Will Your Assets Feel the Pinch of an Estate Tax in California?

Is there a California estate tax?

Federal and state tax laws change more often than most people realize. One common question is whether a California estate tax will impact assets. In this post, you’ll learn more about whether you should worry about a California estate tax when planning for your family’s future.

Related: Estate Planning Basics: What Is an Estate Plan?

There Is No Such Thing as a California Estate Tax

As of 2019, there is no California estate tax. There is a federal estate tax. However, the federal estate tax doesn’t apply to most estates. In 2018, the exclusion amount at the federal level was $11.18 million.

With that being said, if you own property in other states, your estate may be impacted if that state has an estate tax. As of 2019, the states that have an estate tax are:

  • Connecticut
  • Delaware
  • Hawaii
  • Illinois
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • New York
  • Oregon
  • Rhode Island
  • Tennessee
  • Vermont
  • Washington

The District of Columbia also has an estate tax. You should talk with an estate planning lawyer who has experience creating estate plans that include property located in other states so that you can protect as much of your estate as possible.

What about an Inheritance Tax?

In addition to no California estate tax, there’s also no inheritance tax. There’s also no gift tax. Again, though, if you own property in another state that will be inherited or gifted to another person, you’ll want to talk with a lawyer who has experience handling those situations. It can be an incredibly difficult experience for heirs who must sell or forfeit something left to them because they couldn’t afford to pay the associated tax.

Related: California Estate Planning: What Happens to a Timeshare When You Die?

Your Estate Must Still Pay the Final State and Federal Income Tax

Although there is no California estate tax and no inheritance tax, your estate must pay a final set of state and federal income taxes. If there is a trust, there may be more tax work that must be done. Until the final round of taxes is paid, the beneficiaries cannot receive the assets left for them.

Generally, the state and federal returns will be due April 15th of the year after the death. Of course, this also depends on the income earned. If there wasn’t enough income made to report, then it isn’t necessary to prepare and submit the tax forms. If you’re married, your spouse can file a joint tax return for the year of your death.

Talk with a Qualified Estate Planning Lawyer to Learn More

California estate planning depends specifically on your desires for the future. To learn more about taxes and how you can best protect your assets to pass on to others, make an appointment to talk with a qualified estate planning lawyer.

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