New California Estate Tax Proposed for 2020

The Los Angeles Times recently reported on a measure California voters will face in the upcoming 2020 statewide election to consider a, “state-mandated [estate] tax on the assets of wealthy residents, one that could generate as much as $1 billion a year for low-income families, under legislation introduced in the state Legislature on Tuesday.”

In 2017, the federal estate tax was loosened to affect estates worth more than $11.4 million individually or $22.8 million for married couples. The proposed Senate Bill 378 would impose a tax on estates larger than $3.5 million for an individual, similar to the federal estate tax that was applied between 2009 and 2011, however would phase out once the estate hits the current federal requirement to avoid double taxation.

If passed by the legislature and voted on in the upcoming election, revenues from Senate bill 378 are slated to address socioeconomic inequality through programs that benefit low-income families including child savings accounts.

Just what is the federal estate tax?

Many Californians may not be familiar with the term, or whether the proposed bill will apply to them. According to the IRS, a federal estate tax is, “a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.” However, the estate tax is more complicated than this and also takes into account any assets, trusts, annuities, business interests, as well as debt, mortgages, surviving family members, and/or charities. CunninghamLegal’s business is estate planning and we know how many moving parts there are to handling a loved one’s final affairs, including the federal estate tax.

Estate planning and staying up-to-date with current tax laws may seem overwhelming, which is why we do it for you. At CunninghamLegal, we help you create a customize plan that allows you to choose what kind of legacy you leave behind, alleviating future confusion and unnecessary difficulties during an already emotional time. Do you have questions about your estate and how California tax laws, including this future one, will affect you? Join us for one of our FREE seminars and receive a consultation with one of our knowledgeable, licensed attorneys.


Source (1):


, , ,

A Second Chance to Double Your Tax Exemption

CunninghamLegal – The Living Trust Lawyers

The IRS just issued Revenue Procedure 2017-34, which, for a limited time, has extended the deadline to file for portability elections. The American Taxpayer Relief Act of 2012 (enacted in 2013) provided people with the process of “Portability” where a surviving spouse “inherits” the unused Federal Estate Tax Exemption of their predeceased spouse by filing an Estate Tax Return (Portability Form 706) within nine (9) months of the date of death, or within 15 months if a 6-month extension is timely filed. This Portability tool may significantly reduce your estate taxes at your death. Due to the numerous extensions granted to people filing their estate tax return, the IRS has reopened that window for the sake of efficiency.

If you or anyone you know has missed the window to file the estate tax return, the deadline has been extended to January 2, 2018 or by the second anniversary of the decedent’s death (whichever is later). Please note, this process will not apply if the first spouse died before January 1st, 2011.

If you think your estate may benefit from electing “portability” but missed the deadline to file, you can still schedule an appointment with our office before the hard deadline of January 2, 2018, when this opportunity will be lost.

, , , ,

Estate Tax and Gift Tax Coming to an End?

CunninghamLegal – The Living Trust Lawyers

The year 2017 is bringing changes to the estate and gift tax exemption, the annual exclusion as well as a possible repeal of the estate tax due to President Trump and a Republican majority in Congress.

The estate and gift tax exemption is increasing this year as expected. As a refresher, the estate and gift tax is a tax on the transfer of assets either during life (gift tax) or at death (estate tax). The new exemption amount allows an individual to give away during life or at death $5.49 million without being subject to the tax. A married couple can double their exemption amount with portability, but portability requires the surviving spouse to make the election on a timely filed estate tax return (9 months after their spouse’s death).

The annual gift tax exclusion is still $14,000. The annual gift tax exclusion is the amount of money you can give away without being subject to gift tax. For example, if an individual gives $16,000 away, then they will have to report $2,000 of the gift ($16,000 minus the gift tax exclusion) on a gift tax return, thus, using a sliver of their $5.49 million of exemption.

President-elect Trump and the Republicans in Congress have their sights on a repeal of the estate tax, so 2017 may bring some historic changes. Interestingly, there has been little to no mention of repealing the gift tax. With the outgoing estate tax, there may be incoming changes for step-up in basis rules. However, like the current estate tax, the step-up in basis rules will have little impact on the vast majority of Americans. Trump’s tax plan will cap a step-up in basis on capital gains up to $10 million held at death (currently unlimited) and disallow contributions of appreciated assets into private charities.

Written by: Stephen M. Wood | Attorney at Law | CunninghamLegal | Camarillo Office | |  (805) 484-2769