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Estate Taxes

Sacramento Estate Planning Attorney

Does the state of California impose a state estate tax? The answer is no, it does not. For decedents who die on or after January 1, 2005, there is no longer a requirement to file a California estate tax return. However, prior to January 1, 2005, California did used to collect a separate estate tax on the state level, which was called a "pick up tax."

The "pick up tax" was a state estate tax that was collected based on the state estate tax credit allowed by the IRS on the federal estate tax return, IRS Form 706. In essence, a portion of the federal estate tax bill was taken away from the IRS and paid to the decedent's state taxing authority.

Prior to January 1, 2005, when a deceased person owed federal estate taxes, the California Controller's Office collected the pick up tax from the decedent's estate. Since Congress and President Obama passed the American Taxpayer Relief Act (ATRA), the pick up tax was not resurrected and will not come back without further action from Congress and voter approval.

Inheritance Tax & Federal Estate Tax

California currently does not collect a state inheritance tax, which is a tax assessed against a beneficiary's share of an estate as opposed to an estate tax, which is assessed against the entire estate. The California estate inheritance tax was abolished on June 8, 1982. Since California no longer collects a state estate tax or an inheritance tax, it is the federal estate tax that gets a lot more attention. However, the federal estate tax law affects only the richest American families.

As of 2014, every person can leave or give away as much as $5.34 million without owing any estate tax. One attractive feature of the current estate tax law is that spouses are able to combine their estate tax exemptions, thereby allowing married couples to give away or leave more than $10 million without owing tax. This new feature, called "portability" is permanent.

For married couples to take advantage of the portability rule, an estate tax return must be filed when the first spouse dies, even if there is no tax due. This means that the IRS must process returns that don't provide tax revenue and taxpayers must enlist experts to help them prepare these complicated tax returns. For very large estates that are subject to the tax, as of 2013 the gift/tax was established at 40%, which is an increase over the 2012 rate of 35%.

Contact The Law Offices of Jack S. Johal

Searching for an attorney who has a firm grasp on estate taxes in Monterey? Not only does attorney Johal have a 10.0 Superb Avvo Rating and an AV® Rating from Martindale-Hubbell®, but he earned his LL.M. in taxation from New York University School of Law in 1983. As a Sacramento estate planning attorney with over 30 years of experience, attorney Johal has the knowledge and experience to handle all of your estate tax matters competently and professionally.

For a free consultation, contact us today at (916) 229-8027.

Avvo Superb Rating Five Star Professional
The Law Offices of Jack S. Johal
The Law Offices of Jack S. Johal - Sacramento Estate Planning Lawyer
2025 Hurley Way, Suite 100
Sacramento, CA 95825
Phone: (916) 569-8111

The information on this website is for general information purposes only. Nothing on this site should be taken as legal advice for any individual case or situation. This information is not intended to create, and receipt or viewing does not constitute, an attorney-client relationship.

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