SlideShare une entreprise Scribd logo
1  sur  7
Télécharger pour lire hors ligne
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 1
WILL MY ESTATE
BE EXPOSED TO
THE ESTATE TAX
IN CALIFORNIA?
“Who is exposed to the federal estate tax and
who is exempt?”
TIMOTHY P. MURPHY
NORTHERN CALIFORNIA CENTER FOR ESTATE PLANNING AND ELDER LAW
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 2
If you have been financially successful throughout your life, you may feel as
though the heavy lifting has been done. However, accumulating wealth is only
part of the equation. You must also preserve wealth that you intend to pass
along to your loved ones.
The federal estate tax
can take a heavy toll on
your financial legacy.
At the time of this
writing in 2014, the top
rate of the estate tax is
40 percent. Clearly, this
is a hefty percentage
that can have a
significant impact.
Who is exposed to the federal estate tax, and who is exempt? Let's look at the
answer to this question.
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 3
FEDERAL ESTATE TAX EXCLUSION
There is a federal estate tax credit or exclusion. This is the amount that you can
pass on to your heirs free of taxation. Any portion of your estate that exceeds
the amount of the exclusion would potentially be subject to taxation.
In 2014, the exact amount of the federal estate tax exclusion is $5.34 million.
This may sound like a rather arbitrary figure, but there is a logical rationale
behind it.
A base of $5 million was put into place for the 2011 calendar year, and there
have been ongoing adjustments to account for inflation since then. Next year
another inflation adjustment could be applied.
FEDERAL GIFT TAX
In addition to the federal
estate tax, we also have a
federal gift tax. This tax is in
place to prevent people from
giving away assets while
they are living in an effort to
avoid the estate tax.
The gift tax and the estate
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 4
tax are unified. Because of this unification, the $5.34 million exclusion that is in
place in 2014 is a unified exclusion. It encompasses taxable gifts that you give
while you are living along with the value of the estate that you are passing on to
your heirs.
To provide clarity by way of example, if you were to give away $5.34 million in
tax-free gifts while you are living, you would have used the entirety of your
unified exclusion. As a result, there would be nothing left to apply to your estate
after you pass away.
UNLIMITED MARITAL DEDUCTION
There is an unlimited marital transfer tax deduction. You can utilize this
deduction to transfer unlimited assets to your spouse free of taxation, either
while you are living or after you pass away.
You are not using any of your
unified transfer tax deduction
to give tax-free gifts or
bequests to your spouse,
assuming your spouse is a
citizen of the United States.
The unlimited marital transfer
tax deduction is not available
to non-citizen spouses.
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 5
However,there are tax efficiency solutions that can be implemented if you are
married to someone from another country. Qualified domestic trusts are often
utilized under these circumstances. This is a matter that you should discuss with
a licensed estate planning attorney.
STATE-LEVEL ESTATE TAX
The federal estate tax is applicable in all 50 states, but there are a number of
states that levy state-level estate taxes. We practice law in the state of
California. There is no state estate tax to contend with in the Golden State.
However, if you own valuable property in a state that has a state-level estate
tax, there could be estate tax exposure, even if you do not reside in that state.
SUMMARY
Most American families are not exposed to the federal estate tax, because there
is a relatively high credit or exclusion. If the assets that are being transferred do
not exceed the amount of this exclusion, the estate tax is not applicable.
At the present time, the precise amount of the federal estate tax exclusion is
$5.34 million. There are annual adjustments to account for inflation, so you
could see a slightly larger number each year.
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 6
Because of the existence of the unlimited marital deduction, you do not have to
use any of your exclusion to transfer assets to your spouse tax-free if your
spouse is an American citizen.
If you are exposed to the federal estate tax, there are legal steps that you can
take to gain estate tax efficiency. The optimal course of action will depend upon
the circumstances in question.
To gain an understanding of your options, schedule a consultation with a
licensed estate planning attorney.
REFERENCES
Forbes
http://www.forbes.com/sites/janetnovack/2012/10/14/the-forbes-guide-to-
estate-planning/
IRS
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-and-
Gift-Taxes
Collaborative Research Project
http://lobby.la.psu.edu/027_Estate_Tax/frameset_estate.html
Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 7
About the Author
Timothy P. Murphy
Timothy P. Murphy is an estate planning and elder law attorney
whose practice emphasizes helping people to build, preserve
and pass on their wealth. He works with his clients to
accomplish their goals while avoiding unnecessary court
proceedings and minimizing or eliminating exposure to death
taxes. Mr. Murphy also assists families facing the myriad of
problems associated with dealing with a loved one’s declining
health and rising needs for care. He has practiced law in the Sacramento area for
29 years, first with a large firm, and then with his own firm since 1987.
Tim has written a regular column on legal issues for Senior Magazine. He also
was a regular featured guest on the Money Experts radio program heard locally
on KFBK (AM 1530). Tim has been featured in the Sacramento Bee, Sacramento
Business Journal, Sacramento Magazine, Comstock’s Magazine and other
publications on estate planning and related topics. He also assisted local Channel
3 (KCRA) in an investigative report on the trust mill problem in the Sacramento
area and was featured on Channel 10 (KXTV) in its series on personal financial
planning.
Northern California Center for Estate Planning and Elder Law
www.norcalplanners.com
SACRAMENTO
2277 Fair Oaks Boulevard
Suite 150
Sacramento, CA 95825-5599
Phone: (916) 437-3500
ROSEVILLE
3017 Douglas Blvd.
Ste. 300
Roseville, CA 95661
Phone: (916) 437-3500

