The Estate tax in the Unites States is a tax imposed on the transfer of the “taxable estate” of a deceased person, whether such propriety is transferred via a will, according to California laws of intestacy or otherwise as an incident of the death of the owner, such a transfer of property from a trust or the payment of certain life insurance benefits. The Estate Tax is one part of the Unified Gift and Estate Tax system in the United States. California has already eliminated any state estate taxes.
The Federal estate Tax is imposed on every citizen or resident of the United States. The starting point of the calculation is the “gross estate.” Certain deductions from the gross estate amount are allowed in arriving at s smaller amount called the “taxable estate”.
The “gross estate” for Federal estate tax purposes often includes more property than that included in the “probate estate” under California property laws. For instance if life insurance policies name the “estate” as the Beneficiary, the estate will include these proceeds. Life insurance proceeds are not generally included in the estate in a probate case.
The estate tax for the year 2012 is based on an estate of $5,000,000.00 or more and the tax rate is $155,800 plus 35% of any excess. Certain Credits and Exemptions can apply to the “gross estate”. The estate tax rate and amount is set to expire on December 1, 2013. At that time unless Congress passes a law otherwise, the tax rate will go up to 55% on all “gross estate” values over $1,000,000. With proper estate planning, some married couple will be able to avoid the estate taxes on the death of one spouse until both spouses pass away. This is done with an Attorney in the preparation of a “revocable a/b trust.” Ms. Turner has prepared many trust packages for not only those who may be in the highest income brackets to avoid Federal estate taxes, but also for those with estates over $150,000. In California, as of January 1, 2012, if you die without a will, or with a will and your total estate assets are worth over $150,000 your estate must be probated. A probated estate generally requires going to Probate Court with an Attorney, who is paid a statutory fee for representing you. Further, the courts records are public and complicated and lengthy. It is not uncommon to spend six months to one year or more in Probate court over even simple estates.
A revocable Trust package for a single person or a couple is one way to help prevent going to Probate Court. Ms. Turner is adept at teaching you the benefits and helping you through the procedures necessary to set up your estate planning using a revocable trust. Ms. Turner also prepares both financial and health care Powers of Attorney, as well as a living will and “pour-over” will(s). These documents are discussed in a separate blog.