Helping those in California navigate through estate tax lawsadmin
While it is true that most people do not like to contemplate their own passing, it is something they must do if they want to ensure their estate is in order and will be properly administered, particularly if significant assets are involved.
February 09, 2014 /24-7PressRelease/ — While it is true that most people do not like to contemplate their own passing, it is something they must do if they want to ensure their estate is in order and will be properly administered – particularly if significant assets are involved.
For most, there are several components to a good estate plan, which can vary greatly depending on a person’s circumstances. For instance, while a well-executed will may be sufficient planning for some, others may require the creation of trusts to help avoid oppressive estate taxes. Indeed, some of the largest California estates may face an estate tax rate of 40 percent – although proper estate planning has the potential to help even the biggest of these estates.
History of estate tax in California and increase of exemption in 2014
Even though it has actually been several years since any estate taxes have been collected in California at the state level, the federal government may still get its piece of the pie when it comes to high-valued California estates. Essentially, the federal estate tax only applies to estates that are larger than the current estate tax exemption limit – meaning those valued under the exemption limit are free from the estate tax.
However, the amount of the federal estate tax exemption has experienced several ups and downs over the years. For example, while the Economic Growth and Tax Relief Reconciliation Act of 2001 called for a yearly increase in the federal estate tax exemption – with the eventual phase-out after several years – by 2011, federal lawmakers created a new estate tax exemption limit of $5 million, which was tied to inflation. Interestingly, however, this particular exemption was scheduled to revert to a mere $1 million if no further action was taken by the end of 2012.
Thankfully, for taxpayers, the American Taxpayer Relief Act (ATRA) was passed in early 2013, which established an estate tax exemption amount significantly higher than $1 million, and was also tied to inflation. Currently, in 2014, the federal estate tax exemption limit sits at $5.34 million – with estates smaller than this being safe from estate taxes. However, the ATRA was not all good news for taxpayers as it also increased the tax rate on non-exempted estates from 35 percent to 40 percent.
Establishing trusts may be able to help with estate taxes
It is important to note that various tools do exist in California that can help even large estates prevent potentially burdensome estate taxes. For example, several types of tax savings trusts not only can help families avoid probate but also lower an estate’s value to the point that estate taxes are minimized or avoided altogether.
In the end, every situation is different, not to mention that estate law may be subject to change at a moment’s notice. Accordingly, if you are currently contemplating the creation of an estate plan and believe estate taxes may come into play, it is often best to seek the counsel of an experienced attorney. A skilled attorney can help explain confusing laws and advise as to your rights and options given your situation.
Article provided by Law Offices of Connie Yi, PC
Visit us at www.connieyilaw.com
Posted: February 9th, 2014 under 24/7 PRESS RELEASE.