Contenu connexe

Plus de Timothy Murphy

Can An IRA Be Used for Estate Planning Purposes?
Can An IRA Be Used for Estate Planning Purposes?Can An IRA Be Used for Estate Planning Purposes?
Can An IRA Be Used for Estate Planning Purposes?Timothy Murphy
 
What Is A Northern California Qualified Domestic Trust
What Is A Northern California Qualified Domestic Trust What Is A Northern California Qualified Domestic Trust
What Is A Northern California Qualified Domestic Trust Timothy Murphy
 
Does a Revocable Living Trust Protect Assets
Does a Revocable Living Trust Protect AssetsDoes a Revocable Living Trust Protect Assets
Does a Revocable Living Trust Protect AssetsTimothy Murphy
 
What Is a Northern California Durable Power of Attorney
What Is a Northern California Durable Power of AttorneyWhat Is a Northern California Durable Power of Attorney
What Is a Northern California Durable Power of AttorneyTimothy Murphy
 
How Expensive are Nursing Homes in Northern California
How Expensive are Nursing Homes in Northern CaliforniaHow Expensive are Nursing Homes in Northern California
How Expensive are Nursing Homes in Northern CaliforniaTimothy Murphy
 
Will My Heirs Be Forced To Pay an Inheritance Tax
Will My Heirs Be Forced To Pay an Inheritance TaxWill My Heirs Be Forced To Pay an Inheritance Tax
Will My Heirs Be Forced To Pay an Inheritance TaxTimothy Murphy
 
Using Powers of Attorney in California: Questions and Answers
Using Powers of Attorney in California: Questions and AnswersUsing Powers of Attorney in California: Questions and Answers
Using Powers of Attorney in California: Questions and AnswersTimothy Murphy
 
Revocable Living Trusts in Northern California: More Questions Practical Options
Revocable Living Trusts in Northern California: More Questions Practical OptionsRevocable Living Trusts in Northern California: More Questions Practical Options
Revocable Living Trusts in Northern California: More Questions Practical OptionsTimothy Murphy
 
Estate Planning in Northern California: More Questions More Answers
Estate Planning in Northern California: More Questions More AnswersEstate Planning in Northern California: More Questions More Answers
Estate Planning in Northern California: More Questions More AnswersTimothy Murphy
 
Estate planning in northern california commonly asked questions and answers
Estate planning in northern california commonly asked questions and answersEstate planning in northern california commonly asked questions and answers
Estate planning in northern california commonly asked questions and answersTimothy Murphy
 
Intestacy in Northern California: What Is It What Does It Matter
Intestacy in Northern California: What Is It What Does It MatterIntestacy in Northern California: What Is It What Does It Matter
Intestacy in Northern California: What Is It What Does It MatterTimothy Murphy
 
