If you’ve been following the national news much at all for the last year, then you know that President Trump has made it very clear that he wants to repeal the federal estate tax. While this may seem like a welcome break for many of California’s residents, it may be too soon to rejoice. Recently, state legislators have introduced bills that would effectively replace the repealed federal estate tax with a California-specific estate tax.
Under the proposed law, Californians who would qualify for the existing estate tax would be subject to the state-level tax. The rates or tax brackets for the estate tax are not expected to change, and the tax would be used to recapture some tax revenue for public service programs and education systems.
However, California already taxes its wealthiest residents heavily, and this may create some additional work when it comes to estate planning. At the moment, the 40 percent estate tax does not come into play for estates worth less that $5.49 million. Once an individual’s estate crosses this value threshold, extra care must be taken to avoid losing unnecessary value to taxation. In the event that the state estate tax comes into effect, many of the same considerations must be made.
Each person’s needs are different and must be considered individually. If you believe that your estate is threatened by potentially harsh estate taxation, then you should consult with an experienced attorney to create a plan that allows the most flexibility to your assets while providing you with the greatest long-term protection.
With guidance from an experienced attorney, you can create a strong plan for the future, even as the future itself remains uncertain.
Source: Nasdaq, “Estate Tax Repeal? Perhaps Not in California!,” John M. Goralka, May 13, 2017
