Probate
Federal Estate Taxes
The estate tax (or death tax) is a tax on property left by a deceased person. Technically, the estate tax is imposed on all estates, but each taxpayer has a huge tax credit that corresponds to the tax on an estate of $1,500,000 (for the year 2004). The practical result is that there is no estate tax if a deceased person leaves less than $1,500,000 worth of property. In accordance with the tax cut plan signed by President Bush in 2001, the exempt amount will increase from $2,000,000 in 2006 and topping off at $3,500,000 in 2009. In 2010, the estate tax will be eliminated. However, under the current law, in 2011, the estate tax structure reverts back to what it was in 2001, with $1,000,000 exemption per person.
With this new federal estate tax structure, avoiding estate taxes no longer needs to be a primary goal of most Californians. This means that estate planning has become simpler and more affordable for everyone.