Intestacy in Northern California: Part1
Intestacy in Northern California: Part1Intestacy in Northern California: Part1
Intestacy in Northern California: Part1Timothy Murphy
 
Your Northern California Will: What You Need to Know and What They Do
Your Northern California Will: What You Need to Know and What They DoYour Northern California Will: What You Need to Know and What They Do
Your Northern California Will: What You Need to Know and What They DoTimothy Murphy
 
Probate in California: Basic Questions and Answers
Probate in California: Basic Questions and AnswersProbate in California: Basic Questions and Answers
Probate in California: Basic Questions and AnswersTimothy Murphy
 
What Is Northern California Probate
What Is Northern California ProbateWhat Is Northern California Probate
What Is Northern California ProbateTimothy Murphy
 
What Is a Northern California Living Will
What Is a Northern California Living WillWhat Is a Northern California Living Will
What Is a Northern California Living WillTimothy Murphy
 
Is Northern California Probate Always Required
Is Northern California Probate Always RequiredIs Northern California Probate Always Required
Is Northern California Probate Always RequiredTimothy Murphy
 
What Is Northern California Estate Planning
What Is Northern California Estate PlanningWhat Is Northern California Estate Planning
What Is Northern California Estate PlanningTimothy Murphy
 
Preparing for Northern California Incapacity: Part 2 of 2
Preparing for Northern California Incapacity: Part 2 of 2Preparing for Northern California Incapacity: Part 2 of 2
Preparing for Northern California Incapacity: Part 2 of 2Timothy Murphy
 
Preparing for Northern California Incapacity: Part 1 of 2
Preparing for Northern California Incapacity: Part 1 of 2Preparing for Northern California Incapacity: Part 1 of 2
Preparing for Northern California Incapacity: Part 1 of 2Timothy Murphy
 

Plus de Timothy Murphy (20)

Can An IRA Be Used for Estate Planning Purposes?
Can An IRA Be Used for Estate Planning Purposes?Can An IRA Be Used for Estate Planning Purposes?
Can An IRA Be Used for Estate Planning Purposes?
 
What Is A Northern California Qualified Domestic Trust
What Is A Northern California Qualified Domestic Trust What Is A Northern California Qualified Domestic Trust
What Is A Northern California Qualified Domestic Trust
 
Does a Revocable Living Trust Protect Assets
Does a Revocable Living Trust Protect AssetsDoes a Revocable Living Trust Protect Assets
Does a Revocable Living Trust Protect Assets
 
What Is a Northern California Durable Power of Attorney
What Is a Northern California Durable Power of AttorneyWhat Is a Northern California Durable Power of Attorney
What Is a Northern California Durable Power of Attorney
 
How Expensive are Nursing Homes in Northern California
How Expensive are Nursing Homes in Northern CaliforniaHow Expensive are Nursing Homes in Northern California
How Expensive are Nursing Homes in Northern California
 
Will My Heirs Be Forced To Pay an Inheritance Tax
Will My Heirs Be Forced To Pay an Inheritance TaxWill My Heirs Be Forced To Pay an Inheritance Tax
Will My Heirs Be Forced To Pay an Inheritance Tax
 
Using Powers of Attorney in California: Questions and Answers
Using Powers of Attorney in California: Questions and AnswersUsing Powers of Attorney in California: Questions and Answers
Using Powers of Attorney in California: Questions and Answers
 
Revocable Living Trusts in Northern California: More Questions Practical Options
Revocable Living Trusts in Northern California: More Questions Practical OptionsRevocable Living Trusts in Northern California: More Questions Practical Options
Revocable Living Trusts in Northern California: More Questions Practical Options
 
Estate Planning in Northern California: More Questions More Answers
Estate Planning in Northern California: More Questions More AnswersEstate Planning in Northern California: More Questions More Answers
Estate Planning in Northern California: More Questions More Answers
 
Estate planning in northern california commonly asked questions and answers
Estate planning in northern california commonly asked questions and answersEstate planning in northern california commonly asked questions and answers
Estate planning in northern california commonly asked questions and answers
 
