Orange County California

Trust Attorneys


Planning for what will happen with your estate after you die is an important task. For some people, potential estate taxes are a significant consideration when creating their estate plan. An experienced attorney can help you develop a plan that addresses all of your needs and goals, including minimizing taxes, if necessary.

5 Reasons for Estate Tax Planning

As you create your estate plan, it is important that you understand all tax implications. Here are five reasons you should consider estate taxes in planning your estate plan:

  1. If your total estate is valued at more than $5.43 million. You should calculate the value of your estate with the guidance of an experienced attorney, as various complex tax rules and laws apply to this calculation. For example, the value of the proceeds from a life insurance policy could, in some cases, be included in the value of your estate. For many people, this represents a significant sum of money.
  2. If you think your estate will grow significantly in the future. For example, you may know you’ll inherit a large sum of money that would increase the size of your estate to an amount above the federal exemption amount.
  3. If your total estate is valued above the federal exemption amount and you are not comfortable having your estate liable for the tax that ensues. If your estate is only slightly above the exemption amount, you may decide to weigh the benefits of creating an estate plan that eliminates any tax liability against creating a simpler plan that does not incorporate tax planning. This decision should be made with the guidance of a knowledgeable attorney because the federal estate and gift tax rate is 40%, which can often result in a costly tax.
  4. If you made, or intend to make, large gifts during your lifetime that are not tax exempt. For example, if you gave a loved one hundreds of thousands of dollars in gifts, these gifts eat into your federal tax exemption amount of $5.43 million. Even if you do not currently have assets worth that much, you may still find that you have a taxable estate upon your death. So, it’s important to consider tax issues when creating your estate plan.
  5. If you live or own property in an estate that has a separate state estate tax. In these cases, a state level estate or gift tax may be due at a much lower threshold than the federal estate tax exemption amount. It is important to consult with an attorney to determine whether you may be facing any state level estate tax issues.

Interested in learning more about creating an estate plan to minimize taxes? We encourage you to reach out today for more information at (714) 282-7488.

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