overall estate value to a proposed tax on capital gains. However, California, which often pioneers progressive policies, is proposing a state-level estate tax — even if the federal estate tax is repealed.

Here in California, the estate tax is exceptionally controversial. On the one hand, our population is often politically and fiscally liberal, and may support the state -level estate tax. The proposed bill's author contends that it is a reasonable provision for the purpose of redirecting lost estate tax revenue directly to state endeavors like education and infrastructure.

On the other hand, the current cap per household for the estate tax is $5.49 million for an individual or $10.98 million for a couple. In many parts of the country, or even some areas of California itself, this may seem like a reasonable threshold — however, many residents feel that the cap is realistically much lower for Californians because of the relatively high cost of living, especially in the real estate sector.

It remains to be seen how the issue will play out, as neither the federal estate tax repeal and the state-level estate tax have become law yet. Regardless of how the future plays out, it is important to have a well-crafted estate plan to make sure that you retain as much of your estate as possible and to direct your property and assets to the individuals and causes you hold dear.

Source: Forbes, "Trump Vows Estate Tax Repeal, But California Plans Its Own 40% Estate Tax," Robert W. Wood, Feb. 23, 2017

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