Intestacy in Northern California: What Is It What Does It Matter
Intestacy in Northern California: What Is It What Does It MatterIntestacy in Northern California: What Is It What Does It Matter
Intestacy in Northern California: What Is It What Does It Matter
 
Intestacy in Northern California: Part1
Intestacy in Northern California: Part1Intestacy in Northern California: Part1
Intestacy in Northern California: Part1
 
Your Northern California Will: What You Need to Know and What They Do
Your Northern California Will: What You Need to Know and What They DoYour Northern California Will: What You Need to Know and What They Do
Your Northern California Will: What You Need to Know and What They Do
 
Probate in California: Basic Questions and Answers
Probate in California: Basic Questions and AnswersProbate in California: Basic Questions and Answers
Probate in California: Basic Questions and Answers
 
What Is Northern California Probate
What Is Northern California ProbateWhat Is Northern California Probate
What Is Northern California Probate
 
What Is a Northern California Living Will
What Is a Northern California Living WillWhat Is a Northern California Living Will
What Is a Northern California Living Will
 
Is Northern California Probate Always Required
Is Northern California Probate Always RequiredIs Northern California Probate Always Required
Is Northern California Probate Always Required
 
What Is Northern California Estate Planning
What Is Northern California Estate PlanningWhat Is Northern California Estate Planning
What Is Northern California Estate Planning
 
Preparing for Northern California Incapacity: Part 2 of 2
Preparing for Northern California Incapacity: Part 2 of 2Preparing for Northern California Incapacity: Part 2 of 2
Preparing for Northern California Incapacity: Part 2 of 2
 
Preparing for Northern California Incapacity: Part 1 of 2
Preparing for Northern California Incapacity: Part 1 of 2Preparing for Northern California Incapacity: Part 1 of 2
Preparing for Northern California Incapacity: Part 1 of 2
 

Dernier

Mana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdf
Mana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdfMana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdf
Mana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdffaheemali990101
 
Vilas Javdekar Yashwin Enchante Pune E-Brochure .pdf
Vilas Javdekar Yashwin Enchante Pune  E-Brochure .pdfVilas Javdekar Yashwin Enchante Pune  E-Brochure .pdf
Vilas Javdekar Yashwin Enchante Pune E-Brochure .pdfManishSaxena95
 
Kolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdf
Kolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdfKolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdf
Kolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdfAhanundefined
 
Brigade Neopolis Kokapet, Hyderabad E- Brochure
Brigade Neopolis Kokapet, Hyderabad E- BrochureBrigade Neopolis Kokapet, Hyderabad E- Brochure
Brigade Neopolis Kokapet, Hyderabad E- Brochurefaheemali990101
 
Listing Turkey - Viva Perla Maltepe Catalog
Listing Turkey - Viva Perla Maltepe CatalogListing Turkey - Viva Perla Maltepe Catalog
Listing Turkey - Viva Perla Maltepe CatalogListing Turkey
 
Managing Uncertainty: Newman George Leech's Real Estate Finance Strategy
Managing Uncertainty: Newman George Leech's Real Estate Finance StrategyManaging Uncertainty: Newman George Leech's Real Estate Finance Strategy
Managing Uncertainty: Newman George Leech's Real Estate Finance StrategyNewman George Leech
 
Provident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdf
Provident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdfProvident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdf
Provident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdffaheemali990101
 
Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|
Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|
Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|AkshayJoshi575980
 
What-are-the-latest-modular-wardrobe-designs.pdf
What-are-the-latest-modular-wardrobe-designs.pdfWhat-are-the-latest-modular-wardrobe-designs.pdf
What-are-the-latest-modular-wardrobe-designs.pdfKams Designer Zone
 
Listing Turkey - Resim Modern Catalog Istanbul
Listing Turkey - Resim Modern Catalog IstanbulListing Turkey - Resim Modern Catalog Istanbul
Listing Turkey - Resim Modern Catalog IstanbulListing Turkey
 
