Well, you knew it was inevitable.  We’ve talked about estate planning, and now we’re going to talk about the “other” thing that, according to the saying, no one can avoid:  taxes.  Specifically, the kinds of taxes that follow a death.  Now, I am an estate planning attorney, not a tax attorney or a CPA, and this is a blog, not legal advice.  This overview is for discussion purposes only.  So let’s talk about death and taxes in California.

What are “death taxes?” 

That term refers to estate taxes, and the term “gift tax” falls under the estate tax bailiwick as well.  (The Unified Gift and Estate Tax System is the formal federal name of this process.) The term “inheritance tax” is just another way of referring to a state-imposed estate tax.

What do “estate taxes” cover?

The term can include both the federal estate tax and the state version.  Now, as of this writing, California DOES NOT HAVE a state estate tax; only nineteen states and the District of Columbia do.  Estate taxes include what is termed the “taxable” portions of an estate, such as certain transfers of property, certain life insurance payments, and some other financial payments.  (again:  this is an overview.  Talk to your accountant for more information)   A “gift tax” refers to financial and asset gifts made during a person’s lifetime; certain amounts are taxable and others are not. To name just a few types of gifts that may or may not be taxable:  charitable donations, gifts to spouses, children, grandchildren, political organizations, educational and medical expenses. (Hello, accountant?)

What about “inheritance taxes?”

Good news:  California does NOT, as of this writing, have a state inheritance tax.  In fact, only six U.S. states have these.

My purpose here is not to confuse, but to help clarify and hopefully simplify some of the terminology we all encounter at one time or another.  Now, with my estate planning hat back on, I will also note that part of what I do is help clients identify and utilize certain tax benefits associated with estate plans, such as trusts.  Do you have questions?  Would you like more information on how California estate planning and tax laws may affect you and your plans for the future?  Just give me a call, and we can set up a time to talk about all your concerns.  You can contact us at 818.956.9200.

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616 E. Glenoaks Boulevard, Suite 203

Glendale, CA 91207

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Sherman Oaks, CA 91403