Do you have friends who have told you that the main focus of their estate planning is simply to reduce the estate taxes that their heirs will need to pay? It's a serious concern for some people, and they go to great lengths to cut back on the tax burden. They just want to give their heirs an inheritance that they'll enjoy.
Do you have to worry about that in California? Not at the state level. There's no estate tax.
However, that could be changing in the near future. In March of this year (2019), a bill was announced that could make an estate tax at the state level. It's based around the federal estate tax that already exists. The major difference is that the exemptions are lower in the state-based tax. They would be $3.5 million for an individual and $7 million for couples who are legally married.
This would not create double taxation for those who are subjected to the federal estate taxes, however. It phases out at $11.4 million for an individual, which is the federal exemption level. That doubles to $22.8 million for those who are married.
This bill shows why it is so important to keep an eye on all potential changes to estate taxes. Never assume that they're static. Things can change quickly, and you need to know what that means for your estate plan.
If your goal is to pass on as much of your wealth as possible to your heirs, make sure you fully understand all of the legal options you have and the tools you can use to make it possible.