Prestige Somerville Whitefield Bangalore E- Brochure.pdf
Prestige Somerville Whitefield Bangalore E- Brochure.pdfPrestige Somerville Whitefield Bangalore E- Brochure.pdf
Prestige Somerville Whitefield Bangalore E- Brochure.pdffaheemali990101
 
Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...
Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...
Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...Clemson Engineering Consultant
 
Goyal Orchid Life East Bangalore.pdf.pdf
Goyal Orchid Life East Bangalore.pdf.pdfGoyal Orchid Life East Bangalore.pdf.pdf
Goyal Orchid Life East Bangalore.pdf.pdfkratirudram
 
Lancaster Market Expenses and Company Worksheet
Lancaster Market Expenses and Company WorksheetLancaster Market Expenses and Company Worksheet
Lancaster Market Expenses and Company WorksheetTom Blefko
 
Mahindra Vista Kandivali East Mumbai Brochure.pdf
Mahindra Vista Kandivali East Mumbai Brochure.pdfMahindra Vista Kandivali East Mumbai Brochure.pdf
Mahindra Vista Kandivali East Mumbai Brochure.pdfPrachiRudram
 
Prestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdf
Prestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdfPrestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdf
Prestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdfAhanundefined
 
Provident Kenworth Rajendra Nagar Hyderabad.pdf
Provident Kenworth Rajendra Nagar Hyderabad.pdfProvident Kenworth Rajendra Nagar Hyderabad.pdf
Provident Kenworth Rajendra Nagar Hyderabad.pdfashiyadav24
 
Kolte Patil Universe Hinjewadi Pune Brochure.pdf
Kolte Patil Universe Hinjewadi Pune Brochure.pdfKolte Patil Universe Hinjewadi Pune Brochure.pdf
Kolte Patil Universe Hinjewadi Pune Brochure.pdfPrachiRudram
 
Ganga Fusion 85 Gurugram - PDF Download.pdf
Ganga Fusion 85 Gurugram - PDF Download.pdfGanga Fusion 85 Gurugram - PDF Download.pdf
Ganga Fusion 85 Gurugram - PDF Download.pdfanjalisaini334541
 
Sankla East World Hadapsar Pune Brochure.pdf
Sankla East World Hadapsar Pune Brochure.pdfSankla East World Hadapsar Pune Brochure.pdf
Sankla East World Hadapsar Pune Brochure.pdfabbu831446
 

Dernier (20)

Mana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdf
Mana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdfMana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdf
Mana Dale Kodathi, Sarjapur Road, Bangalore E-Brochure.pdf
 
Vilas Javdekar Yashwin Enchante Pune E-Brochure .pdf
Vilas Javdekar Yashwin Enchante Pune  E-Brochure .pdfVilas Javdekar Yashwin Enchante Pune  E-Brochure .pdf
Vilas Javdekar Yashwin Enchante Pune E-Brochure .pdf
 
Kolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdf
Kolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdfKolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdf
Kolte Patil Mirabilis at Horamavu Road, Bangalore E brochure.pdf
 
Brigade Neopolis Kokapet, Hyderabad E- Brochure
Brigade Neopolis Kokapet, Hyderabad E- BrochureBrigade Neopolis Kokapet, Hyderabad E- Brochure
Brigade Neopolis Kokapet, Hyderabad E- Brochure
 
Listing Turkey - Viva Perla Maltepe Catalog
Listing Turkey - Viva Perla Maltepe CatalogListing Turkey - Viva Perla Maltepe Catalog
Listing Turkey - Viva Perla Maltepe Catalog
 
Managing Uncertainty: Newman George Leech's Real Estate Finance Strategy
Managing Uncertainty: Newman George Leech's Real Estate Finance StrategyManaging Uncertainty: Newman George Leech's Real Estate Finance Strategy
Managing Uncertainty: Newman George Leech's Real Estate Finance Strategy
 
Provident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdf
Provident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdfProvident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdf
Provident Solitaire Park Square Kanakapura Road, Bangalore E- Brochure.pdf
 
Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|
Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|
Maha Mauka Squarefeet Brochure |Maha Mauka Squarefeet PDF Brochure|
 
What-are-the-latest-modular-wardrobe-designs.pdf
What-are-the-latest-modular-wardrobe-designs.pdfWhat-are-the-latest-modular-wardrobe-designs.pdf
What-are-the-latest-modular-wardrobe-designs.pdf
 
Listing Turkey - Resim Modern Catalog Istanbul
Listing Turkey - Resim Modern Catalog IstanbulListing Turkey - Resim Modern Catalog Istanbul
Listing Turkey - Resim Modern Catalog Istanbul
 
Prestige Somerville Whitefield Bangalore E- Brochure.pdf
Prestige Somerville Whitefield Bangalore E- Brochure.pdfPrestige Somerville Whitefield Bangalore E- Brochure.pdf
Prestige Somerville Whitefield Bangalore E- Brochure.pdf
 
Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...
Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...
Clemson Engineering Consultant Dubai For Innovative and Sustainable Engineeri...
 
Goyal Orchid Life East Bangalore.pdf.pdf
Goyal Orchid Life East Bangalore.pdf.pdfGoyal Orchid Life East Bangalore.pdf.pdf
Goyal Orchid Life East Bangalore.pdf.pdf
 
Lancaster Market Expenses and Company Worksheet
Lancaster Market Expenses and Company WorksheetLancaster Market Expenses and Company Worksheet
Lancaster Market Expenses and Company Worksheet
 
Mahindra Vista Kandivali East Mumbai Brochure.pdf
Mahindra Vista Kandivali East Mumbai Brochure.pdfMahindra Vista Kandivali East Mumbai Brochure.pdf
Mahindra Vista Kandivali East Mumbai Brochure.pdf
 
Prestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdf
Prestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdfPrestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdf
Prestige Orchards Plots in Shamshabad, Mamidipalli, Hyderabad pdf.pdf
 
Provident Kenworth Rajendra Nagar Hyderabad.pdf
Provident Kenworth Rajendra Nagar Hyderabad.pdfProvident Kenworth Rajendra Nagar Hyderabad.pdf
Provident Kenworth Rajendra Nagar Hyderabad.pdf
 
Kolte Patil Universe Hinjewadi Pune Brochure.pdf
Kolte Patil Universe Hinjewadi Pune Brochure.pdfKolte Patil Universe Hinjewadi Pune Brochure.pdf
Kolte Patil Universe Hinjewadi Pune Brochure.pdf
 
Ganga Fusion 85 Gurugram - PDF Download.pdf
Ganga Fusion 85 Gurugram - PDF Download.pdfGanga Fusion 85 Gurugram - PDF Download.pdf
Ganga Fusion 85 Gurugram - PDF Download.pdf
 
Sankla East World Hadapsar Pune Brochure.pdf
Sankla East World Hadapsar Pune Brochure.pdfSankla East World Hadapsar Pune Brochure.pdf
Sankla East World Hadapsar Pune Brochure.pdf
 

Will My Estate Be Exposed To The Estate Tax in California

  • 1. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 1 WILL MY ESTATE BE EXPOSED TO THE ESTATE TAX IN CALIFORNIA? “Who is exposed to the federal estate tax and who is exempt?” TIMOTHY P. MURPHY NORTHERN CALIFORNIA CENTER FOR ESTATE PLANNING AND ELDER LAW
  • 2. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 2 If you have been financially successful throughout your life, you may feel as though the heavy lifting has been done. However, accumulating wealth is only part of the equation. You must also preserve wealth that you intend to pass along to your loved ones. The federal estate tax can take a heavy toll on your financial legacy. At the time of this writing in 2014, the top rate of the estate tax is 40 percent. Clearly, this is a hefty percentage that can have a significant impact. Who is exposed to the federal estate tax, and who is exempt? Let's look at the answer to this question.
  • 3. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 3 FEDERAL ESTATE TAX EXCLUSION There is a federal estate tax credit or exclusion. This is the amount that you can pass on to your heirs free of taxation. Any portion of your estate that exceeds the amount of the exclusion would potentially be subject to taxation. In 2014, the exact amount of the federal estate tax exclusion is $5.34 million. This may sound like a rather arbitrary figure, but there is a logical rationale behind it. A base of $5 million was put into place for the 2011 calendar year, and there have been ongoing adjustments to account for inflation since then. Next year another inflation adjustment could be applied. FEDERAL GIFT TAX In addition to the federal estate tax, we also have a federal gift tax. This tax is in place to prevent people from giving away assets while they are living in an effort to avoid the estate tax. The gift tax and the estate
  • 4. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 4 tax are unified. Because of this unification, the $5.34 million exclusion that is in place in 2014 is a unified exclusion. It encompasses taxable gifts that you give while you are living along with the value of the estate that you are passing on to your heirs. To provide clarity by way of example, if you were to give away $5.34 million in tax-free gifts while you are living, you would have used the entirety of your unified exclusion. As a result, there would be nothing left to apply to your estate after you pass away. UNLIMITED MARITAL DEDUCTION There is an unlimited marital transfer tax deduction. You can utilize this deduction to transfer unlimited assets to your spouse free of taxation, either while you are living or after you pass away. You are not using any of your unified transfer tax deduction to give tax-free gifts or bequests to your spouse, assuming your spouse is a citizen of the United States. The unlimited marital transfer tax deduction is not available to non-citizen spouses.
  • 5. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 5 However,there are tax efficiency solutions that can be implemented if you are married to someone from another country. Qualified domestic trusts are often utilized under these circumstances. This is a matter that you should discuss with a licensed estate planning attorney. STATE-LEVEL ESTATE TAX The federal estate tax is applicable in all 50 states, but there are a number of states that levy state-level estate taxes. We practice law in the state of California. There is no state estate tax to contend with in the Golden State. However, if you own valuable property in a state that has a state-level estate tax, there could be estate tax exposure, even if you do not reside in that state. SUMMARY Most American families are not exposed to the federal estate tax, because there is a relatively high credit or exclusion. If the assets that are being transferred do not exceed the amount of this exclusion, the estate tax is not applicable. At the present time, the precise amount of the federal estate tax exclusion is $5.34 million. There are annual adjustments to account for inflation, so you could see a slightly larger number each year.
  • 6. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 6 Because of the existence of the unlimited marital deduction, you do not have to use any of your exclusion to transfer assets to your spouse tax-free if your spouse is an American citizen. If you are exposed to the federal estate tax, there are legal steps that you can take to gain estate tax efficiency. The optimal course of action will depend upon the circumstances in question. To gain an understanding of your options, schedule a consultation with a licensed estate planning attorney. REFERENCES Forbes http://www.forbes.com/sites/janetnovack/2012/10/14/the-forbes-guide-to- estate-planning/ IRS http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estate-and- Gift-Taxes Collaborative Research Project http://lobby.la.psu.edu/027_Estate_Tax/frameset_estate.html
  • 7. Will My Estate Be Exposed To The Estate Tax? www.norcalplanners.com 7 About the Author Timothy P. Murphy Timothy P. Murphy is an estate planning and elder law attorney whose practice emphasizes helping people to build, preserve and pass on their wealth. He works with his clients to accomplish their goals while avoiding unnecessary court proceedings and minimizing or eliminating exposure to death taxes. Mr. Murphy also assists families facing the myriad of problems associated with dealing with a loved one’s declining health and rising needs for care. He has practiced law in the Sacramento area for 29 years, first with a large firm, and then with his own firm since 1987. Tim has written a regular column on legal issues for Senior Magazine. He also was a regular featured guest on the Money Experts radio program heard locally on KFBK (AM 1530). Tim has been featured in the Sacramento Bee, Sacramento Business Journal, Sacramento Magazine, Comstock’s Magazine and other publications on estate planning and related topics. He also assisted local Channel 3 (KCRA) in an investigative report on the trust mill problem in the Sacramento area and was featured on Channel 10 (KXTV) in its series on personal financial planning. Northern California Center for Estate Planning and Elder Law www.norcalplanners.com SACRAMENTO 2277 Fair Oaks Boulevard Suite 150 Sacramento, CA 95825-5599 Phone: (916) 437-3500 ROSEVILLE 3017 Douglas Blvd. Ste. 300 Roseville, CA 95661 Phone: (916) 437-3500